Editor’s Note: I’m not a tax expert, but as some Sports Information Directors will gladly point out, I did stay at a Holiday Inn Express once. So just wanted to put this right up front, take all of this “analysis” with as much salt as necessary to remind yourself that I’m just a schlub reading tax documents.

But, and it’s an important but, those tax documents are the only filters of light we see into the black boxes known as NCAA conferences. And I think I’m in the 0.1% of nerds who have actually gone digging, so as inadequate as my credentials and expertise are, it beats a lot of what you might read on Twitter.

In our first installment, we took a look at the general ledger for the Big East in aggregate to get a sense of the financial picture, at least through the latest available data in 2020. But that only tells us so much. Even though the schools compete in the same conference, they don’t spend money the same way and don’t have the same sources of revenue.

So in order to get a better picture of what Big East finances are like, we have to dive into each school separately.   

What Payouts mean for individual teams?

The large majority (69%) of the conference revenue (media, NCAA shares, BET) is sent back to individual schools in the form of payouts. These are the staggering numbers you see referenced in terms of the Big Ten and SEC.   

The same 990 Tax Forms we used previously to see Big East revenues and expenses also give us a school-by school breakdown of the individual payouts from the Big East per school every year since 2013.

Here is a team by team breakdown. (Green shading signifies an NCAA Tournament appearance since 2014.)

We don’t have an exact explanation for why each team gets the exact payout it does, but using DePaul as a baseline (0 NCAA Tournament appearances) and Villanova as a topline (6 appearances) we can deduce that there isn’t an equal distribution of NCAA units/payments.

For those that need a refresher, each NCAA Tournament game appearance by Big East teams earns the conference a predetermined sum over a 6-year period. Sportico calculated that the 2022 units will be worth about $2.02M over the next 6 years, meaning the conference will collect over $26M spread out from 2023 to 2028.  

This is where we get back to how that revenue is ultimately paid out. DePaul hasn’t made any NCAA appearances in this time period while Nova has collected half the conference wins. With that knowledge the chart below makes a lot of sense.

Villanova has collected almost $8 million more than the 2^nd best team (Marquette), so from this we can infer that teams that collect those shares earn a bigger portion of the payouts.

They may not be equal payouts but they are still much more equitable than a conference like the WCC in which Gonzaga hoovers up most (if not all) of its NCAA credits. In 2019, Gonzaga collected $2.9 million while only St. Mary’s cracked 6 digits. Stan Johnson’s Loyola Marymount made $39,284 from conference payouts.

And if you’re wondering why Butler, Creighton and Xavier are all lower than DePaul, it’s because I included a 2013 “signing bonus” to the Catholic-7 teams for breaking off from the now-AAC. This turned out to be $5 Million per team.

What matters for us, though, is that even teams that aren’t “producing” revenue in the form of NCAA Tournament units get to share in the prosperity of the conference, albeit at a slightly lower rate.  

How does this compare to other schools?

We’ll use Marquette and Wisconsin as the example here, but feel free to insert your own Big East team and a corresponding B10/SEC team here.

(Editor’s note: The DOE data about to be cited is notoriously unreliable when using to cross compare between schools due to differences in accounting methods. A school like MU might account for Fiserv expenses under the athletic department while a similar school like Xavier categorizes Cintas expenses under the school’s, not the AD’s ledger, so isn’t reported to the DOE as an athletic expense. In any case, it’s the best we have.)

In 2014, according to the official Department of Education data, Marquette spent $28.7M on its athletic department. In that same year, Wisconsin spent $129.6M. Obviously football expenses are enormous, but factor in all of the additional sports UW has, some to balance out the 80+ football scholarships for Title IX purposes, and it’s easy to see how that gap exists.

Fast forward to 2019, the last complete athletic year on record and MU’s expenses have gone up by $9.5M for a total of $38.2M while UW’s seen its expenses rise by $6.4M to $136M. The $3M gap isn’t small, but when you factor in the baselines, the change is enormous. Marquette’s expenses have gone up 33% while UW’s only went up 5% in the same time span.

But wait, there’s more. In that same time frame, Marquette’s payouts from the Big East have gone down by 17% (from $6.1M to $5M) so that means Marquette has to pay a bigger portion of the AD expenses out of its own pocket. Whereas Big East payouts covered 21% of expenses in 2014, they now only get to 13% of the total.

We already mentioned UW’s expenses remained relatively flat, but now factor in that their payout from the Big Ten has gone up 101% to $55 Million from 2014 to 2019, you can clearly see how that divide is growing. Whereas both MU and UW covered 21% of their expenses simply with conference payouts in 2014, MU went down while UW nearly doubled what it could cover, up to 41%. That means MU is getting much more dependent on internal institutional support while UW is much less reliant. If the B10 does indeed double their next TV contract to $1Billion+ as most expect, we’ll likely see those payouts near $100M which would cover over 75% of expenses.

And once more, this isn’t even touching on what the schools bring in on their own through ticket sales and local sponsorships. The UWs of the world needed that to cover the 80% of expenses internally a decade ago. Now that 50%+ is coming from the conference, they have an abundance of riches to self fund the entire athletic department without needing to dip into the school funds.

This is where the inequality of the upcoming financial divide will affect the Big East even if it doesn’t have football expenses to contend with. It’s not just a B10 thing. Check out how some median teams from each of the P6 schools have fared in terms of how their conference payouts.   

Basically, the individual Big East teams rely much more heavily on their own revenue (and institutional support) to fund Athletic Departments, even though they don’t have the football expenses to worry about. So outside of the NCAA success, increasing local commercial opportunities and maintaining ticket sales, in a time of decreasing attendance figures, is essential in order to keep competing with the big boys on equal footing.

Expensive Expenses

And one final sidebar for those that believe exploding football budgets won’t necessarily impact basketball schools, as most of that money is for football anyways. But the numbers are telling us that most Big East teams have seen fairly significant increases in expenses since the reformation.  

Again, it won’t be apples to apples, but for the most part you can see the progression in the chart above. It costs more to compete at a high level. It also isn’t surprising to see Creighton (45.8%), Butler (49.9%), and Xavier (52.3%) have 3 of the 4 biggest increases in expenses from 2013 to 2019, jumping up from a mid-major level to high majors across all sports.  

Conclusion

So what does this all mean? Expenses are going up significantly and conference revenue isn’t keeping up.

To me, this is all important because it sets a baseline for schools. We talked about Marquette at length, but the picture is similar across the board for all Big East teams. Individual (ticket, sponsor, local media) revenue is more important than ever, but so is the support from the school.

If a president were to come in and not see the value of athletics and mandate the department be self-funding, the private jets and extra coaches and new technology that help programs compete at the highest levels would disappear.

On its own, seeing other conference payouts explode isn’t a death knell for Big East teams. It won’t relegate the conference to second tier status automatically. What it does mean is that individual donors and the institutions themselves will be footing a much larger part of the bill.

The next TV contract is going to have ramifications on the Big East the like we’ve probably never seen before. What kind of money are we talking about? That’s for next time.