SBJ/20080623/This Week's News

Big Ten posts record revenue

Commissioner Jim Delany
awarded Ohio State the 2007
Big Ten tournament trophy.

The Big Ten Conference generated more than $177 million in revenue during its 2006-07 fiscal year, according to documents filed this month with the Internal Revenue Service.

That amount, along with the $7.83 million in excess revenue after expenses, surpasses the comparable marks posted by other major conferences throughout this decade of growth in the college space.

Compared with the previous year, Big Ten revenue was up almost 40 percent in 2006-07, fueled by the launch of the Big Ten Network and the conference’s renewed media rights deal with ABC/ESPN. Both agreements were announced in June 2006, just days before the end of the 2005-06 fiscal year. Neither agreement took effect until fall 2007, well after the conference’s 2006-07 fiscal year had ended, but upfront payments and related signing bonuses are reflected in the conference’s bottom line for 2006-07.

The Big Ten has 51 percent ownership of the Big Ten Network; News Corp. owns the balance. While the Big Ten in its annual filing did not detail how much the partnership contributed to overall conference revenue, News Corp. indicated in a March 10-Q federal filing that the conference could receive an average of $112 million annually over the course of the deal. This year, according to that News Corp. filing, the network is paying the conference $66 million. The rights fee escalates over the course of the deal.

2006-07 Big Ten financials
REVENUE: SELECT CATEGORIES AMOUNT (CHANGE FROM 2005-06)
Sports revenue $154.23 million (+30.9%)
Signing bonuses $13.0 million (NA)
Operating revenue $5.15 million (+2.9%)
Corporate sponsor rights fees, licensing program royalties $1.43 million (-9.5%)
Championship events $754,566 (-10.7%)
ESPN Regional $743,636* (NA)
Miscellaneous $500,767 (+1,709.0%)**
CSTV $500,000* (NA)
Total revenue $177.43 million (+39.8%)
EXPENSES: SELECT CATEGORIES AMOUNT (CHANGE FROM 2005-06)
Distributions to member schools $154.23 million (+30.9%)
Allen & Co. LLC $3.50 million (+591.2%)
Compensation of current officers, directors, key employees $2.85 million (+76.2%)
Mayer Brown LLP $822,753 (-12.8%)
Championship events $754,566 (-10.7%)
Total expenses $169.60 million (+32.7%)
NA: Not applicable
* Includes non-cash contribution of broadcasting time. Similar deals were in place during previous fiscal years but were not broken down in enough detail to compare with 2006-07.
** Amount stems almost fully from an honorarium received for hosting the first- and second-round games of the 2007 NCAA Division I men’s basketball tournament at the United Center.
Source: Big Ten Conference Form 990, filed with the Internal Revenue Service

The new, 10-year national rights contract with ABC/ESPN is valued at $1 billion, starting at $83 million in the 2007-08 fiscal year, according to the Big Ten filing.

On the expense side, Big Ten Commissioner Jim Delany’s total compensation package, including benefits and expense accounts, rose 18.5 percent to $1.14 million. That includes deferred compensation of $272,584, a contractually obligated amount that increased slightly from 2005-06. A $1.5 million bonus also was awarded to Delany during the year. Robert Bruininks, University of Minnesota president and chairman of the Big Ten Council of Presidents and Chancellors, said in a written response to questions about the filing that the payment was “in recognition of the outstanding leadership [Delany] displayed during the successful negotiations of the conference’s media rights.”

Big Ten Deputy Commissioner Brad Traviolia said legal and consulting fees for the year increased to $5.35 million from $1.9 million, almost exclusively because of work related to the launch of the Big Ten Network. Notably, payments to Allen & Co. increased to $3.5 million from about $506,000. The New York-based private investment bank was the lead consultant to the conference during the network’s launch.

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