The Conference Shuffle: the Atlantic Coast Conference Set Off a Wave Of
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RF Winter 04 FINAL.ps - 1/10/2005 13:56 PM SM the conferenceshuffle The Atlantic Coast n the fall of 2001 it was George Nemhauser’s turn to serve as pres- I ident of the Atlantic Coast Conference set off a Conference. Ordinarily this would be no big deal. The position of ACC pres- ident unceremoniously rotates each wave of league swaps. year among league faculty representa- tives. They tend to brand their terms with lackluster pet projects like sports- Despite the outcry, manship or raising academic standards. But Nemhauser, a professor at Georgia Tech’s industrial and systems it shouldn’t have engineering department, had a gut feeling that the nine-school ACC was at a crossroads. So when ACC Com- surprised anyone missioner John Swofford asked the question — “What’s on your agenda?” — Nemhauser didn’t hesitate: “We BY DOUG CAMPBELL need to think about expansion.” And thus was set in motion the events that led to a seismic shift in athletic conference memberships across the National Collegiate Athletic Association (NCAA). By the fall of 2003, the ACC’s historic and some- times tumultuous march to expansion was complete. Ultimately accepting invitations to join the ACC were three schools: University of Miami, Virginia Tech, and Boston College. The three From Top to Bottom: jumped from the Big East, setting off 1) 2004 Atlantic Coast Conference Logo a nationwide chain reaction of con- 2) John Swofford, ACC Commissioner ference swaps. In all, 19 schools 3) Miami vs. VA Tech, 12/4/04 switched leagues during the second 4)Duke vs. UNC, 2/5/04 half of 2003, and some analysts believe 5) Jessica Trainor (Virginia) and more shuffling is to come. Anne Morrell (North Carolina) at the In the aftermath, ACC leaders were 2004 ACC Women’s Soccer Game giddy. “We have landed at a superb PHOTOGRAPHY: TOP TWO IMAGES COURTESY OF ACC/BOTTOM THREE IMAGES BY JEFF CAMARATI/GETTYIMAGES BY THREE IMAGES OF ACC/BOTTOM COURTESY TWO IMAGES TOP PHOTOGRAPHY: 18 Region Focus • Winter 2005 RF Winter 04 FINAL.ps - 1/10/2005 13:56 PM place,” Swofford said during a June 2003 actions are in keeping with microeco- The ACC hired sports-business con- press conference to announce the first nomic models of how competitive sultant Dean Bonham to conduct an phase of expansion. In short order, the industries work. analysis of expansion’s pros and cons. ACC had enhanced its revenue-gener- “You can’t hold back these market Bonham’s answer, contained in a report ating prowess in football while at the forces,” says Raymond Sauer, an econo- that was a year in the making, was a same time preserving its reputation as mist at ACC member Clemson robust recommendation for adding the premier men’s basketball confer- University and keeper of the Web-log three schools. In Bonham’s analysis, ence. Television contracts were quickly www.sportseconomist.com. short-term monetary gains were sec- renegotiated to reflect the addition of ondary to the pressing task of durability. the Boston and Miami markets, Nos. 6 Why It Happened “The bottom line came down not and 17, respectively in the nation, adding Pop quiz: The ACC is expanding from to money but survival,” Bonham says. millions of dollars to the ACC’s take. nine member schools to 12 because: “The ground underneath the collegiate This fall the ACC will hold its first- a) Miami couldn’t fathom hosting a world was moving at a pretty rapid ever football championship, worth an home football game against lightweight rate. We foresaw there was going to estimated $7 million. And it stands a Big East foe Rutgers. be a lot of alignment and realignment. far stronger chance of placing two b) Newly struck television contracts If the ACC didn’t expand, some of schools in the coveted Bowl Champi- will bring the ACC an estimated extra their competitors or other conferences onship Series (BCS), whose title game $16 million each year. would.” is worth as much as $14 million and c) ACC leaders feared that Florida The collegiate map that Bonham lesser matchups not far behind. State would leave if Miami was gobbled and ACC managers analyzed in 2002 Meanwhile, the Big East was in up by the Southeast Conference (SEC). laid bare the need for action. Out of crisis, reeling from what Commissioner Answer: All of the above. 11 Division 1-A conferences, the ACC Mike Tranghese had called “the most At one time, all the ACC’s schools ranked fifth in total revenue-per-school, disastrous blow to intercollegiate ath- called the Fifth District home. Estab- according to an NCAA study (see table letics in my lifetime.” In the space of lished in 1953 with eight schools, the on page 22). On an average, per-school a few months the Big East became Greensboro-based ACC lost charter- basis, the league was losing money, the Medium East, having lost three of member University of South Carolina albeit just a bit. Additionally, the ACC its highest-profile schools. Suddenly, in 1971 to the SEC but added Georgia relied heavily on men’s basketball for it was scrambling to survive with only Tech in 1978 and Florida State in 1991. revenues, which would have been fine six teams playing football. In Georgia Tech, the ACC laid claim except that football generally pays a lot The media portrayed the story in to the valuable Atlanta TV market; in more. The bigger conferences, espe- multiple ways. Some said it was a case Florida State, it finally claimed a top- cially the SEC and the Big 12, gained of brilliant strategy by the ACC con- tier football team. much more from their football pro- trasted by the flat-footedness of the The 1990s and beyond have been grams. While the ACC took in an Big East. Others saw it as an example good years to the ACC. Basketball average $8.1 million per school for of greed overtaking amateur sports. powerhouses Duke University, Univer- men’s basketball and $11.8 million for Neither turned out to be a fair sity of North Carolina, and University football, the SEC generated $5.7 million characterization. Interviews with econ- of Maryland won championships, from men’s basketball and a whopping omists and NCAA observers suggest earning the league a deserved distinc- $26.9 million from football. that conference realignment was going tion as the best in hoops. And Florida Where does all that cash come to happen, whether or not the ACC State took home the No. 1 football from? TV and radio revenues from con- led the charge. Powerful market forces ranking for the 1999 season. tracts negotiated by the schools were at work, creating incentives for Nemhauser’s hunch — shared by themselves account for 7 percent of athletic leagues to grow membership. observers across the country — was that Division 1-A athletic program support. What’s more, the Big East was time was running short for conferences Another 9 percent is from NCAA and hardly asleep at the wheel. Big East to shore up membership and protect conference distributions. Most of that leaders in the late 1990s and in May their goodies. But if it were to go money — an estimated 90 percent — 2003 approached the ACC about through with enlargement, the ACC comes from broadcast agreements merging their football leagues. On both would be making a huge bet. The league negotiated by the NCAA and the ath- occasions it was the ACC that said ‘no,’ annually pays out about $9 million to letic conferences, such as the $6 billion, in the end deciding to cherry-pick some $10 million each to its member schools, 11-year pact allowing CBS to broadcast of the Big East’s marquee schools according to tax filings. Adding three the NCAA basketball tournament. But without having to take on the risks of more would mean having to come up the bulk of collegiate athletic funds operating the proposed 18-team league. with an additional $30 million in annual derive from ticket sales — 26 percent. In hindsight, it all makes perfect revenue to make sure incumbents Schools with 80,000- to 100,000-seat sense. The ACC’s and the Big East’s weren’t giving up anything. football stadiums, packed seven times Winter 2005 • Region Focus 19 RF Winter 04 FINAL.ps - 1/10/2005 13:56 PM a year, reap even larger shares moting stability, only seldom from ticket sales. Larger still Conference Shuffle reaching out to swipe each are alumni and booster contri- Since the summer of 2003, 19 schools have announced changes other’s schools. butions at 18 percent and direct in conference affiliations. The ACC’s plucking of three Big East University of Chicago econ- institutional support at 10 schools got the ball rolling. omist Allen Sanderson likens percent. collegiate athletic conferences Tipping the scales in favor To the ACC To the Big East to a cartel. When everybody of conference enlargement was (all from Big East) (all from C-USA) obeys the unwritten rules, a relatively new post-season Miami Cincinnati everybody profits. “But there’s feature of the NCAA — the Virginia Tech Louisville always the incentive to cheat, Bowl Championship Series. Boston College Marquette whether it’s OPEC or the The BCS was set up in 1998 DePaul NCAA,” Sanderson says. for the purpose of declaring a To the Atlantic 10 South Florida The ACC wasn’t cheating, bona fide national champi- (both from C-USA) but it was moved to take action onship in football. At the same UNC-Charlotte To Conference USA after observing several eyebrow- time, it preserved the tradi- Saint Louis Rice (from WAC) raising developments.