Can Colorado Afford to be in the Athletic Arms Race?

Two and a half years ago, the University of Colorado announced they would join the PAC 12 in 2011. The move was justified by university officials for the following reasons:

  • More than 35,000 alumni reside in the Pac-12 footprint, whereas about 11,000 are located within the Big 12 regions.
  • This level of alumni support in key markets should help with recruiting.
  • CU should get more support on the road, because there is easier access to PAC 12 cities.
  • Many CU fans feel the PAC 12 cities are more desirable to visit.
  • PAC 12 teams will receive significant revenue from the new Pac 12 television contract.
  • The PAC 12 was a closer fit academically.

These are all legitimate reasons to make the switch; however, it was obvious that CU could not bankroll teams that could consistently compete against Oklahoma and the wealthier Texas schools. Most Coloradans hate to lose to Texas (at anything).

CU is not the only university that is having trouble dealing with the accelerated level of spending for athletic programs. In August 2011 Michael Smith, writer for Street and Smith’s Online Sports Business Journal was the author of an article entitled “Athletic Budgets Continue to Climb“, that focused on the rapid growth of budgets for the major athletic conferences. Though the data is slightly dated, it illustrates the amount of money spent on college athletic programs and their rates of growth.

Smith secured budgets for most of the schools in the Big 10, Big 12, SEC, ACC, and PAC 12. Texas tops the list in spending. The median rate of annualized growth is 5.4%.

Six SEC, four Big 10, and two Big 12 teams round out the top twelve schools in spending. Oregon is the top PAC 12 team at number 13 and North Carolina is the top ACC team at number 21. Four of the bottom eight schools are from the PAC 12, including newcomers Colorado and Utah.

In the PAC 12 Colorado and Arizona State have similar budgets and both are well above Washington State and Utah. The four schools stack up at the bottom of the conference.

If Colorado was still in the Big 12 it would be at the bottom with a budget similar to Iowa State and Baylor. The size of the Texas athletic budget is about the same as the combined budgets of Colorado, Iowa State and Baylor.

Of the 49th teams, CU was 42nd overall and 39th in the rate of growth. Six of the PAC 12 teams had budgets that grew at an annualized rate of 3.1% or less from 2010 to 2012.

The PAC 12 is a great conference for the University of Colorado for the reasons stated above. Time will tell whether schools such as Colorado, Oregon State, Washington State, and Utah can afford to participate in the PAC 12 or any other major athletic conference.

The table below expressed the athletic budgets for the schools in millions, from Smith’s article. In three instances estimates were made or to account for data that was not available in Smith’s report.

ACC Budgets were not available for Boston College, Duke, Miami and Wake Forest. The Big 10 budget for Northwestern was not available. The PAC 12 budgets for Stanford and USC were not available. The Big 12 budgets were not available for Baylor. The SEC budget for Vanderbilt was not available.  The 49 universities are color coded by Conference (Big 12 = grey, Big 10 = pink, SEC = green, Pac 12 = purple, ACC = light orange).

PAC-12 Arrives – Let the Games Begin

Tomorrow (7/1) marks the day the University of Colorado and the University of Utah join the PAC-12. For CU, the move is from one BCS Conference to another – no big deal. For Utah the move is from a non-BCS to a BCS conference – this is a big deal. Being part of the PAC-12 is historic in another sense. The league is the second oldest in the country with only the Ivy League having a longer history.

Reportedly there is a network deal with ESPN and Fox worth about $3 billion to the PAC-12 (Daily Camera). As a result the move could be worth an additional $20 million each year to CU. While this is not a firm number, neither it or other preliminary estimates are chump change. Unfortunately, CU and Utah will need substantially more to be competitive in the new league.

Being in the PAC-12 presents a number of new marketing opportunities for the newcomers, particularly given CU’s large alumni base on the West Coast. And on the academic side, Buff leaders are quick to make the claims that the PAC-12 conference in more in line with the CU academic mission.

At the moment the conference is thriving under the aggressive leadership of Larry Scott. CU and Utah will definitely benefit from his actions.It was necessary for both schools to make the jump, given the race by other programs to construct a series of super conferences. If either school failed to take advantage of this opportunity they would have ended up in a weak conference.

Not only did the Buffs and Utes find a home; they now reside in one of the country’s elite athletic conferences. HOWEVER; being tabbed as an elite programs presents the newcomers with a series of new challenges- how are they going to survive in the race to raise or generate the most money, build the best facilities, hire the top coaches, and recruit premier athletes.

The bottom line is that CU and Utah were invited into the PAC-12 to generate money and develop winning teams. It is that simple. Let the games begin!

For further information on the PAC-12, click here, or go to http://www.pac-12.org/.