The Math for Getting out in 2012

[Moontan]

Note: this is a simplified look at the financial implications of a 2012 move to the ACC. Politics and ethics will likely keep this from being considered and are not considered here. This is a simple look at "what if?" and "what would it take".

Assumptions

Although the BE would probably reject this, threat of legal action may dictate otherwise, so let's assume:

1. $20M is required to get out in 2012
2. Syracuse's share of BE TV revenues is $3.5M/yr
3. Big East is holding Syracuse's 2011-2012 share of TV revenues in escrow
4. the Athletics Dept needs the $3.5M to operate (either for 2011-2012 or 2012-2013)
5. Syracuse's share of ACC TV revenues is $14M/yr
6. half of Syracuse's $5M exit fee has already been paid (bylaws seem to indicate 1/2 now the rest on exit)
7. the rest of the ACC membership sees the light is is willing to loan Syracuse and Pitt $6M each (that's $1M total per current ACC member) to be paid back over 2 years
8. the Chancellor really wants to get out and is willing to lend the Athletics Dept the remaining cash. [I realize this is probably a big no-no and the Board may not approve... for this example, let's just assume that the Athletics Dept agrees to pay $1M in interest and that the Board does approve.]

For simplicity, NCAA credits are left out of the equation. Syracuse will likely lose 2-3 years of such additional revenue since the credits it earned while in the BE remain with the conference. The ACC will likely not let Syracuse and Pitt share in ACC credit revenues earned prior to their joining the conference.

Remaining $ Required to Leave
$20M - $2.5 (already paid) - $3.5 (BE TV revenue in escrow) = $14M

How it's Funded

1. $6M from ACC loan
2. $8M* from University loan

* in order to fund the program for a year without TV revenue cash flow an additional $3.5M is needed. Assuming Boosters pick up $500K, an additional $3M will need to be borrowed from the University.

How it's Paid Back

1. ACC is paid back over 2 years (funds withheld from Syracuse's share of TV revenues)
2. University is paid back over 4 years ... $11M + $1M in interest ($3M/yr)

Athletics Dept Cashflow Related to Conference Move

• 2012-2013 : $14M TV revenue - $3M ACC loan - $3M Syracuse loan = $8M revenue
• 2013-2014 : $14M TV revenue - $3M ACC loan - $3M Syracuse loan = $8M revenue
• 2014-2015 : $14M TV revenue - $3M Syracuse loan = $11M revenue
• 2015-2016 : $14M TV revenue - $3M Syracuse loan = $11M revenue
• 2016-2017 : $14M TV revenue

Conclusions
Based on this admittedly simplified model, from a financial standpoint it would appear to be doable. Syracuse makes an earlier move and the Athletics Department gets a significant boost in revenue.

From a sanity standpoint it's still a $15M hit.

Assuming a 2013 exit fee of $10M, it's an extra $10M hit over leaving in 2013. At $14M vs. $3.5M in TV revenues, the $10M extra hit is basically a wash.

If it really is a wash, then Syracuse Athletics gains earlier entry into a stable conference. It avoids an additional year of squabbling with the BE and its membership.

The cost is that a bunch of bridges were burned as it puts the Remaining Five in a bit of a scheduling bind. Perhaps the BE can take the extra $10-15M and Pitt's extra $10-15M and pay the early exit fees for a couple of C-USA programs. That would be a win-win-win.

This is a lot like a divorce... it's probably best to cut ties and move on as soon as possible.
Let's go!

 

[orangecuse]

This is a lot like a divorce... it's probably best to cut ties and move on as soon as possible.

Yeah...still living together...but sleeping in separate beds.

 

[Toga]

Good analysis. If we were to stay one more year I'd hope our negotiating position improves in that it wouldn't leave BE FB so much in the lurch. That, combined with leveraging alleged financial injury from BE decisionmaking, might make the financial dynamics somewhat better by staying a year. If so, I wouldn't mind playing one more year for FB but start playing ACC BB starting 2012-13. But I don't know if that makes financial sense vis-a-vis the new ESPN-ACC contract. In other words, what is the contract value of FB vs. BB, and how might that impact ACC teams contributing to exit fees?

Is the $1M per team B12 contribution in the form of a loan?

 

[Moontan]

Is the $1M per team B12 contribution in the form of a loan?

For WVU's assistance in getting out of the BE, I believe it is a loan.

Initial reports made it sound like a gift, but subsequent reports made it sound more like a loan.

 

[44PRIDE]

At this point, I can live with one last year in the Big Least. It'll be over before we know it.

 

[Moontan]

At this point, I can live with one last year in the Big Least. It'll be over before we know it.

I think almost everyone was back in September. The rest realized it when it took the BE 4 months to arrange for the backfill. This week's WVU departure agreement just rekindled some thoughts of a 2012 departure.

 

[baggerbob]

I say we need to get out now they ae talking of us playing Rutgers twice because of their stupidity. With the way this conference is run it will cost us the same amount to get out next year. Its foolish to talk about trying to keep good relations with people who have screwed us since the beginning. When we wanted to get Penn St in the league they voted against us, then the football league was formed and only Miami was given full membership. Its always been about the basketball schools and never about all schools. Then to get West Virginia full membership they added notre dame and gave them voting rights for football and a spot in a big east bowl. That is when the football schools started looking for somewhere else to go.

 

[midloviking]

If we win BE titles in football, basketball and lacrosse and as many other sports as possible I'm sure the remaining members will want us gone after 2012-13. Let us win our way out, ha!

 

[arbitragegls]

+1