"I felt we made a mistake in building a baseball field. I thought that should have been the ice skating rink, because I think hockey in this state right now, not just hockey, but ice skating, if you come up to our office building at 6:00 in the morning, some mornings you can't get a parking spot because parents have taken their kids up here to skate...I think hockey will be a great addition to our intercollegiate program. [The Pegula gift] is a great, great gift. And I think very far-sighted and I'm really pleased with it." - Joe Paterno

Tuesday, April 30, 2013

Hockey-Related Revenue Questions Answered?


Throughout TYT's existence, I've taken many positions on different issues. Sometimes I'm right, sometimes I'm not, sometimes I change my mind. One position I've held fairly consistently is that the Big Ten Network's impact on hockey was being overhyped by school and conference officials. Given hockey's sad history on television generally, the thought that BTN is unlikely to add many new subscribers or advertisers solely because of the sport and the equal division of network revenue among conference members, I felt it was a reasonable opinion.

Today, I'm owning up: There's a pretty good chance I was wrong about that. According to Minnesota-based publication Let's Play Hockey...


It's just a tweet with no link and no named source (something that didn't go unnoticed by BTN personnel), so assign credibility as you generally would for something like this. For whatever it might be worth to you, I'll vouch for LPH on matters within the state of Minnesota - and clearly, this information could have come from a source at The U, as they call it up there - although they're hit and miss on many things beyond their home state's borders. One of the more famous misses came in 2011, when LPH advanced the rumor that Illinois was on the verge of adding NCAA hockey through a donation from Jimmy John's founder Jimmy John Liautaud.

For now though, we'll proceed as if the news is true. I just try to be as honest as I can about information, because I despise when people, like Let's Play Hockey right now for example, drop intel without giving audience members a chance to assess its credibility for themselves. Equally maddening is the tendency of LPH to drop a bomb and walk away, offering nothing in the way of follow-up or additional information. That's what happened with the Illinois story, and it's probably what will happen here as well.

Anyway... how much is $2 million annually in terms of college hockey? It's a lot. A ton, actually. It's more than many NCAA Division I schools spend in total. Precise bottom-line numbers aren't always easy to locate, but back in 2009 when Bowling Green's program was near death, it was reported that the Falcons' annual expenses were roughly $1 million, generally considered typical for a lower-middle class program. Even among Big Ten schools (again, in 2009), spending was minuscule compared with the much-more-publicized football numbers, ranging from $2,155,223 (Minnesota) to $4,002,512 (Wisconsin).

Just to touch on some more current data regarding components of a hockey program's budget, Penn State's highest possible undergraduate tuition in 2012-2013 (for an out-of-state, upperclass nursing student) was $32,992. Multiply that by 18 scholarships, and you get $593,896. According to Department of Education filings for the 2011-2012 academic year, Big Ten schools spent between $437,047 (Ohio State) and $933,506 (Wisconsin) on operating expenses for men's hockey.

There are, of course, many other pieces of the pie including things like coaching salaries and recruiting expenses. Still, I've hit two pretty big chunks, and it's safe to say that the checks from BTN, if they are in fact coming, will go a long way towards ensuring Penn State hockey operates in the black each year. That's true even when accounting for the women's program and for the fact that the Pegula Ice Arena will be operated as its own entity, much like the Bryce Jordan Center, and won't feed directly into the hockey programs.

It's fair to ask how BTN is able to commit $12 million to the hockey schools on top of the usual payouts ($284 million to the 12, soon to be 14, members at last check) before a single conference game is televised and particularly considering the factors noted at the top of the post. And really, your guess is as good as anyone's at this point. BTN is expected to broadcast 40 hockey games in 2013-2014, up from 15 this past season, which may have spurred a bump in ad revenue. It's entirely possible that the other shoe to drop will be a press release about how Ro-Tel has signed on as the title sponsor for all Big Ten hockey telecasts and the league tournament. Or maybe, as Western College Hockey Blog's Chris Dilks suggested, it's all just an accounting trick based on the windfall created by the admission of Rutgers and Maryland to the conference.

Are we one step closer to seeing the Blackshirts in Big Ten hockey?

The $2 million payout has obvious effects well beyond the present six conference members. It signals the introduction of real television money to college hockey (sorry North Dakota, your cute little broadcast network is no longer top-of-the-food-chain stuff), something that has big - and not necessarily in a positive way - implications for a lot of schools that are used to big-time status but might have to settle for a mid-major reality. Naturally, it's also quite a chalupa laying out there for any other Big Ten members considering adding hockey... like Nebraska.
If you assume that college hockey programs will break even with revenue approaching $3 million [note: a reasonable assumption, as indicated], then a $2 million television deal for Big Ten hockey programs should make hockey viable at any Big Ten school. Each campus is going to be different: is there a facility available to play hockey, and how much will it cost to operate? Are there any Title IX issues that are raised by starting a men's hockey team, and would you need to add another women's sport to compensate.

And that includes Nebraska. I've long felt that Husker hockey probably wasn't viable at Nebraska. Shawn Eichorst dismissed the idea of hockey in February on his statewide call in show, and should have known at that time that this type of revenue was being discussed. But these numbers are hard to ignore. If they are true, that is.
Okay, so it's not set in stone that the BTN money will lead to new programs. But let's circle back to Penn State for a moment before leaving this because the dollars and cents flowing through PSU hockey look pretty rosy even beyond BTN money.

According to the Nittany Lion Club's recently-issued annual report (not yet online, unfortunately), there are at least seven men's hockey scholarships endowed at the "highest and most fully funded levels in Intercollegiate Athletics." Four of the seven originated with the Pegula donation and are named after Terry's children (both with Kim and from his first marriage). The others are named after Joe and Heidi Battista, Ralph Kerr and the John Davis family. There is also one "fully funded" women's hockey scholarship named after Laura, another Pegula daughter. The list presented in the NLC report is identified as "a portion of" the scholarships across the athletic department, leaving open the possibility of more than the seven and one given being in place.

Beyond those, many smaller donations have been made towards the endowment, including five listed in the Spring NLC Newsletter alone.

Furthermore, ticket sales for the coming season have been brisk, with Battista telling the Pittsburgh Tribune-Review's Scott Brown that season ticket deposits are in for 3,000 of the 5,000 non-student seats in the PIA. While I continue to believe that consistently filling the place may become a concern down the road if the inevitable dissolution of its novelty isn't met with a lot of winning, in the short term, things look fantastic.

Fantasic on the ice, fantastic on the business end as well. Look out, college hockey.

4 comments:

  1. FYI the BTN tweet has since been deleted. What did it say?

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    1. Nothing earth-shattering, it was just someone with the name "BTN____" (I can't remember, something female) asking what their source was. Like lots of things, that can be taken either way, I suppose. Either she was trying to track down the leak or she was trying to prevent misinformation.

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    2. Yeah it was Elizabeth, she's the Comms boss for BTN (and a media person not a sports person, don't ask me how that works). A lack of a flat out denial means that there's probably some truth to it.

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  2. Hockey is one of the interesting sports i ever seen. Fabulous Information.

    Ice hockey bag & Roller blades

    ReplyDelete