5:29am

Thu May 12, 2011
Business Report

Conference Move Could Bring Millions to CU

A new television contract for the Pac-12 conference promises millions of dollars in new revenue for the University of Colorado.  KUNC’s Erin O’Toole talks with Boulder County Business Report publisher Chris Wood about the financial windfall awaiting CU athletics.

O’Toole:  Chris, CU will officially become part of what was the Pac-10 conference, now the Pac-12, in July. Many observers have predicted that the university would secure far greater television revenues than it did in the Big 12. What are the numbers looking like?

Wood: It’s just what you said at the top, Erin. It does look like a windfall for CU. As you noted, the university is joining the Big 12, along with the University of Utah. CU left the Big 12 after decades in that conference or its predecessors. And just last week, the Pac-12 announced a TV deal with Fox and ESPN that could see the university earning TV revenue alone of $20.8 million dollars per year. That’s more than double the $9 million per year in revenue related to the Big 12 conference.

The entire Pac-12 deal is estimated to be worth about $3 billion dollars, or at least $250 million per year for the 12 teams. And the numbers will only go up when the Pac-12 launches its own TV network, as it promises to do.  So we are talking very big numbers.

O’Toole: Sounds like it.  Well, increased television revenues certainly would be significant for CU.  Are analysts expecting other revenue increases as well?

Wood:They absolutely are, Erin. A lot of CU alumni live in the Pac-12 area, and one official with sports analyst firm Navigate Marketing in Chicago expects those alumni to increase donations by 5 percent as a result of the shift to the Pac-12. A very telling number is the fact that CU has more than three times as many alumni in the Pac12 states — 50,000 — as it does in the Big 12 states.

Those are important numbers, especially as the university launches a $1.5 billion dollar fund-raising campaign.  Navigate also projects increases in ticket sales and what’s known as ‘branded inventory revenue.’

O’Toole:Branded inventory revenue? Is that a fancy name for--?

Wood: Essentially, it’s use of the C-U brand and logo on different products, so that’s what we’re talking about…

O’Toole: So like sweatshirts, coffee mugs?

Wood:That’s right.  And also, CU might also seem more revenue from Learfield Sports of Dallas. Learfield manages the university’s sponsorship and multimedia rights. That deal currently is worth more than $3 million per year. It’s unclear exactly how the contract is structured, but if CU can’t renegotiate the deal, it might see additional revenue if Learfield hits certain sales thresholds.

O’Toole: Chris, earlier you mentioned that the Pac-12 intends to launch its own TV network. What will that look like?

Wood:Essentially, the Pac-12 Network and the Pac-12 Digital Network will be owned by Pac-12 Media Enterprises. This, as well as the Fox and ESPN deals, mean that Pac-12 football and basketball games will be televised much more frequently.

O’Toole: With all of this additional revenue... what is CU expected to do with the money?

Wood: Some observers have hoped that the university would add some additional sports. Baseball, for example, is a program that ended at CU in the mid-1980s. But more likely, according to the Boulder Daily Camera, is that CU will use the funds to help pay off some of its past coaching mistakes, including funds owed related to buyers of former football coaches Gary Barnett and Dan Hawkins. It will also give the university additional funds for facility improvements, scholarships, coaches’ salaries and other needs.

Chris Wood is the publisher of the Boulder County Business Report.