Sons of Super Leagues: A Case for Virginia Tech in Conference Realignment

Fill in the blank. Conference realignment is all about ____________.

By now, you’ve probably been subjected to every pundit, message board, and casual fan’s take (and this article is no different) on what criteria are being used to decide who will be included in college football’s “elite” Power 2 conferences, the SEC and the Big 10.

To refresh your memory, the following seem to be the common factors mentioned by the media as to what matters in conference realignment:

1. Viewership

2. TV market

3. Brand / Value

4. Football culture

5. Alumni base

6. Academics

Ok, maybe not so much with the last one (tongue in cheek). However, while the above factors are important, I do believe there is a missing piece of the realignment commentary that should be included… Football program spending.

It's a common fallacy that a university's total athletic department revenue is a reflection of what they are spending on football, or have the capacity to spend on football, but that isn't necessarily the case. Different cultures at different universities lead to massive differences in how they finance capital facilities, spend on non-revenue sports, provide scholarships for athletes, and the list goes on, which means that football spending may be the most accurate indicator of who is committed to competing at the highest level and will strive to ensure the viability of their football program.

Also, if college football as a product is on the cusp of achieving unprecedented levels of TV revenue, there must be a line of demarcation drawn at some point (i.e. how the NFL and NBA have established salary cap floors) between programs that spend high amounts on football, and those who don’t.

Why?

Ask yourself this question.

How much longer before college football maintains its affiliation with the NCAA, and just breaks away to form some form of College Football Playoff League (CFPL), thus creating 3+ tiers of Division 1 college football?

Let’s be honest, with the implementation of the transfer portal (free agency), NIL (contracts and signing bonuses), and ballooning TV contracts that now mirror the professional leagues, college football is already the NFL's minor league, and competing at the highest level in the CFPL would require significant investment in terms of football spending per program to sufficiently operate in that league.

And if a CFPL is formed, why on earth would the current SEC and Big 10 affiliations matter, when it's clear that there is already massive disparity WITHIN those conferences between the haves and have-nots, let alone the other conferences?

That’s because if the long-term outcome is the establishment of a CFPL that competes at the highest level, you have to ensure the participants can absorb the CAPACITY to take on the associated costs and risks of participation, such as player contracts, signing bonuses, salary caps (floor and ceiling), healthcare, and several other aspects of being a more “professionalized” version of minor league football.

In a more professional league, it makes no sense for Alabama, which spent an average of $63.7 million from 2018-20 to continue subsidizing a school like Missouri, which spent only $25.3 million over that same timeframe, to be co-members in the CFPL, especially if there's no association with the NCAA.

(Disclaimer #1. Vanderbilt is a private school whose spending is not disclosed. Still, one can assume that their football budget is MUCH lower than Missouri, which reported the lowest level of spending among public universities in the SEC.)

Now I know what you are thinking, not every school spends an insane amount of money on football as Alabama does, and that is true.

However, after excluding the Top 2 averages among the SEC from 2018-20 (Alabama - $63.7 million and Tennessee - $55.7 million) as well as the Bottom 2 averages not to include Vanderbilt (Missouri - $25.3 million and Mississippi State - $25.9 million), the AVERAGE of the remaining SEC teams is $40.1 million!!!

By the way, this conference is adding Texas and Oklahoma, so I expect that spending average to increase dramatically.

And with the SEC's tiered TV revenue sharing model (i.e. not every school gets an equal payout), even if I’m a program like Arkansas which spent $43.7 million on average, I’m tired of subsidizing a program like Missouri.

Make no mistake, this is all about college football. Not athletic departments. And at the end of the day, the old motto of “You gotta spend money to make money” will likely prevail.

So, for the current SEC and Big 10 schools that are being “auto-included” into a future CFPL, our old friend Lee Corso has a warning for you:

After analyzing all available Power 5 program spending trends from 2018-20 (not to include Notre Dame, Miami, and USC, which are also private schools and do not report their financials), it was surprising how many schools, especially those among the SEC and Big 10 who have far greater shares of TV revenue than the ACC, Big 12, and Pac 12, do not spend a significant portion (~35+%) of their budget on football.

However, after looking closer at these programs that spend less on football, the commonality was obvious… many of the Power 5 programs that fell below par from 2018-20 in terms of average football spending (<$30 million) are known more for their “basketball-first” culture.

(Disclaimer #2. It made sense to use ~$30 million as the spending threshold considering only 52 of the 65 Power 5 teams are public universities that report financials, and there were only 30 teams that spent more, and if you included Notre Dame, Miami, and USC, it would equate to 33 teams which would fit the mold of a potential 32 team CFPL structure. Not an exact science, but close enough.)

(Disclaimer #3. 2021 spending was not utilized for this article since all but 6 of the 52 reporting public universities spent LESS due to the carry-over impact of COVID-19 on athletic department financials.)

And who are some of the more notable Power 5 “basketball-first” brands that do not spend significantly on football?

You may recognize a few:

● Kentucky

● UNC

● Kansas

● Virginia

● Maryland

● Arizona

● Indiana

● Illinois

● Purdue

If I’m a future CFPL commissioner and my goal is to create a revenue-sharing model whose SOLE PURPOSE is to get the best available FOOTBALL product on TV, and I have no ties to the NCAA, then my proposition to these programs is simple… spend more on football or get left behind.

Now let’s get to the bottom line of this article...

For some background, feel free to read my previous articles HERE, HERE, and HERE, where I have already made the case that Virginia Tech is one of the largest schools in the ACC (and still growing) that is positioned to graduate a large cohort of high-level technology-oriented alumni that are continuing to populate the Mid-Atlantic regional “tech-talent” markets such as DC, Raleigh, Baltimore, Charlotte, Virginia Beach, and Richmond.

And since these markets are still growing in population, and Virginia Tech has and will continue to have the largest market share across these regions in terms of college football viewership, fan engagement, football spending, and football culture, you have to believe Tech already has a strong case for inclusion with any potential super league.

As for Virginia Tech’s recent college football spending?

From 2018-20, Virginia Tech spent on average about $33.4m on football.

As for Tech’s total athletic department revenues?

The Hokies averaged $98.1 million during that same stretch, meaning Tech allocated ~34% of its total revenue towards football, which if you think about it, is a significant percentage of its total budget when you also consider the remaining “basketball-first” teams in the ACC (i.e. UNC, UVA, and Louisville) bring in at least $10+ million more athletic department revenue than Virginia Tech, but spend less on football.

Virginia Tech AD Whit Babcock is right, the Hokies have a “Top Tier of the ACC” football budget as he has mentioned numerous times in recent press releases and interviews.

Just look for yourself...

ACC Average Football Spending, 2018-20:

1. Florida State - $57.5 million

2. Clemson - $52.6 million

3. Miami – Private, does not report

4. Virginia Tech - $33.4 million

5. Louisville - $33.1 million***

6. Georgia Tech - $27.8 million

8. Virginia - $25.3 million

9. North Carolina - $25.1 million

10. NC State - $24.4 million

11. Rest of the ACC – Small private schools, do not report

*** Louisville’s average increased significantly due to a one-year spike in spending in 2019 ($46.4 million). If you exclude that outlier, then from 2016-20 their average spending was $25.4 million.

Within the ACC regarding football spending, there is a definitive Top 2 with Florida State and Clemson, Miami as an unknown, Virginia Tech, and the rest of the ACC.

For additional context, the SEC and Big 10 have EIGHTEEN schools in the current Top 30 of college football spending (>$30m), which makes sense considering the average estimated TV revenue payouts per conference as of 2018-19 were:

● SEC - $50 million

● Big 10 - $44 million

● Big 12 - $39 million

● Pac 12 - $32 million

● ACC – $28 million

The takeaway is simple.

Even with lower athletic department revenue than its “basketball-first” ACC peers and a conference TV revenue payout disadvantage from the SEC and Big 10 of nearly $20+ million, Virginia Tech STILL ranks in the Top 30 of all Power 5 programs.

Now, I have no idea what will happen to Virginia Tech when a likely CFPL is established, but given every factor (viewership, TV market, football spending, and fanbase), if the CFPL incorporates a roughly 30-35 team league, then I must believe the Hokies would be included.

I’ll leave you with a few parting thoughts.

The perceived strength of Tech’s case across ALL factors that would influence the Hokies being included in a super conference (viewership, TV market, football spending, brand and pedigree, alumni base) are mostly based on 10+ “down” years of Virginia Tech football. If this were 2010, there would be no doubt of Tech's inclusion among the national pundits, who are usually the least informed.

Virginia Tech has been a viable partner with ESPN since the late 1990s. The Hokies laid the foundation for the College Gameday atmosphere and have the record for most Thursday Night Football games. Suffice it to say, ESPN knows VT’s value when the program is rolling and when it is not. However, most of the recent realignment articles have only included TV data from when Tech was down as a program. That’s not the case at ESPN.

Also, as it pertains to the ACC Grant of Rights, which is set to expire in 2036, I have a hard time believing that ESPN and the ACC powerbrokers will sit idly by over the next decade and allow for a $70m+ funding gap to exist between the SEC, Big 10, and the remaining Power 5 programs, which negatively impacts their investment into the ACC Network and the ability for its top programs to compete at a national level. That's not happening and change is coming, probably sooner than we know.

Virginia Tech recently increased its investment in football which hasn’t been fully captured in the latest financial reporting. But for the purposes of this article, the goal was to reduce recency bias in the numbers, so I used a 3-year spending average spanning 2018-20. However, if you wanted to use the most up-to-date spending as of 2020, Virginia Tech had a football budget of $34.2 million putting them at #23 of all public universities. Keep in mind this is BEFORE the influx of football spending in the form of the Football Enhancement Fund, which is adding $30 MILLION MORE over time.

So let’s say VT ended up adding $5 million this last offseason for increased football staffing, recruiting, and facility improvements. That increase would have put Tech well into the Top 20, just behind Texas A&M and above Florida, as of the 2020 financial reporting.

Factor in what should be an improving on-field product with Coach Pry’s influx of energy back into the program, the Drive for 25, which is now at 29k+ and counting, and I have to believe Tech is ramping up for something special.

Now whether or not Virginia Tech wants to participate in a CFPL-like super league is another story. However, all things being considered, I have confidence there would at least be an invitation extended.

Go Hokies.