Run up the score

That’s what the ACC must do with its TV football deals to stay in the game
By Spencer Campbell

Tom Hamilton was a hard man. He played halfback and quarterback on the undefeated Navy team that won a national championship in 1926. He led a come-from-behind touchdown drive, then drop-kicked the extra point that tied Army in one of the best football games ever played. A pioneer naval aviator, he flew scout, patrol, torpedo and transport planes and, in World War II, commanded aircraft carriers in the Pacific. But nothing, not lunging linemen or crashing kamikazes, scared him the way television in its infancy did. “We are dealing with a terrific force like a powerful wind of gale velocity,” the retired rear admiral warned the 1951 convention of the National Collegiate Athletic Association. “We are already feeling the first breezes of this hurricane.”

Hamilton, then athletic director at the University of Pittsburgh, and his colleagues feared the new medium threatened college football: It could siphon gate receipts, their programs’ lifeblood, its live images overexposing and making mundane the sport’s spectacle. To prevent that, they were willing to tie one another’s hands. Members agreed to bar schools from independently selling rights to games. When the University of Pennsylvania ignored the edict, the NCAA branded it “a member not in good standing,” and the Quakers caved in. The NCAA signed one contract for all, restricted the times a team could appear on TV and created the Football Television Committee, which, along with the networks, decided what games would be shown. “They wanted to protect the sport,” writes Kevin Dunnavant, author of The 50-Year Seduction: How Television Manipulated College Football, from the Birth of the Modern NCAA to the Creation of the BCS. “They assumed they could.”

The plan resulted in lopsidedly uniform payouts. In 1981, more than 200 ABC stations showed a much-publicized match between Oklahoma and Southern Cal. That same week, only four broadcast the Citadel-Appalachian State game, but the network paid each school roughly the same fee. Football powers had grown weary of the NCAA’s protection, so Oklahoma and Georgia sued the governing body, contending that it was violating the Sherman Antitrust Act. John Swofford, then in his early 30s and already athletic director at UNC Chapel Hill, flew to Albuquerque, N.M., where the suit was heard. As a member of the Football Television Committee, there was a chance he would be called to testify. A federal judge ruled against the NCAA, calling it a “classic cartel,” without Swofford taking the stand. “I would probably have come down on the side of the NCAA,” he says. “The national package through the NCAA was appropriate. I thought that at the time.”

The U.S. Court of Appeals and Supreme Court followed the lower court’s lead, freeing schools to negotiate for themselves. “A lot of people were really afraid of what would occur when that ruling came down,” says Swofford, now 63 and commissioner of the Atlantic Coast Conference. “It’s like anything else. When you have those kinds of transitions, there’s usually an opportunity where you first see an obstacle.” But along with opportunity came a storm the admiral never saw coming.

Spurred by increased popularity and exposure, the value of college football’s TV contracts has exploded since the sport was deregulated. In 1980, the more than 100 schools then in the NCAA’s top division received a total of $27.8 million. Most now negotiate as part of their conferences, and the 12 members of the Big Ten alone share almost $250 million a year. At least 70% of that’s from football, with basketball making up almost all the rest. “Football is king in this country,” UNC Charlotte sports economist Craig Depken says. “If you just look at the amount of money that’s generated nationally but also regionally, college football dominates.” That’s bad news for the ACC, the Greensboro-based nonprofit that oversees 12 schools playing 25 sports. Formed in 1953, its original seven members’ fortunes veered sharply toward the hardwood — they’ve won 12 NCAA titles in basketball and just two in football. It’s one of college basketball’s most lucrative leagues, but that’s trifling nowadays. For example, Duke University generated basketball revenue of $26.7 million in 2009-10, most of any school. Football at the University of Texas, a member of the Big 12 Conference, more than tripled that.

Given its tribulations on the gridiron, the ACC could well have shriveled into obscurity, but it clings to the final spot among the Big Five conferences thanks to John Douglas Swofford. “He’s one of the few people in college athletics who gets it,” says Barry Frank, executive vice president of New York-based IMG Media Sports Programming and an ACC consultant. “He knows what makes it tick. Money.” He also knows where to find it. ESPN Inc., an all-sports subsidiary of Burbank, Calif.-based The Walt Disney Co., has become collegiate football’s dominant network. According to Depken, it broadcasts 65% of games, ready-made products that fit perfectly into its time slots. That creates a bilateral monopoly — single seller, single buyer. “How do the schools and the conferences respond to that?” he asks. “They get more TVs.” In other words, they expand into more broadcasting markets.

The ACC under Swofford has plucked five schools from the Big East Conference, metamorphosing from a nine-member, mostly regional affiliation into a mega-league that stretches almost the entire Eastern Seaboard. Consequently, it has been “portrayed as the Gordon Gecko, corporate-style raider of college athletics,” says David Glenn, who hosts a self-titled radio show in North Carolina. Greed has been good. Its projected television haul of $179 million in 2013-14 would be a 141.9% increase over 2006-07 and more total revenue than the $162 million the conference generated in 2010-11. But this summer the hunter became the hunted. Important people at Florida State University, the league’s most profitable football program in 2010-11, were not happy with the newest TV deal, announced in May. It didn’t leave, but eyes began to wander. “I think there’s obviously been some unrest with conference affiliation that’s led to speculation and rumors about things that did not happen and were never going to happen,” Swofford says. “But people like to talk about sexy topics. The reality is I consider this league totally stable.” Others aren’t so sure.

Stability is fantasy in college sports. Conferences — once tied by history and rivalry — are only as secure as the dollar bills that bind them. Swofford has adapted maybe better than anyone, but the playing field is only becoming more skewed toward football powers, which his conference isn’t. “These are different times,” says Gene Corrigan, conference commissioner before Swofford. “It makes it much more difficult. John has a much tougher job than I had.” That job now entails saving the ACC.

Because of his conference’s prowess on the hardwood — and its follies on the football field — Swofford has been accused of favoring basketball. The irony is that he first fell for the ACC through football. He grew up in North Wilkesboro, the youngest of four boys, and his brother Jim played tackle at Duke. His father — owner of three stores that sold tires and appliances — caravanned the family to Wallace Wade Stadium in Durham as well as to the Blue Devils’ away games. “I saw a lot of college football when I was that age.” Little of it on TV. The ACC was a pioneer in televised basketball, inking in the late 1950s a regional syndication deal with Philadelphia producer C.D. Chesley believed to be the first in college sports. Games eventually were carried as far north as New Jersey and Pennsylvania, helping the conference build a broader appeal. “I think that had a lot to do with the ACC evolving and developing as it did with basketball,” Swofford says. “The ACC was so far ahead of other conferences.” But its football teams rarely made it on-screen. N.C. State University was televised just six times between 1957 and 1967.

Swofford was good at basketball, but he was great at football. Twice named an all-state quarterback at Wilkes Central High School, he was wooed by every ACC member. He chose Carolina, but his time on the gridiron there was a struggle. He broke his wrist and a few ribs his sophomore season, causing him to miss about half the year. He threw three interceptions against the University of South Carolina the following year. “And the next week, literally, I was a safety.” As a senior, he played backup defensive back and special teams. As his fortunes plummeted, those of the Tar Heels skyrocketed. His first year, the team went 2-8. By ’71, when he was riding the pine, Carolina won the conference title and played Georgia in the Gator Bowl.

After graduation, he came home to work in the family business. UNC Athletic Director Homer Rice suggested he get a master’s of sports administration from Ohio University. “From a career standpoint,” Swofford says, “it was like somebody screwing in a light bulb in a dark room.” He worked as ticket manager at the University of Virginia, then, when Bill Cobey succeeded Rice in 1976, returned to Chapel Hill as one of his assistants. Four years later, Cobey left to run for lieutenant governor, telling Swofford he should go after the job. Despite strong candidates such as Dave Gavitt, founder of the Big East, and Jim Jones, later athletic director at Ohio State, Carolina hired Swofford. “I don’t think I really appreciated the leap of faith they took in hiring a 31-year-old to run a major college athletic program.”

He kept an eye on the ACC, sometimes bucking the wishes and immediate good of his alma mater. After Penn State joined the Big 10 in 1990, Corrigan started courting Florida State, a rising football power. Some UNC administrators weren’t keen on the idea. “As I recall, it was their chancellor,” Corrigan says. “I think some of those people like Carolina, Duke, Virginia looked at Florida State … I think they would’ve rather brought in Princeton, you know?” Swofford pressed his boss to reconsider. “You could see at that point how things were evolving, that football and football dollars and football television were going to be very important to keeping our league viable.”

The Seminoles joined the ACC — with Carolina among those consenting — in 1991. It proved a lesson in how lucrative expansion could be: With a toehold in the nation’s fourth-most-populous state, the conference would see TV money from football jump from $3 million to $16 million a year, Corrigan says, matching that from basketball for the first time in 1996-97. Swofford and Duke Athletic Director Tom Butters had fought for equal sharing of revenue, which went into effect just before FSU joined the conference. In the ’80s, teams appearing on TV got 75% of the payout, the league getting the rest. Due to their basketball popularity, the shift to an even split initially hurt the Tar Heels and Blue Devils but paid off when Florida State boosted football revenue. “When you’re part of a family,” Corrigan says, “and you’re eating steak and the other people are eating peanut butter and jelly, wouldn’t you get mad at your brother if he was eating a steak?”

He succeeded Corrigan in 1997. “Swofford’s job interview was the strongest interview I ever sat through,” recalls Art Cooper, then N.C. State’s faculty athletic representative. At the time, expansion wasn’t a big concern; the conference was busy adjusting to a major NCAA organizational overhaul. “I don’t want to imply that television dollars weren’t an issue when I was [faculty rep], because they were, but they were not the all-consuming issue that they are now.” That would change, and Swofford quickly discovered that the ACC couldn’t tolerate plain ol’ steak anymore — it needed filet mignon.

The ACC celebrated its 50th birthday in 2003 with much cause to rejoice. The year before, it had paid out $9.7 million from TV sports and post-season winnings to its nine schools, most of any conference in the NCAA. The league had only speculatively discussed further expansion — “Sometimes ideas like that just take a little time to bear fruit,” Swofford says — but with its football contract set to expire, it was time to harvest, and powerful University of Miami looked ripe. There were some sour grapes. In April, Big East Commissioner Mike Tranghese told New York Daily News, “They operate in the dark. They’ll never acknowledge this, but I’m aware the ACC has basically gone out and tried to convince our teams to join their league.” There must have been some truth behind his anger: Conference leaders voted in May to talk with Miami, Boston College and Syracuse University, all Big East schools. The commissioner reportedly believed they would boost football money from an annual average of $25 million to $40 million.

The Big East refused to roll over. Five of its schools and attorneys general of Virginia, Connecticut and West Virginia sued the ACC, while Virginia Gov. Mark Warner pressured UVA not to vote for expansion unless Virginia Tech was included. “It’d be easy to say, ‘Well, we should’ve seen that,’” Swofford says. “Well, even in hindsight, not really. Because those things generally just don’t happen in college athletics.” Adapting on the fly, the conference added Miami and subbed Virginia Tech for the other schools. The next football deal reportedly averaged $36.9 million a year, and Boston College joined in ’05. But the ACC’s reputation was sullied. “I hope we mend fences,” Duke men’s basketball coach Mike Krzyzewski said at the time. “Because we’ve obviously gone into another person’s yard with our tractor-trailer and knocked down a few trees.”

Maybe karma caused ACC football to take an unlucky bounce. With Miami, Florida State and Virginia Tech, it should have boasted power few could match. But Florida State has turned pedestrian, winning only one conference title since 2004, and the Hurricanes have been downgraded to a tropical storm, posting a mediocre 41-35 mark since ’05. (UM also has had an on-field brawl featuring a player wielding his helmet like a mace and a booster who told Yahoo Sports last year that he treated 72 athletes to improper benefits, including prostitutes.) Only Virginia Tech has delivered, claiming four conference titles. The ACC’s Bowl Championship Series teams — its best playing other leagues’ best — are 2-13.

In 2010, it signed an all-sports deal with ESPN that increased TV revenue 62.7% to $131 million the first year of the contract. But the following May, the Pacific-12 Conference blew past the ACC with an agreement that pays an average of $250 million a year. “The numbers got humongously out of line,” Frank says. But a clause in the ACC’s contract let it renegotiate if its membership changed. So it hammered two more nails into the Big East’s coffin, announcing in September 2011 that Syracuse and the University of Pittsburgh would be joining, upping its number to 14. That will happen next year. Though both have stronger basketball than football programs, they will add New York and Pennsylvania, the third- and sixth-most-populous states, to the league’s turf. The schools sought financial stability; the conference coveted the major TV markets they offered. All were rewarded in May, when the ACC wrangled an extension from ESPN that averages $240 million a year through 2026-27.

Celebration was short-lived. The deal sounds lucrative, but its technicalities caused Forbes magazine’s website to prophesy the league’s demise — the headline read, Say Your Goodbyes: The ACC’s Days Are Numbered — because it had given away third-tier football rights (for games that remain after networks have filled their slots), which can add millions in revenue. More worrisome: The Seminoles went on a warpath. “It’s mind-boggling and shocking” that the ACC sold third-tier football and not third-tier men’s basketball, Florida State Board of Trustees Chairman Andy Haggard told Warchant.com. “It continues the perception that the ACC favors the North Carolina schools.” Head football coach Jimbo Fisher suggested FSU should explore its options. The Internet rumor mill had the Seminoles bolting for the Big 12, taking Clemson, Miami, Virginia Tech or maybe Georgia Tech with them.

That uproar became a soft din after Florida State President Eric Barron clarified that revenue from third-tier men’s basketball rights will be split equally, meaning his school will benefit as much as Duke and Carolina. Still, the league’s contract isn’t as rich as other major conferences’ — though Swofford cautions that details make apples-to-apples comparisons unwise — due to middling football and terrible timing. In 2010, Swofford negotiated with two networks, Fox and ESPN. NBC- Universal entered the ring when the Pac-12 auctioned off its rights, driving up the price.

“The rumored demise of the ACC is strictly related to football,” Wake Forest University Athletic Director Ron Wellman says. “Basketball is doing well, all of our other sports are doing exceptionally well. But we’ve got to do better in football.” If the conference doesn’t get stronger, Florida State might look for greener turf elsewhere. “If this is a basketball-first league that has a lot of small universities that have trouble historically with football, could a slight economic difference today be much larger down the line?” Glenn asks. “There’s going to have to be a real philosophical and financial conversation about what’s most appropriate for Florida State.”

Whether the Seminoles stay or go there’s little doubt something akin to Adm. Hamilton’s hurricane has struck the ACC. But rather than hurt its attendance, TV has made college football too powerful, and when anything has too much power, scandal happens. “Who was really running Penn State?” asks Jason Lanter, a psychology professor at Kutztown University in Pennsylvania and former president of The Drake Group, an NCAA watchdog. He believes school officials covered up allegations of sexual abuse by ex-defensive coordinator Jerry Sandusky in part because of the financial havoc a scandal would have wrought. The program earned $53.2 million in 2010-11. “The city and the university are built on the back of their football team. What does it say about the state of amateur athletics?"

That it’s not very amateur anymore. “We’re very much like professional sports in that we’re trying to get as much television exposure as we can get, we’re trying to get as many television dollars as we can get, we’re trying to market and promote our programs to get people to come and fill our stadiums and arenas,” Swofford says. “But we’re also responsible for young people getting an education and graduating and having a quality experience where they develop as people. … We can’t ever lose sight of that, or we will have lost our way.”

The ACC might already be adrift. Swofford’s alma mater hired Butch Davis, architect of Miami’s national championship teams, as head football coach in 2006. The nearly $2 million a year it paid him paid off with a $70 million addition to Kenan Memorial Stadium, but the program was nailed for major NCAA violations connected to impermissible benefits and academic fraud during his tenure, the first leveled against UNC in half a century. On the other hand, research shows that strong athletics can benefit academics — for example, by increasing student applications. That’s why Wake Forest has poured $70 million to $80 million into its football stadium in the last decade. TV money is especially critical for the small, private school in Winston-Salem, whose athletic department brought in the least money of any ACC school in 2010-11. “That revenue generation is important for us to give the experience that we want to our student athletes, our fans and retain our coaches,” Wellman says. In early August, WFU President Nathan Hatch was elected to a two-year term as chairman of NCAA Division I Board of Directors.

Academia versus athletics isn’t Swofford’s main concern — ensuring the ACC doesn’t become the Big East is. In the past, that meant expansion. “This league could not have stayed a boutique, eight-member conference and retained its place as one of the major conferences in college athletics,” he says. Going forward, survival means looking for new money wherever it’s hiding. The guy who gets it sits in his office on a summer morning, his cellphone wailing. Days before, a committee of university presidents had approved a new playoff system — one he helped design — that could double the post-season payoff. Shortly, the ACC will unveil a new partnership with the Orange Bowl that gives it roughly 50% of the game’s revenue. Football season will soon arrive. His phone keeps yelling. He smiles. “We used to take a deep breath in this business this time of the year. Not anymore,” he says. “Not anymore.”