What would a new Big Ten media rights deal mean for Penn State?

The number for the Big Ten’s next media rights deal wasn’t a misprint.

According to an anonymously sourced report from Michael Smith of the Sports Business Journal last month, the Big Ten is expecting a major media rights deal. Its current deal set to expire in 2023, the report said flatly that, however the dust settles, the conference will net more than $1 billion on the deal.

“The Big Ten will become the first college conference to eclipse $1 billion per year when it negotiates its next media-rights deal later this year,” the report reads. “That’s the opinion held by several well-placed sports business sources, who expect the conference to more than double the $440 million in annual rights fees that Fox and ESPN currently pay.” 

Continuing to note that, at present, the Big Ten is in an “exclusive negotiating window with ESPN,” Smith cited interest from CBS and NBC as likely bidders to drive up the conference’s value.

Adjacent reporting from John Ourand, also of SBJ, noted that the Big Ten is expected to reach its deals, likely with multiple television partners, “before the fall semester.”

And in a market that has already seen the ACC and SEC solidify their media rights deals – the ACC set through 2036 and the SEC locked in with ESPN/ABC until 2034 – the Big Ten’s positioning will create a crush of interest against that of the Pac-12 and Big 12. Those conferences are set with their rights deals until 2024 and 2025, respectively.

Current Penn State athletics financial picture

Though certainly attention-grabbing, what would a deal valued at more than $1 billion annually mean for Big Ten member institutions? More specifically, what would it mean for Penn State and its athletics department?

Late last month, the department’s annual financial report to the NCAA was made publicly available for the fiscal year ending June 30, 2021. 

Within the report, Penn State showed predictable drops in revenue as a result of the COVID-19 pandemic. While offset in many instances by reduced operating expenses on a per-program basis, the blunt numbers were that of $106m in total revenues against $165m the year prior. 

A drop in revenues by $59m, Penn State’s roughly $7m surplus in fiscal year 2019-20 became a nearly $24m deficit in 2020-21.

While it’s unlikely that next year’s report for fiscal year 2021-22 will completely return to the full ~$165m high water mark in revenues set in each of the three years prior to the pandemic, it will certainly see a strong rebound.

Prior Big Ten media rights deal impacts

Specific to the impact of media rights, however, there are some instructive histories worth considering.

The first is what transpired between 2015-16 and 2016-17, when the Big Ten renegotiated part of its media rights deal to include FOX. 

At the time, Penn State was reporting roughly $23m in media rights annually under the prior deal. The dynamic shifted dramatically upon the introduction of the current deal, valued at roughly $440m annually for the conference, between FY 2017 and FY 2018.

FY 2015	$26.1m
FY 2016	$22.3m
FY 2017	$23.3m
FY 2018	$38.4m
FY 2019	$40.1m
FY 2020	$42.1m
FY 2021	$31.7m

While the pandemic-year numbers represent a drop-off in those media rights revenues, the numbers for FY2022 should return to the roughly $40m previously established.

What would next deal mean for Penn State?

Knocking out some back-of-the-napkin math, including the roughly $9m on top of what would be a $31m split among conference schools, the next deal would change the financial landscape for Penn State’s athletic department and the 13 other member institutions in the Big Ten.

How much?

Split evenly, a $1.1 billion annual media rights deal for the Big Ten would equate to roughly $78.5m in automatic revenue for each athletic department. Keeping with the rough numbers of excess revenues within the media rights framework that currently exists, another $9m added to the pot would represent $87.5m annually. 

Against the high point of media rights revenues in FY 2020 of $42.1m, the number would more than double with its additional $45.4m coming in moving forward.

Granted, an untold cornucopia of elements in Penn State’s yearly budget could change between now and the Big Ten’s hypothetical new deal. 

But inserting a potential media rights revenue of $87.5m within the framework of Penn State’s last pre-pandemic report, the department would be operating at more than $210m in revenues annually. While operating expenses are likely to continue to climb, having already risen to a previous high of $160m in 2018-19, the path forward for Penn State athletics would shift markedly.