COLLEGE PARK – When the University of Maryland announced its intention to move to the Big Ten Conference in November 2012, the athletic department had just cut seven sports because of an $83 million debt.
The university is banking on the move as a long-term solution to the department’s financial troubles. But Maryland will likely need to spend a lot more to recruit players and field teams once it officially leaves the Atlantic Coast Conference and heads to the more lucrative pastures of the Big Ten in July.
Maryland spends less than every other school in the Big Ten recruiting athletes and on spending per athlete, according to a Capital News Service analysis of financial data reported by schools to the U.S. Department of Education.
“I would definitely anticipate that Maryland’s spending is going to go up,” said Tony Weaver, a columnist for College Sports Business News who has also worked in several Division I college athletics administrations.
In 2012-13, Maryland spent $777,678 on recruiting, less than all 12 current Big Ten schools. The Big Ten average for recruiting spending was $1.44 million.
Maryland spent $113,706 per individual student-athlete in 2011-12, which was less than the 10 Big Ten schools that reported their figures. The average for the Big Ten was $130,835.
“The commission spent a lot of time on the issue [of spending per student-athlete],” said Brian Ullmann, the spokesperson for a commission established in 2011 by University of Maryland President Wallace Loh to study athletic department finances. “Many of our recommendations were aimed at increasing the support-per-student-athlete. It continues to be a primary objective as we move into the Big Ten.”
Maryland has long lagged behind competitor schools, even in the ACC. In 2012-13, they ranked last in the ACC in recruiting spending. In spending per student-athlete, they have traditionally spent well below the ACC average, but in 2011-12 they raised that number to just below the conference average.
Maryland might find itself better off in the Big Ten by getting out of the basement in recruiting spending, Weaver said.
“It gives you better resources to try to recruit better student athletes and allows you to travel further,” he said. “I’m not sure Maryland has to go all over the country to get the best players, but they may find that to be as competitive in the Big Ten – especially with football – the recruiting space has to be wider because you are going to a better conference.”
While Weaver expects Maryland to start spending more on things like recruiting and student-athlete spending once it’s in the Big Ten, he cautioned that this isn’t necessarily something the athletic department has to do to in order to win on the field.
“There are some people who believe that to be successful in college athletics you have to spend as much as your competitors. I don’t know if I necessarily agree with that,” he said. “Dollar for dollar, spending the most doesn’t always equal winning the most.”
Weaver said that since Maryland is spending a lot less right now than Big Ten schools, while it doesn’t necessarily have to spend on the level of say, Ohio State, to have success, it will likely still have to take a step up from what it’s been spending in the ACC.
“There are certain points where you have to increase your spending to be competitive,” he said. “It will be interesting to see how much they have to.”
More spending, of course, can mean more opportunities for revenue, which something Maryland is counting on when it gets to the Big Ten.
The ACC average for profit in 2012-13 was just under $2 million, but Maryland only brought in $346,540 more than it spent. The average profit for a Big Ten school was $5.5 million.
But Big Ten Schools spent a lot more on average — $90.5 million, $32.7 more than Maryland spent during 2012-2013 — to bring in that profit, compared with $67.9 million for the ACC.
Weaver said that he expects Maryland will need to spend more to travel to schools spread out all over the Midwest.
“In terms of playing conference opponents, that’s going to cost more,” he said. “Suddenly you have to take into account what its going to do to student-athletes – is it going to pull them out of classrooms longer? That means you’ll need more money for academic tutors and extra hours.”
The Big Ten Conference made over $315 million in 2012-13 for a payout of over $25 million to each member school, both numbers of which were the largest of any conference in the NCAA. Nineteen of that 25 million came from television revenue.
“The major reason that they’re moving is they believe television revenue will help with a lot of their debt,” Weaver said. “They’ll solve some [financial] problems and ideally would like to win.”
The television revenue will come via the Big Ten Network, the conferences’ internationally distributed TV network that is available in more than 90 million homes in the U.S. and Canada.
“Maryland’s finding that to be a really, really important revenue source in the next decade,” Weaver said of the school’s potential payout from television in the Big Ten. “They’re counting on a heavy emphasis on moving from traditional revenue streams like ticketing and fundraising to television revenue, which has really blown up recently.”
Ullmann said that while they are prohibited from commenting on potential future financial details right now, the school expects the athletic program “to be financially secure for decades” after this conference switch.
That would be a huge step up from the current state of Maryland’s athletic program, and from the state it was in not even two years ago.
Another thing that the 2011 commission found was that one of the reasons for the program’s financial troubles was that Byrd Stadium’s suites in Tyser Tower weren’t being bought at the level needed to balance their $50 million price tag.
If attendance goes up for Big Ten home games, Maryland could finally start seeing those suites being purchased the way it was originally envisioned.
“I think we expect big things for our football program, including sell-outs for Byrd Stadium,” said Ullmann. “That could certainly translate into higher demand for our suites and mezzanine seating, but we’ll have to wait and see.”
Getting a steady stream of revenue from things like suites and sold-out home games could prove to be very important in the long run, as Weaver cautioned that relying too much on television revenue to solve your problems has a degree of risk to it.
“The dangerous part is if you don’t win, a lot of the traditional revenue streams will go away,” he said. “That becomes very, very dangerous. It’s a bold move on their part.”