To the other thread where we talked about investment need to be competitive, We clearly need at least another $1.5M to attract a middle-of-the-conference coach. That’s a lot of (incrementally lousy) seats at the BJC to fill!!!
I don’t think it’s high risk, nor do I think it’s low reward.
You’re talking an increased investment of 1-1.5 mill per year that could next you an extra 4-8 million if you’re good (going off B1G estimates of bball revenue at peer schools). It’s not just about filling BJC seats, it’s about tournament revenue sharing, increased sponsorship opportunities and more simulcast networks in the northeast for PSU sports just to name a few. You’re risking essentially <20% of AD profits (not expenditures, just pure profit) to potentially pay off 3-8x your incremental investment increase.
It’s rare nowadays to have that type of alpha if you get the hire right.
Not necessarily true, as PSU can contribute in theory to a deeper run in the tournament if they are better, thereby giving the B1G a chance to earn extra TV “units” which makes out a sizable chunk of NCAA tournament payouts.
In theory, PSU can do this not necessarily at the expense of another B1G team. But again, that doesn’t take away from the over-arching point that we’re talking about a <20% investment in profit to potentially earn 3-8x your investment by just getting closer to our peers in the conference in terms of bball revenue.
Naming a few more here, if you’re good, you can require donation levels for good season tickets, in addition to ticket prices naturally inflating due to demand. More merchandise sales will never hurt too.
And before Lar goes too into the weeds, the tournament payout structure isn’t really the main reason you go for it. The increased ad sales, ticket sales and merchandising opportunities is where the big money is. The tournament revenue is more a potential projection if the B1G has another good team in it. It’s more a nice byproduct of actually having a good bball program.
The only way you can generate numbers that high is by doing it consistently. A good year every now and then isn’t going to suddenly result in multi-millions showing up on the bottom line. You have to grow all the bases. You don’t get to jack up advertising dollars and buyers or drastically increase your media rights as the result of an occasional good season. Sustained performance is the only way to do it - and that takes years to build.
The only way you can generate numbers that high is by doing it consistently. A good year every now and then isn’t going to suddenly result in multi-millions showing up on the bottom line.
I think that’s the whole point of spending more…to be consistently good. That’s why you pay 2 million for a coach. I’m not even being aggressive here and saying we can make as much as Wisconsin or Indiana, mind you…just migrate to the middle of the pack. Given the size of our alumni base and how quickly crowds flock when we’re good, I don’t think it’s unreasonable.
Let me put it another way…we’re making 10 million in revenue because of how our TV deal is structured. That’s with a largely empty BJC, free food for students, etc. etc. And by the way, our AD is NOT in deficit right now. I’m talking about reinvesting <20% of the PROFIT the AD is turning.