Penn State

Penn State’s most profitable sport after football? It’s not what you think

Imagine a big sports week at Penn State when the men’s ice hockey, wrestling and basketball teams are all competing.

You can see the 5,782 seats in Pegula Ice Arena sold out for a hockey matchup. You can also picture the 6,502 seats at Rec Hall filled for the wrestling match.

Basketball, however, is a different story. Even during a big-time game, out of the 15,261 seats in the Bryce Jordan Center, only about half are filled.

During the 2015 season — the last available data — an average of 8,044 fans attended each game.

Guess which teams brings in the most revenue? If you guessed hockey or wrestling, you are incorrect.

The men’s basketball team in the 2015-16 fiscal year made $11.2 million, trailing only football, which generates by far the most revenue of all Penn State sports.

A review of Penn State’s Equity in Athletics Disclosure Act reports going back to 2003 shows that men’s basketball has always had the second-highest revenue and profit in Penn State Athletics.

Popularity or a winning record doesn’t always drive revenue, the reports show.

For example, Penn State’s men’s basketball team, which had a record of 16-16 in the 2015-16 season, brought in more than the University of Oregon’s team, which had a record of 31-7, won the Pac-12 championship and advanced to the Elite Eight in the NCAA tournament. It brought in $8.3 million.

Penn State basketball’s last winning season was 18-16 in 2014-15. Head coach Pat Chambers joined Penn State in 2011 and has a record of 87-109.

So how did the basketball team make $11.2 million in revenue and $5.5 million in profit?

Ticket sales are not the big source. In 2015-16, hockey led men’s winter sports in ticket sales with $1.68 million. Basketball trailed with $822,000, and wrestling had $637,000.

The basketball team’s largest portion of revenue came from media rights — the agreement made between the Big Ten and media outlets to broadcast its games across all media platforms — and from NCAA distributions.

Media rights brought in about $5.8 million, and the NCAA delivered about $3.2 million. Add in ticket sales. Then the remaining $1.4 million (approximate) came from sources that include contributions and athletics-restricted endowments.

When it comes to media rights, football and basketball are the only two sports with such deals.

And basketball’s media rights income could increase substantially. Last June, a new television deal was created between the Big Ten and CBS, ESPN and FOX. Worth about $2.64 billion, it will give the Big Ten an average of $440 million annually over the next six years, according to a report in the Sports Business Journal.

In addition, each year the NCAA distributes a percentage of its revenues to each conference. Most comes from its own media rights deal — largely the 14-year, $10.8 billion agreement with CBS Sports and Turner Broadcasting for the Division I Men’s Basketball Championship, popularly known as March Madness. The rest is primarily from the tournament’s ticket and merchandise sales.

Under a complicated formula, Penn State also gets about $110,000 each time a Big Ten team advances in March Madness, according to Penn State instructor Michael Poorman, who teaches a class titled, “Introduction to the Sports Industry.” That is part of the NCAA’s distributions.

Wayne DeSarbo said he believes that money is why so much focus is put on basketball nationally, rather than hockey or wrestling. DeSarbo is executive director of the Center for Sports Business & Research at Penn State’s Smeal College of Business.

“Basketball is extremely popular in the marketplace, since it is ranked second in American sports when it comes to highest profit and revenue generation,” he said, “so many television contracts are made in order to air the most games as possible.”

DeSarbo also noted that there is no national media rights deal for hockey and wrestling, and most coverage for these sports comes from conference networks or local stations.

Even with expenses of just under $5.7 million, the men’s basketball team netted a profit of $5.5 million in 2015-16.

By comparison, the rapid success of men’s ice hockey in five Division I seasons helped it generate $4.41 million in revenue in that fiscal year. But after deducting $3.54 million in expenses, its profit was about $870,000.

The same goes for wrestling, which in the past seven years has been NCAA champion six times. It has not made a profit in any year of the Equity in Athletics reports since 2003. With 2015-16 revenues of about $1.4 million and expenses exceeding $2.1 million, the team lost roughly $737,000.

Referring to State College, John Powell, associate director of the sports research center, said, “Penn State basketball does not have a good location and/or a strong tradition in basketball, which hurts them in building a strong team.”

“I can’t think of another school where hockey and wrestling are as popular as they are here, ” Powell added. “Most Power Five schools have basketball programs that are very popular and have decent hockey programs or no hockey program at all, but at Penn State the roles are reversed.”

Greg Merchlinsky and Caralyn Reese are Penn State journalism students.

Revenue from football

It’s no secret that football pays the bills for Penn State Athletics.

In the 2003-04 fiscal year, the football team brought in nearly $40 million and made a profit of about $26 million.

By 2015-16, as costs continued to rise, the team’s revenue rose to around $75 million, yielding a profit of $39 million. That’s in stark contrast to Penn State’s second-largest revenue-producing sport, men’s basketball, which brought in $11.1 million and a profit of $5.5 million that same fiscal year.

The football program’s revenue puts it third in the Big Ten, after Ohio State ($86.6 million) and Michigan ($97.1 million) in 2015-16, according to PennLive.

The Equity in Athletics reports from 2003 to 2015 also show Penn State Athletics’ revenues and expenses tracking closely over time.

In 2003, revenue totaled $57 million and spending $55 million, while in 2015, the department brought in $132 million and spent $122 million. (Adding in debt service brought total expenses to $129 million, the department told the NCAA in a separate report.)

A March news release about its latest report to the NCAA noted that “Penn State is one of only seven NCAA Division I athletic departments that reports to be self-supporting, according to USA Today’s 2016 College Athletics Finance Report.”

Mark Fischer and Aubree Rader