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Stanford Athletics expects financial boost from conference expansion

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After grappling with budget difficulties for the past two years, Stanford Athletics is set to receive a significant boost in revenue as the new Pac-12 Conference’s media deals are renegotiated in 2011.

With the full integration of Colorado and Utah to the existing Pac-10 set for the 2011-12 academic year, the Pac-12 has made aggressive moves to increase the conference’s attractiveness to media networks.

Along with the addition of the new schools, the Pac-12 will employ a new revenue-sharing plan, which will go into effect starting in the 2012-13 academic year. Though yet to be negotiated, the new media deals are expected to earn upward of $175 million, which will be distributed evenly among the schools in the conference.

Currently, the Pac-10 uses an appearance-based model to parcel out revenue: the schools that appear on television the most receive the biggest shares. This arrangement has historically favored the Southern California schools; USC and UCLA tend to appear on television more often than the other eight schools.

When asked if this new revenue will keep the Stanford athletic department financially stable, Brian Talbott, the chief financial officer of Stanford Athletics, was cautiously optimistic.

“It depends on what the actual amount of the deal ends up being, but the expectation is there to be a big boost to the budget for many years to come,” Talbott said.

He added that the predefined revenue split was a superior model for Stanford.

“This is absolutely better,” Talbott said. “It’s much easier to budget when you know the amount of money you’re getting at the beginning of the year.”

Still, it’s hard to quantify exactly how much Stanford Athletics will receive as the conference expands. In addition to bringing in two new schools, the Pac-12 Championship Game in football will bring in additional revenue for the conference.

Stanford’s athletics department has recently had to aggressively cut costs to stay profitable without cutting any of its 35 varsity sports, though the fencing team had to raise $250,000 by itself to keep its varsity status. The 2010-11 budget for athletics operations and financial aid currently stands at $85.7 million, representing 9 percent of the University’s budget for administrative and auxiliary units.

Across the Bay, UC-Berkeley has had to cut five of its varsity athletic teams, which will impact 163 student-athletes and 13 full-time coaches at Cal.

“It’s a course of last resort for any athletic department to do anything like this,” Talbott said. “Our new TV deal will hopefully help prevent something like this from happening and bring financial stability [to Stanford Athletics].”

Though Stanford may not have been in desperate need of money, the incoming revenue will be very helpful.

“We are largely dependent on our endowment and gifts, and both of those sources suffered as a result of the economic downturn,” Talbott said. “The additional money from the TV deal will certainly help us bounce back.”

Indeed, losses in the athletics endowment (which is separate from Stanford’s general endowment) were especially damaging for the athletics department. A 27 percent drop in fiscal year 2009 in the endowment caused a $5 million shortfall, since much of the department’s financial aid for athletes was covered by endowment payouts.

Stanford Athletics, a self-contained entity that runs independently on the revenues it generates, has not yet figured out whether it will be able to contribute any surplus back to the University’s general budget, according to Talbott.

“We’ll have to wait until we see what the actual TV deal is,” he said. “The current TV deal has provisions to allow us to renegotiate. We will have a good idea hopefully before the start of next football season.”