SEC schools are getting help from headquarters.
The league has distributed $ 23 million in supplemental revenue to each of its 14 members in an effort to help offset the financial impact of COVID-19, Commissioner Greg Sankey confirmed. Illustrated Sports in an interview this week. The league is funding the $ 322 million distribution by accessing future proceeds from its multi-million dollar media rights deal with ESPN that begins in 2024.
The SEC is the only conference that has announced an additional distribution to its schools, and the amount is significant. The additional one-time revenue is more than half of the traditional 2019-20 conference revenue distribution ($ 45.5 million per school). And still, for some programs, the amount is a small part of the revenue lost during the pandemic.
SEC schools lost an average of $ 45 million in revenue last academic year, and some programs lost as much as $ 70 million, Sankey says. In addition to lost revenue, largely from soccer ticket sales, every SEC school spent at least $ 2 million on COVID-19 testing.
As with traditional income distribution, SEC programs are free to use the additional income as they wish, but these funds are expected to be used to support athletes.
“We have internally focused on expectations around student-athlete support, including the full range of academic, medical, mental health and nutrition studies,” says Sankey.
The SEC is securing supplemental income by borrowing from your future media rights earnings in an arrangement facilitated through Truist Securities, an Atlanta-based investment and corporate bank, and Regions Capital Markets, a division of Regions Bank. In December, the league announced a 10-year, multi-million dollar contract with ESPN and ABC that begins with the 2024 soccer season.
The conference will begin repaying funds in installments from 2025 by allocating a portion of the media rights fees. That will last until “the late 2020s,” says Sankey.
The league expects its annual distribution to still increase from 2025 even after the reallocation, a surprising fact that only further illustrates the richness of the SEC’s new deal with ESPN. Industry insiders believe the deal is worth more than $ 300 million, which would add $ 20 million in additional revenue to each school’s annual distribution.
The idea of supplemental income has been a long time coming. Starting in April 2020, league executives began discussing better ways to support schools. One-off distribution is seen as a way to complement other efforts to mitigate loss of income, such as staff layoffs and leave, reduced hours, and limited travel.
“A lot has gone into trying to think strategically about what the pandemic meant,” says Sankey. How do you deal with the new cost of COVID testing? How do we think creatively about the provision of funds through our normal income distribution process and this complementary opportunity? “
Despite the sharp drop in revenue, some SEC schools haven’t slowed down in the spending department. For example, four league teams laid off their head coaches this past cycle, costing those programs what could be a total of $ 45 million, though much or all of it comes from private funds.
“There will always be critics,” says Sankey. “We are in the middle of 15 to 16 months of total interruption of complete economic activity. However, through all of this, our programs have worked well. Yes, people have made decisions about retaining and not retaining coaches. They have also supported student-athletes, and I think we can all be continually thanked for providing those educational and competitive opportunities, and we do so with pride. “
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.