This is my question as well. If Penn State invested to the mid-level of the B1G's MBB program expenses, would the investment yield net positive revenue results? My guess is that ICA has crunched these numbers and that the answer is no. If Penn State was a solid mid-conference team that made the Tourney an average of two out of four years, would BJC ticket revenue; parking, concessions and licensing revenue; sponsorships; a bigger radio network; etc., would these monies cover the increased investment and then some?
Penn State ran a well-financed ICA program throughout the Paterno era without a standout basketball program. I think it's the case that Penn State wants a winning MBB program, but realizes it doesn't need a winning MBB program. I also suspect that Penn State has long believed that it can't be a big winner in MBB without getting its hands dirty.
I’ve crunched some back of the napkin numbers in other posts. Here’s the issue, as I see it. In the long term, yes, with a winner you can make as much or more as we make now in profit, by spending more and getting a winning program. The problem is that additional revenue doesn’t show up in the coffers overnight. You have to spend money first, and hope the team consistently finishes in the upper half if the conference, before significantly more money comes in. How long will that take? We’re talking selling out the BJC, raising ticket prices significantly, increased donor support, etc. 5-10 years minimum, I’d say. In the meantime, where’s the money coming from?
Without getting into more specifics, I estimated that if we sold out the BJC at current ticket prices for every game, including non-cons, that’s in the $1.5-$2M range in additional revenue. How realistic is that to happen, and how quickly? You won’t sell it out without a better product, but you need the revenue to develop the product. It’s a chicken or egg scenario. In terms of raising prices, in the course of doing so, we will probably lose some current ticket holders who now buy only because they’re relatively inexpensive. So we need to develop new fans to fill empty seats, and replace some existing fans who will get priced out. As an example, we have tickets for sale behind the baseline and off to the side, about midway up, for the game against Sparty. Big opponent. Cost is $24 last I looked. Similar seat in Crisler Arena for Michigan’s game against lowly us... $119 as I recall. But we have to first build the product, then build the fan base, then increase prices. In the meantime, where’s the millions going to come from until the revenue streams catch up?
I hope Sandy can figure out a way to do it, just as much as I hope Chambers can turn it around and do the slow build we seem to be able to afford (only faster). But I have to temper my optimism with reality.
