College Football: Cash Cow and Albatross
The words “big time” and” college sports” are so closely associated that it may be surprising to learn that many schools are facing financial pressures. In a six part series, College Football’s Financial Woes, Bloomberg reporter Eben Novy-Williams describes how “rising costs and falling revenue, including low game attendance and costly stadiums, are impacting programs across the nation.”
Part One focuses on gradual drops in attendance at Division 1 schools, roughly 1 percent a year over the last seven years. Still, TV deals can mean even larger declines aren't such a bad thing. The University of Kansas offset an almost 50 percent decline in game-day attendance since 2009 with TV revenue from the Big 12 Conference, "which pays schools about $23 million per year.”
Part Two focuses on the large debts many athletics department have incurred, often to upgrade their football facilities. Novy-Williams writes:
A high-priced coach might earn $4 million to $5 million a year. Meanwhile, according to public records ... at least 13 schools in the country have long-term debt obligations of more than $150 million as of 2014—money usually borrowed to build ever-nicer facilities for the football team.
Part Three looks more closely at the growing importance of television revenues:
The Big Ten Conference, for example, is about to start a new, six-year TV contract worth $440 million a year, nearly three times what the group was able to negotiate in 2006 The post-season pot got bigger for everyone in 2014, when ESPN agreed to pay $7.3 billion over 12 years for the rights to the newly established College Football Playoff.
Part Four notes that while some big programs are enjoying broadcast bonanzas, many smaller schools find their dreams of gridiron glory have become albatrosses. Cases in point: the University of Massachusetts Amherst, the University of Alabama at Birmingham and the University of Idaho.
Part Five asks the question: Given the financial strains, why have 57 colleges and universities – including East Tennessee State University - started NCAA football programs during the last eight years? Look at the intangibles, Novy-Williams writes:
Football is thought to drive alumni donations and raise a school’s profile beyond its immediate regional footprint, creating a better pool of prospective students. University officials also say it’s a point of community pride and juices local businesses through such events as pep rallies and homecoming.
Part Six highlights the growing disparity between college football’s one-percenters – gridiron royalty such as Ohio State and Alabama – and even its well-heeled opponents. In addition to the TV money shared with conference rivals, about a dozen schools also generate substantial revenue through side deals:
At Ohio State, for example, the athletic department is in the middle of a 10-year, $128 million agreement with IMG College, a media rights middleman. A 15-year, $252 million apparel deal with Nike Inc. begins in 2018. Last year, the Buckeyes earned roughly $15 million in annual licensing royalties.
Read the full series here.