March 26, 2017

College Football Business

During August-September of 2012, Springer will publish College Sports Inc.: How Commercialism Influences Intercollegiate Athletics. Produced and distributed as a ‘SpringerBrief,’ it contains seven chapters and includes a Foreword and Acknowledgements, and an Appendix, Bibliography, and Index. Besides the Introduction in Chapter 1 and Conclusion in Chapter 7, the other chapters have contents that focus on Intercollegiate Athletics, Sports Finance, Department of Athletics, Student Athletes Environment, and Sports Events and Facilities. In addition, tables with business, economic, and sports-specific data reveal periods and types of athletic programs in schools of higher education.[1]

Regarding football, College Sports Inc. shows how financial support from local, regional, and national businesses and such groups as corporate foundations, cultural and social enterprises, and alumni make a difference in the quality and quantity of schools’ football programs as a member of Division I, II or III of the National Collegiate Athletic Association (NCAA). Furthermore, it examines cost and revenue streams of these programs and denotes why trends in commercialization will continue to change and impact the operation, popularity, and future of college/university sports. The following is an overview of topics primarily in football as discussed in Chapters 2–6.

 

Intercollegiate Athletics

Although difficult, expensive, and risky to operate as a sport, football is usually the most lucrative, popular, and publicized athletic program on campuses of U.S. colleges and universities who sponsor a team that participates in a division of the NCAA. Across three NCAA divisions, the number of schools with football teams increased by approximately 31 percent, or from 497 in the 1981–82 college sports season to 650 in 2011–12. Between these periods, the change in numbers of sponsors represents a decline from 4.2 to 3.5 percent as a proportion of total sports teams. This occurred, in part, because of Title IX legislation and thus the growth of women—and perhaps other men—sports.

Although criticized by several well-known professors, prominent university presidents, and some sports reporters, commercialism has become an important trend since the early 1980s among athletic conferences and their schools especially in the Football Bowl Subdivision (FBS or former Division I-A) and Football Championship Subdivision (FCS or former Division I-AA). In response to the proposals of critics, the NCAA wrote, adopted, and implemented various reforms that have marginally improved ethics of athletic directors and operations of their programs but not necessarily the conduct of football coaches and academic performances of student athletes. Based on my research of intercollegiate athletics, school officials need to truly enforce NCAA rules and aggressively penalize anyone who violates them but also accept and control the expansion of commercialism in football.

 

Sports Finance               

During Fiscal Year (FY) 2010, FBS teams had almost four times the median amount of generated revenue than those in men’s basketball. Meanwhile in net revenue (or profit), football’s median amount exceeded basketball’s by more than 300 percent while amounts of other NCAA team sports were actually a negative net revenue or a net loss. For schools in conferences of the FCS and in Division II, however, their football programs ranked last with the most negative net revenue of all team sports. In other words, a relatively small number of universities with big-time football programs earned enough income from gate receipts and television broadcasts of their games, and in distributions from their conferences, to offset total expenses.

Other interesting aspects of sports finance are schools’ and/or conferences’ media and television rights deals, and their revenue from football’s bowl games. Recent variations in these amounts ranged, respectively, from $74.5 million for Louisiana State to $112.5 million for Nebraska in media rights; from $37 million for Conference USA (multisport) to $4 billion for the Big Ten (basketball/football) in television rights, and in bowl game payouts, from a total of $3.3 million for the FCS Conferences, Notre Dame, Army, and Navy combined to $115.2 million for the Big Six Conferences. These distributions, In part, reflect how games and tournaments in regular seasons and postseasons have contributed to college and university sports programs and groups of them from a financial perspective.

 

Department of Athletics

In most American colleges and universities, the Department of Athletics (DOAs) consists of an Athletic Director (AD) who prepares budgets and supervises other administrators, and sports coaches and their staffs. Since the late 1990s, former business executives and managers with financial experience have gradually replaced men and women with college degrees in physical education to become ADs at major schools.

During 2010 to 2011, for example, the three most popular positions in DOAs among men were assistant and associate directors of athletics, and then sports information directors. Among women, the positions were administrative assistants, academic advisors/counselors, and senor women administrators. Of total departmental personnel in schools that period, men ADs were five percent of the group and women one percent. Consequently, men tended to rank higher than did women in the hierarchy of DOAs.  

Other data provided specific financial information about DOAs of schools and/or athletic conferences. For the 2010–11 Academic Year, the University of Texas’ DOA ranked first with totals of $150 million in revenue and $125 in expenses while the University of Alabama and Penn State each earned $31 million in net income. In total compensation the median salaries and benefits of football coaches in the FBS was highest at $3.5 million followed by $1.4 million for coaches of men’s basketball programs. Moreover, from FY 2010 to 2012, the average budgets of DOAs were largest at Big Ten schools and then at those in the Southeastern Conference and Big 12. In short, ADs have become more business oriented as leaders while DOAs are increasingly valuable to colleges and universities based on the growth of their assets, financial investments, and resources.

 

Student Athletes Environment

According to NCAA reports for selected sports seasons, the number of Student Athletes (SAs) playing football on schools’ teams increased by 5,000–7,000 in each division between 1990 and 2010. In fact, there were more football players than the total number of athletes who competed in baseball, basketball, and several minor sports. Because football generates thousands or millions in revenue for schools, the sport has the most SAs in it. Besides that data, the Appendix in College Sports Inc. contains tables that list the number of SAs by race and gender in football and other team sports in NCAA Divisions I, II and III.

In different ways, commercialism influences SAs who participate on football teams of schools particularly those in the FBS and FCS conferences. Indeed, these players receive athletic scholarships, financial aid, and perhaps stipends and other benefits from their schools. As discussed in Chapter 5 of College Sports Inc., some SAs struggle academically and unfortunately never graduate with an undergraduate degree. As a result, a number of college and university officials including faculty, ADs, and coaches suggest methods to compensate football players based on their contribution to the sport. Therefore, the chapter evaluates models that analyze the economic benefits and costs of this issue since pay-for-play involves commercialization of SAs.

 

Sports Events and Facilities

Besides baseball’s College World Series and basketball’s March Madness in postseasons, football’s series of bowl games each December to January are popular events among sports fans but also exist as commercial activities. That is, they determine a national champion and final rankings of teams, and generate revenue for the NCAA and its conferences and their schools, specific television networks, and any companies that market products and/or services during them.

Although 70 or 64 percent of Division I-A football teams played in bowl games to conclude the 2010–11 college football season, the NCAA and groups of conference commissioners and school presidents jointly agreed to establish a four-team playoff following the 2014 college football season. If commercially successful, the playoff will appeal to the media, receive support from sports fans and communities, and generate revenue for schools due to ticket sales and expenditures for merchandise and memorabilia at the games.

The primary facilities in football are private or public stadiums for college/university regular season games. These venues are increasingly costly to build, operate, and renovate. In Chapter 6 of College Sports Inc., there is information about the naming rights of stadiums and amounts of money needed to finance their construction and/or renovation. During future years, schools will further commercialize their facilities and thereby increase the revenue from them because of inflows from advertisements, contracts with vendors, gate receipts at home games, naming rights, and parking fees.

 


1. For the website with ISBN of College Sports Inc., see www.springer.com/economics/labor/book/978-1-4614-4968-3.

 

Frank P. Jozsa Jr. was a professor of economics and business administration at Pfeiffer University from 1991 to 2007. He is the author of ten books on professional team sports.