| Blog 1.1 (05-02-2025): Money in College Sports | ||
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Every time we think we've got a handle on the new college sports revenue paradigm, something happens to loosen our hold and pry our mouths agape. The old 'amateurism' model worked fairly well for over 100 years but once lawyers followed the money and along with benevolently-minded rights groups plead for the poor students whose scholarship to a free education wasn't enough, the dollar dam broke.
With the seemingly never-decreasing popularity of sports, especially college football and basketball, we always knew there was a lot of money involved to insulate the fun swarming in stadiums. Let's follow it for a short ride (make sure to hold your nose.) I do not aim to bark for UConn in its bleating desire to gain acceptance (and respect to many) into the dark wood-paneled den of bourbon, shoulder pats and flapping wallets that is any Power (pick a number) conference boardroom. Not here, anyway. Not yet. What I will show are cold-blooded numbers and a bit of insight into why UConn has been left at the alter so often and why college sports will never be the same (as in pre-1990s.) At its core, all fans really want to do, as Cyndi Lauper's lyric goes, is have fun. Fun, has never been the issue because it has always been there. Fans flock to be entertained at football stadiums and basketball arenas and have been doing so for generations. While we've gone from "Rah rah rah, sis boom bah!" to "U-C-O-N-N, UConn, UConn, UConn!", it's the same ardor. Fans used to wear 3-piece suits, hats (not caps) and dresses to games as recently as the 1960s. Now, the selection of team gear is dizzying and creative. Anything goes now, from painted bare chests (men's anyway from my experience), shaved heads serving as personal ad space, torso and (human) head gear of all kinds sporting your team or player of rooting interest. We see glittering school-colored wigs, tattooed facial cheeks and mascot-themed costuming. Fun is not what it used to be in detail but in the whole, the emotion has not changed. We do what we can to ensure we'll have fun, win or lose. We'll always say we had fun if our team won. If we lose, however, at least we've dressed up, maybe drank a bit and screamed for our team, releasing the dopamine to feel spent and happy regardless of the outcome. Fans want to root their team on during the main course - the game - and enjoy the associated appetizers and sides like tailgating, watch parties and marching bands. Some just watch alone, writhing within their own cocoon of worry and clenched teeth. So simple and that's all anyone ever wanted for decades. Outside of in-arena, million-pixel video boards the size of an end zone that serve up replays, stats, scores and wait for it, promotions, to a captive audience, I have not noticed any consequential difference in the way fans enjoy the game in person in my lifetime (maybe courtside seats but those are reserved for the fannies of the rich.) Beyond being there and screaming so loud you are positive the refs surely can hear you to then apologize for their latest gaffe, there are the inventions for the way fans consume the games. Newspapers ruled for decades. Fans could only find game results the day after. They were fine with that because it was their only source, outside of someone attending the game and telephoning the result to others. Radio was the first innovation, transcendentally transmitting games into homes of awestruck citizens gathered as a family around the hip-high audio-only console, sating the fever of those fans that could not attend a game in person. Television appeared a generation later, adding pictorial broadcasts that America's flicker-loving brains grew to love. A few more decades passed and cable appeared, adding even more coverage over digital lines and satellite waves into houses and sports bars showing dozens of contests at the same time. Ah, digital. That was a difference-maker and the evolution point for the next metamorphosis, smartphones, those pocket fixation machines that many use to squintilly watch games recorded or even live on 5-6 inch screens with a revolutionary method of delivery, streaming. Combining the delivery mechanisms' convenience with the means by which they continue to provide content, advertising revenue. Subscription and membership fees, it's easy to see where we've been and are going on our dollar journey. While wealth has talked since sharpened stones were traded for deerskin blankets, the sheer quantity of heads of lettuce handled by multiple media forums' farmers' fingers has built silos of staggering size. We can't really start at the top because there are actually two mountains here - the NCAA and the media giants who are bathing together though in opposite ends of a filthy hot tub of cash. The NCAA makes the rules and a lot of the money but a lot less of both than they used to. They profit from selling the media rights to college basketball including March Madness which alone brings in 69% of the hoops revenue, to the tune of close to 1.5 billion. About 30% of those monies are distributed to conferences using a formula the NCAA developed based upon conference performance in the season-ending tournament. The conferences then can divide their take according to their own rules. The NCAA no longer owns college football media rights. The CFP (College Football Playoff) series alone is worth 1.3 billion per year from ESPN to the ten FBS conferences. For the regular season, conferences contract separately with the media outlets. Dollars are then divvied to schools by conference rules. That 3.5 billion dollar golden goose waddled its way up to the mountain tops on the backs of carrier fees, premium subscriptions and advertising revenue deposited by companies paying for commercial air time on the networks and ultimately the consumers who buy their products and services. Yes, we are surely all filling the deep sea of cash. That ocean finds its soft spots and leaks into our borders in the form of conference waterways flowing with liquid assets. Some are as wide as the Mississippi like the Big Tender River that has a billion dollars a year to share and others smaller but no less dependable tributaries like the 28 million dollar Chattahoochee Changepurse Creek of the Sun Belt. Those green streams find their way to feed the lakes of conference member schools and here's where the sailing gets a bit rough. Schools don't always get an even split. New conference members, for a period of time, receive lesser shares. In the Big 12 for the 2023-24 academic year, the original 10 schools received 44 million apiece, while new members (Cincinnati, BYU, Houston, UCF) received 18 million. Now, UConn, with its weak football program, is a moot 'no' for most major conferences looking to expand despite the incredible success of its men's and women's basketball programs. However, if UConn were ever to join the Big 12 for football, they would likely have a several year waiting period during which they would receive not only a scaled-down split of conference media revenues but possibly none at all or a severely reduced amount. At some future milepost, they might get an even split if they were to meet specified goals, such as wins, stadium size, attendance numbers and fund-raising. At the top, the most-watched conference, the Power 5 Big Ten, shared 880 million with member schools, depositing 60 million to 12 of their 14 schools in 2022-23. At the bottom of the best, the Group of 5 Sunbelt shared 24.5 of its 28 million with its 14 football-playing members for a 'mere' 1.75 million per school. If a school does not like their deal with a conference they can and will leave to pursue a different conference home. The biggest schools can afford to do this because they are desired assets but schools such as UConn, a basketball school still looking to solidify a football identity they once built and subsequently left to wither, have little say in their quest for FBS Power conference identity. Identity, brand and appearances are important but suffice it to say, even 6 national championships in men's and another 12 in women's basketball that does little to move the football-weighted needle. The dominos can fall in a hurry. Example: In the desire for greater media revenue and a more lucrative financial landscape in other conferences, schools fled the PAC-12 conference. USC, UCLA, Oregon and Washington joined the Big Ten, while Arizona, Arizona State, Colorado, and Utah went to the Big 12. Stanford and UC Berkeley also left and went cross-country to the Atlantic Coast Conference (ACC). This left the PAC-12 with only 2 member schools, the small-media markets of Oregon State and Washington State. The conference is now looking for new members but they will surely come from smaller media market conferences and it might eventually lose its status as a Power conference. Geography used to matter in conference make-up but modern travel helps make it less relevant and modern money helps make it totally irrelevant. The Atlantic Coast Conference, for decades spanning the actual Atlantic Coast from Maryland to South Carolina now includes Pacific coast schools Stanford and UCSB as well as SMU from Texas. The Big 10, which used to be a midwestern outfit of 10 schools now sports 17 schools including UCLA and USC from the far west and Rutgers from New Jersey. The deep southwest/western mid-America Big 12 now has expanded to Florida (UCF), Arizona (UA, ASU) and out to Utah (UU). Travel costs are partly absorbed by the media rights but despite that and any subsidies universities provide to athletic departments, few schools turn a profit in athletics. According to Forbes, in 2021-22, 2,023 U.S. colleges and universities sponsored athletics programs serving 796,593 athletes. Only 28 of these intercollegiate athletic programs generated more revenues than expenses. Sports has always been a part of the collegiate experience, not meant to generate profits but to add to the collegial experiences for young men and women who either played or rooted for the team. In a large way, sports are a key source of branding opportunities for schools and players alike. This leads us to the estuaries that branch out from the lakes of schools, the current of currency we call the players. An ACC athlete needs to take a 5 hour flight from North Carolina to Palo Alto to play a tennis match and catch a red-eye back to attend class the next day? Fair? Hardship? Expected? Joke? Irrelevant, if you ask the realignment wonks whose care for student-athletes seems to rest on the 'athlete' alone. School officials will point to a modern support systems where they provide tutors that travel with the team. Student-athletes' time is highly planned to include a balance of schoolwork but most of the time is related to the game. Travel from and to the airport and to and from a hotel, team meals, practices, meetings, study time, tutor time, even free time to relax. Students can also participate in actual online classes using Zoom. None of this is easier than falling out of your bunk, throwing on a dirty sweatshirt, stumbling down the stairs to grab a coffee and head to class but it's not supposed to be easier and the high profile athletes do get perks to make up for the difficulties associated with maintaining grades while dedicating themselves to athletic pursuits.. What do the kids get out of the athletic experience? Some things are objective and specific while others are more existential. For the very best in their sport, a professional future looms. The players work on their craft, tune their bodies, exhibit exquisite performances and hope to be selected in a draft or given a legitimate chance to play for pro money and potential fame. However, going pro represents less than 2% of all college student-athletes which also represents the distribution pattern of NIL dollars. While only the top of the top will get rich while in college, what do the 98% do after school? They've hopefully graduated with a degree that represents their major and can start working in that field or more importantly something in which they have a keen interest, just like any other graduate. So, what about the time they spent in school, working their butts off, budgeting time for academics and social activities with the demands of their sport? Many but not all are on at least a partial scholarship, the full rides reserved for the limousine sports of football and basketball. Division II colleges do not even provide scholarships for sports. Factor in that being athletically gifted enough to play at a D1 college crosses sociological boundaries. While to so-called 'country club' sports of tennis and golf might contain athletes from more wealthy backgrounds, it is also true that playground sports like basketball and football reach more kids of lower income families. Do those kids need the extra money beyond their scholarship? Are they entitled to it? Is it the university's responsibility to pay back the kids that perform daily on sporting stages? If not pay-back, can't it be said that colleges and the NCAA were at least standing on kids' backs, biting at the money being served on forks of the media's plates set at the chairs reserved for all but the kids? A court said yes, on the heels of another ruling that led to the creation of NIL collectives for athlete compensation. Division 1 universities now receive 21.5 MM each from the NCAA to distribute as they please directly to athletes. NIL on the other hand, in all its freedom from regulation, provides a limitless source of funding to athletes to profit from their name, image or likeness (NIL). The larger school collectives have generally funded 12-20 MM to spread amongst its athletes. Beyond the collectives, athletes can also now profit on their own from social network performances. Livvy Dunne, an LSU gymnast, made 4.1 MM last year, largely from her Tik Tok workout and dancing videos. Kai Trump, the 17 year old granddaughter of the president, takes to Tik Tok to show her golfing on her granddad's courses in front of 2.9 million followers, 1.5 million on Insta, 900k she influences on X and 1 million more viewing her YouTube channel. As her golfing career progresses into college and formal collectives, her NIL numbers will surely increase as will the proceeds she nets from the social platforms themselves. She is a bit of a unicorn, launching her ride on the coattails of gramps and his over-100 million followers. Even should she not become LPGA tour-worthy, she might continue to benefit from her name and her personality. Fame is truly magnetic. Athletes are now taking advantage of the rules and lack thereof to build internet presences and find a school/team to monetize maximally. They are also building networks and using them and the Portal database to identify potential landing spots for transferring. Without the old 'sit out a year after transfer' rule, player loyalty is passé. Players identify schools that either will pay them the most from a collective, ensure a starting position or are a player or two away from competing for a championship, leading to higher recognition and all that follows. Is a kid the type to compete or just cash in? All of this can drive a coach to quit and many have. Several high profile football and basketball coaches saw the landscape present and future and have expressed frustration with the new system. Jay Wright pulled a reverse-Shane (anyone see the movie?) and left town after leading Villanova to two national championships and two more final fours. He said had lost the 'edge' required to compete. Really, that had to mean the additional stress, time and dollars associated with recruiting players in the modern age. Tony Bennett (Virginia basketball): Bennett, in his retirement announcement, described himself as a "square peg in a round hole" in the current college basketball environment, particularly due to NIL and the transfer portal. Jim Larrañaga (Miami basketball): Larrañaga stated that he was "exhausted" by the challenges of contending with the transfer portal and NIL, according to Fox News. He expressed that he didn't feel he could successfully navigate the new world of college sports due to the complexities of NIL. Nick Saban (Alabama football): Saban had his critics but he was enormously successful with seven national championships at LSU and Alabama. Citing burnout while not directly mentioning NIL as the sole reason for his retirement, he did express concerns about the potential impact of NIL and the transfer portal on the program's values and the overall fairness of college athletics. These are extremely driven men, elite in their profession and they had their fair share of spoils but you have to feel at least somewhat. Careers spent giving all they have for their kids in terms of development, wisdom and the bonding of a team-family atmosphere. Boom! The portal and NIL appear and abruptly, it's all about money. While it's true that the larger rosters in football make for many more transfers (and one would think, headaches) than in basketball, it's also true that a single transfer can have a larger impact to a basketball team's fortunes. This is also why you see more basketball coaches quitting the game. Coaches driven by winning will have an easier time making the transition to the new paradigm than those squarely in the kids' corners, developing young men and women over all else. Back to the players, they now benefit by getting money to play their game while in college and some even in high school. School athletic departments, the best run of them, will adjust and if they are smart, focus on known talents rather than riskier high school freshmen for at least basketball and to a lesser extent, football. Basketball has fewer players and new players need less time to make an impact than in football, where a larger squad is required to learn complicated schemes where 11 players have to work as a unit, not just 5 at a time. Down beyond the 5-stars comes a lot more risk. Will top-25 programs continue to take in 3-4 star kids that need to develop but may not find the minutes to profit from it? Will kids be willing to sacrifice their freshman year and its chancey dollar potential for instead perhaps starting at a mid-major and the additional playing time to increase their profile for a transfer later on? That seems the smart play. While college basketball's fortunes are dependent on NCAA-led media rights negotiations, conferences have the negotiating power in football. They are the big winners as they can also self-determine how much of the pie to divvy out to member schools. Media giants bring in the bucks but are dependent on eyeballs and the purchasing power the wallets in the pockets of the people with those eyes bring with them. Individually, consumers don't have much of a say but as a group, they have the existential control over how much everyone else gets. Come, watch, cheer, click, buy. Did we mention bet? It's a separate topic and not directly related to the college revenue paradigm (yet) but as far as contributing to the money involved in college sports it is even bigger than the media contracts. In a growing number of states, hundreds of millions is now bet legally on college football and basketball with billions more illegally (yes, that March Madness bracket you played at work was illegal!) It is mentioned here because it qualifies under some people's definition of fun but that's because of the gambling thrill - that surge of emotion anticipating the possible reward - rather than the joy of the game experience itself. Yes, the NCAA and local conference networks do profit at least indirectly by raking in rights fees from media partners who air ads from the sportsbooks like DraftKings and FanDuel. Is it telling that their supposed growing concern for student-athletes in the way of lightening gambling-related penalties come at a time when they may be looking to head off claims of hypocrisy as they themselves profit from the institution? It is a load to process. Now, about those iPhones... |
Past Blog entries: 05-02-2025 Blog 1.1 - Money in College Sports |