Kentucky Missing Out On Big Revenue

Kentucky's Rupp Arena (by Flickr user Tennessee Journalist)

Someone recently contacted me and said they read University of Kentucky’s football program makes more than its basketball program. They found this hard to believe given the success of the two programs comparatively.

It’s true. Kentucky football brings in almost twice as much in revenue as the basketball program. Not only that, Kentucky basketball comes in behind quite a few other basketball programs in terms of profit: Marquette, Northwestern, Pitt, and Louisville, just to name a few. In-state rival Louisville boasts the highest profits of any basketball program in the nation and the 21st most profitable sports program overall. You can see all football and basketball program profits ranked here.

Where is Kentucky falling short? The number one source of revenue for most programs is donor contributions. Many think it’s conference distributions, but even with Kentucky’s $18.3 million SEC distribution and Louisville’s $1.2 million Big East distribution, Louisville still comes out on top. In a previous post, I showed you how the majority of last year’s BCS top 25 relied more heavily on donor contributions than conference distributions. What’s the best way to get those contributions? Require them for access to season tickets and premium seating areas.

Now you might be thinking that Louisville’s success is owed to its new arena. However, Louisville was the largest profit-producer in college basketball the season before the new arena. In Freedom Hall, Louisville basketball’s previous home, it made $1.6 million on suite rentals and $10.8 million in ticket-related contributions required to be eligible to rent those suites. In the new arena those numbers have sky-rocketed to $5.7 million in suite rentals and $17.2 million in ticket-related contributions.

What about Kentucky? How much are they making for suite rentals and ticket-related contributions required to be eligible to rent suites? Nothing. Zero. Zilch. Nada.

Rupp Arena doesn’t have a single suite for University of Kentucky to sell.

Kentucky’s not the only SEC school missing out on the opportunity to increase basketball revenue because they have no suites. Georgia, Florida, Alabama, Mississippi State, and Ole Miss also lack suites in their basketball arenas and coliseums.

Tennessee only recently added suites to Thompson-Boling Arena. According to the athletic department website, “Phase I [of the 2008 renovations to Thompson-Boling] also included new luxury suites and loge seating, which are a primary funding source for much of the renovations.” Each suite goes for $35,000-50,000 annually. Over at South Carolina suites bring in $42,000 each.  

Reports this week indicated Kentucky’s Rupp Arena could be renovated if the convention center is relocated. If luxury boxes and other premium seating areas were added, it could mean tens of millions of dollars in additional revenue for Kentucky’s athletic department. It’s an opportunity they can’t afford to miss out on.

CORRECTION: Arkansas was inadvertently listed in the original piece as having no suites. Bud Walton Arena has 47 suites.

Posted on August 30, 2011, in Basketball, Big East, SEC. Bookmark the permalink. 13 Comments.

  1. Arkansas has suites going all the way around the basketball palace of mid-america! Do your homework!

  2. The link for the football and basketball program profits is not working. I am interested to see how UNC stacks up.

  3. I’d like to ask the following question, both rhetorically and practically, if that is possible: Where/When does all of this end? By that I mean, what is the end point of the donor contributions/expenditures? What is the point where donors don’t give any more? Not that they stop giving, just that they say “That’s it, no more. I’ll continue to give ‘x’ amount and pay ‘y’ amount for tickets/skyboxes, etc. but no more.” Or does that point ever come?

    Theoretically, it may never come since every year there is a new crop of incoming freshmen students (future alums) and every year there is a class of graduating seniors (new alums) who are being groomed to become future contributors to their university’s athletic department (and other university organizations/departments also). But, in reality, does it ever get to the point where everyone looks around and says “All of this money being spent on college athletics is insane and I’m just not going to spend any more of my money on it!”

    I have to hand it to universities all across the country, they have done a great job of appealing to the emotions of people, alums and non-alums alike, convincing them of the “need” to be “a part of the family”, to be a “member/booster/supporter/fan”, to be “in the club”. etc. by buying sky boxes, season tickets, team gear, tv packages, etc. and supporting/cheering for ‘dear old State U’ every weekend from early September to early April (football and men’s bb seasons).

    Will it ever get to the point where people ask themselves “What are we really spending our money on? Who/What is ‘the team’ or ‘the program’ or even ‘the university’? Who/What is it that we are supporting? Is it the players, most of whom most supporters do not even know? Is it the uniform worn by the players? Is it the school colors and mascot and logo? Is it a group of buildings and miles of sidewalks and acres of parking lots that collectively are called a ‘university’? Or what is it, exactly, that everyone is so crazy about supporting that they are willing to spend this kind of money to do so?

    I am asking all of this because the premise of this article is that even with the mind-boggling amounts of money being spent on collegiate athletics today by donors/boosters/fans, there is still a significant amount of money being ‘left on the table’ by universities due to ‘inadequate’ facilities and maybe other lost financial opportunities as well. Where/When does the spending by donors/boosters/fans end? Or does it?

    I’m curious to read what others think about this.

    • Owen,

      I would direct you to one of the best sports articles in the last decade written by Wright Thompson called “Seats of Gold” and the shift of sports from the masses to the elite. The author comments on the current age of “harvesting” the swell of wealth on the baby boomer generation while failing to sow the seeds for the generations that follow. I have seen this first hand over the past several decades and see a generation or two from now where the short sighted greed kills the golden goose. My grandfathers said their would be a time when boxing and horse racing would fall from the heights they once occupied, and tho now deceased, their vision has come to pass. Only baseball has weathered the storm as it held the space of father to son traditions. I was not a fan of baseball, but going to a game with my dad is why I have seats today. When I look in the corporate boxes of today, where are the kids? Where is the next generation?

      Several weeks ago on the front page of the USA Today* – not the sports section mind you – was an article about colleges and universities selling their seats through telemarketers. Gone are the days of knowing the folks within the school, to someone working for minimum wage and commissions. If I donate money to the alma mater it goes to the school, but if now I write my check to IMG so they can give sixty cents on the dollar to the school, then who is really in control? I find the comment by Mark Dyer of IMG College the most chilling of all:

      ["We had one school that actually threw out the idea, 'What if we privatize the whole athletic department?'" IMG College's Dyer says. "We didn't know quite how to respond to that because we don't necessarily think that's the model for the future. But when it comes to commercial activities and revenue-producing activities, if we're not in a particular discipline there, then we'd certainly look at possibly getting into it."]

      The biggest problem is the disconnect. The modern emperors are not the rulers, they are just the managers. In short, they have no skin in the game. They use shareholders wealth and the taxpayers pocket to buy their seats at the table. A few contractors are making huge sums for themselves but putting little back to the communities that fund them. Politicians arrive at the show to be seen on a hot button issue with less than realistic numbers, and no money out of their own wealth. James M. Buchanan won a Nobel prize for his work on public choice theory, yet no one raises this debate in the swell of false pride by folks to have the biggest and best facility in the land. At some point the bill comes due, and who will pay the check? Politicians have a self interest to line their nest and inflate their ego, but such a move is rarely in the long term interest of the local community. At least the owners of the past like Carnegie left a legacy of literacy and learning in their wake.

      I am not opposed to athletics in the college environment, but it should operate under a different set of rules than professional sports. If you build a facility to house the fans that maintains the availability for all, then do so. If a building can sustain itself without diverting massive resources from a community then by all means do so. If it is just an arms race to benefit the few while drowning the rest in debt, then I must draw the line. I know it is unpopular to raise the issue of logic in such an emotional issue, but have we learned nothing in the past few years in the housing and financial markets when emotion runs unchecked and the debts mount?

      *USA Today article dated Aug 8 2011 by Steve Berkowitz entitled “Marketers reshape how college teams sell tickets”

  4. Uncle Buck,

    Thanks for your response. I recall reading the recent USA Today article you mentioned about colleges using telemarketers but I had never read the “Seats of Gold” ESPN the Magazine article. I just finished it and it was very interesting.

    Regarding the USA Today article, I actually think that the BCS schools will break away from the NCAA and other schools and form their own corporation within the next ten years or so, similar to what someone in the article suggested. I would never have guessed such a thing would happen even five years ago but looking at things now, with all of the money involved and all of the ‘big time’ schools that are getting busted for rules violations, I think it is inevitable. That said, if they don’t go entirely private, I think we will see an ‘arms race’ between the BCS schools to tie themselves to major corporate sponsors for everything, not just sports. Think “The University of Oregon Presented By Nike” or “The Microsoft/University of Washington Huskies” or some such thing involving every major corporation and university in America.

    I live in Montana, where there is no ‘major league level’ professional team in any sport. As a result, I can count on my fingers, with a few left over, the number of ‘big league’ sports events I have ever attended. We have two Division I universities here that play FCS-level football and that’s as close to ‘big time’ sports as we get. As far as professional sports, we have four short-season rookie minor-league level teams in the state and a couple of low-level semi-pro hockey teams, I think. As a result, we don’t see the ‘over the top’ money-induced behavior like there is with major-league professional sports and BCS-level schools.

    That said, this weekend both the University of Montana and Montana State are getting a small slice of the big-time football money pie by ‘playing up’; Montana is at Tennessee Saturday and Montana State is at Utah tonight. The money from those games helps pay for a sizable chunk of the costs of the entire athletic department for the year for the Montana schools. In recent years past, between them the Montana schools have ‘played up’ at Oregon, Iowa, Colorado, Michigan State and Texas A &M, to name a few. So, even though we don’t have ‘big time’ collegiate sports here, our two universities do see some of the ‘big time’ money.

    On the opposite end of the spectrum, the Big Sky All-Stars from Billings just made an incredible run to the Little League World Series U.S. championship game last week. They captured the attention of the whole state, border to border, literally, and in the process have become statewide ‘rock stars’. (It didn’t hurt that childhood Billings resident and current part-time Montana resident Brent Musburger called two of their games for ABC/ESPN.)

    I was reading earlier today about some of the events they are scheduled to attend in just the next few days (a local high school football game, a local college football game, a parade/barbeque, a meet and greet fund raiser for the team and parents (it costs a lot to travel to California for the regional tourney and then to Pennsylvania for the LLWS); and an invitation to the UM homecoming game later this season. Not to be out done, I’m sure an invite to an upcoming MSU football game will come soon and probably an invitation to Helena to meet the governor. And I suspect that won’t be all they get invited to.

    It was great fun to watch those kids do so well not only on the field but to see and hear how well they handled themselves off the field also. It’s the sort of thing that makes the comparison to the adults involved in college and professional sports look quite glaring. The adults could learn a lot from the kids!

  5. Good story but I believe you overlooked the biggest reason why Louisville is more profitable than UK – alcohol sales. That’s the single biggest reason for the disparity. I can’t speak to the other schools, but I’d imagine that is the case there as well. All SEC schools are hampered by that.

  6. Your pretty “suite” Kristi and I’ll certainly donate plenty to fill your corporate box.

  7. Uncle Buck-

    Not so sure about significant other, you’d think if they were significant they’d be mentioned in one of her many bios (multiple websites).

    Maybe you should get your own site where you can maintain a stiff, sterile, and humorless environment (under the pretense of intelligence).

    Maybe she laughed, maybe she frowned. It’s was all in fun anyway, so lighten up Nancy Boy.

  8. I’m somewhat confused on this issue. According to USAToday’s College Athlietics Financial Database, UofL made $16.7 in total contributions, while UK made $13.1 in total contributions. It’s hard to find a report that breaks down revenue by sport, but an database on the IndyStar website from 2005 shows that the major difference in contributions is not how much they receive, but the fact that UofL allocates the majority of their contributions to basketball, while UK does not allocate any of their contributions to individual sports. Since you probably have more access to this kind of information, is there any way you could look deeper into this issue.

    http://www.usatoday.com/sports/college/ncaa-finances.htm
    http://www2.indystar.com/NCAA_financial_reports/

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