Monthly Archives: January 2013

Connecticut Follows California’s Lead With Proposed Student-Athlete Scholarship Bill

Last year, I wrote about California’s groundbreaking Student-Athlete Bill of Rights.  The legislation, which becomes effective during the 2013-14 school year, requires California universities receiving at least $10 million annually from the sale of athletics-based media rights to, among other things, continue providing scholarships to athletes who (1) suffer incapacitating injuries, or (2) have exhausted their athletics eligibility prior to graduating.  Universities covered by the law are only required to provide scholarships to athletes that fall into the second category if they are a member of a team that has a graduation success rate of less than 60%.

Now, Connecticut may soon be joining California in passing similar legislation.  A bill introduced by Connecticut State Senator Martin Looney requires public Connecticut universities receiving at least $5 million in media rights revenue to provide academic scholarships to athletes (1) whose athletic scholarships are not renewed due to incapacitating injury or illness resulting from participation in the school athletic program, or (2) who have exhausted their athletic eligibility, but are still in good academic standing and pursuing a degree.

While the Connecticut bill and the California law are similar, there are a few key differences.  For starters, the California bill covers all California universities, public or private.  The Connecticut bill only covers public universities.

Second, the California law covers universities that receive $10 million from the sale of athletics-based media rights.  As currently drafted, the Connecticut bill does not contain the same limiting language.  It takes into account revenue earned from the sale of all media rights when determining which universities would be covered by the bill.  While I doubt this lack of limiting language ever expands the bill to cover any university besides UConn (let’s face it, Central Connecticut State isn’t receiving $5 million in annual media rights revenue, athletics-based or otherwise, anytime soon)*, it is something that the Connecticut legislature could tweak on the bill’s journey through the legislative process.

Lastly, the California law only requires universities to continue providing scholarships to athletes who have exhausted their athletic eligibility prior to graduation if their team has a graduation success rate of less than 60%.  This severely limits this portion of the California law.  Based on recent NCAA data, only basketball and/or football players at Cal, USC, and UCLA would be able to take advantage of the California scholarship continuation provision.  This leaves out athletes on revenue producing teams such as Stanford’s football team.  The Connecticut bill, however, allows any scholarship athlete (in good academic standing) who has exhausted his or her athletic eligibility prior to graduation to continue receiving a scholarship.

The Connecticut bill still has a few hurdles to pass before it becomes law.  But, if it does pass, it could be the beginning of a movement of similar laws being passed in other states.

*And with the rapid deterioration of the Big East, and its decreasing value to TV networks, UConn might not even be receiving $5 million in annual media rights revenue in the future.

University of Tennessee Finances in Perspective

ESPN sports business reporter Kristi Dosh (who also happens to be BusinessofCollegeSports.com’s founder) had a piece yesterday giving some perspective to University of Tennessee’s financial situation. One of the points she makes is that Tennessee’s outstanding debt on athletic facilities isn’t out of line with the rest of the SEC.

Here’s a look at outstanding facilities debt at each SEC school and the annual debt service (payments) for the 2010-2011 school year (the most recent available). All information is from NCAA financial disclosures. Vanderbilt’s information is not available via public records requests.

2010-2011 SEC Athletics Debt

School Outstanding Athletics Debt Athletics Annual Debt Service
Alabama $207.2 million $13.3 million
Louisiana State $202.0 million $13.5 million
Tennessee $188.1 million $7.7 million
Georgia $120.8 million $7.9 million
South Carolina $112.9 million $3.5 million
Auburn $106.1 million $10.1 million
Florida $80.8 million $5.8 million
Arkansas $64.1 million $7.3 million
Texas A&M $45.8 million $6.6 million
Mississippi $41.8 million $4.6 million
Missouri $26.8 million $3.1 million
Mississippi State $24.8 million $2.3 million
Kentucky $18.7 million $2.7 million

As Dosh points out in her article, this isn’t a true apples to apples comparison. For example, she notes Kentucky carries no debt on Rupp Arena, because it’s owned by the city. Check out her piece for more information.

Documents obtained from University of Tennessee show its football season ticket base has dropped by approximately 10,000 people since 2009. However, net revenue (profit) from football remains above average amongst other SEC members:

Football Net Revenue 2010-2011

Georgia $52.9 million
Arkansas $47.1 million
Alabama $46.5 million
Florida $43.2 million
Auburn $40.2 million
Tennessee $37.5 million
South Carolina $35.4 million
LSU $31.7 million
Texas A&M* $30.0 million
Kentucky $20.3 million
Mississippi $10.8 million
Mississippi State $10.8 million
Missouri* $9.7 million

*Texas A&M and Missouri were not yet members of the SEC in 2010-2011

The real issue, as noted in Dosh’s article, is the limited reserves Tennessee athletics currently has on hand: $1.95 million. That is one area not in line with other SEC schools, as AD Dave Hart notes in Dosh’s piece.

Mountain West Stable, For Now

The Mountain West appears to have won a large victory with the recent additions (or not losses if that’s how you choose to look at it) of Boise State and San Diego State.  That may in fact be the case.  However, there is also the possibility that in its quest for stabilization and increased stature, the Mountain West endangered itself by giving away crucial member equality in order to re-acquire Boise State.

Reports indicate the Mountain West has or will (among other things): 1) re-negotiate its television contract with CBS Sports Network which will allow teams on national television (i.e. Boise State) to make more money through bonuses, 2) sell Boise State’s home games in a separate package, and 3) allocate half of BCS (and future equivalent) bowl game revenue to the participating team (i.e. Boise State) before splitting it among the remaining conference members.

From the quotes of Big East commissioner Mike Aresco, it sounds as if Boise State wanted to stay in the Big East if it would match the Mountain West’s offer.  Smartly, Mr. Aresco and the remaining Big East schools’ (bonus points if you can name them) presidents said thanks, but no thanks.  In a time when it must feel like everything is crashing down around them, the Big East brass found a line they wouldn’t cross.  Good for them. Let’s face it, Boise State to the Big East wasn’t exactly the perfect mix of chocolate and peanut butter.  So for the Big East to grant unprecedented perks to a school 2,600 miles removed from the conference office didn’t make a whole lot of sense.  Navy Athletic Director Chet Gladchuck even went public with his disdain for the proposed deal, saying:

“What Boise State wanted was outrageous and unprecedented. It was not palatable to any of the other Big East institutions,” Gladchuk said. “In the final analysis, Boise wasn’t worth it. There is zero television interest in Boise along the Eastern seaboard. What it tells me is the Mountain West was desperate. Clearly, the Mountain West was willing to make whatever concessions necessary to keep Boise in the fold.”

But surely it made sense for the Mountain West to do whatever was necessary to bring Boise State back under its tent, right?  Maybe, maybe not.  The money grab that is conference realignment also has an undercurrent of trying to create and/or maintain stability and long-term viability.  As mentioned earlier, the Mountain West seems to have stabilized at 12 members.  But when gross member inequality is part of a league’s structure, there can be problems.

Example:  When the Big 12 was formed in the mid-90s, its structure was similar to how the Mountain West is currently proceeding.  Most notably, it did not share bowl and television revenue monies equally among the members.  Rather, the participating teams were first entitled to a larger share.  This obviously funneled most of the revenue toward the traditionally successful programs, and smaller amounts to everyone else. (Berry Tramel of The Oklahoman wrote about this structure in 2010.) As time passed the Big 12 and its membership experienced the difficulties of operating a conference successfully when there’s a sense that a few schools are driving the bus and collecting the checks, and the rest are just passengers along for the ride.  Ultimately, that and other issues led to the departure of 1/3rd of the Big 12’s schools (Nebraska, Colorado, Missouri, Texas A&M), and a near collapse of the conference entirely.

Whether the Big 12 leadership decided the original structure was a mistake, or that times had changed and therefore the structure needed to change with it, the powers that be agreed to a more (though not completely) equal distribution of revenue in the summer of 2011.  It also put a stake in the ground on stability by having each member grant its television rights to the conference for a long period of time (initially six years, but recently extended to 13), essentially removing the largest incentive to other conferences who may wish to come poaching in the future (the importance of this “grant of rights” was well articulated by Mat Winter in a BusinessofCollegeSports.com post last month).  I have not read or heard anything along the lines of Boise State or the other Mountain West schools making similar commitments.

So while the Big 12 (barely) escaped the inequality trap and the Big East has avoided it for now, the Mountain West may have fallen right in it.  Sure, Utah State and San Jose State are excited to be new members in a league which just got considerably stronger.  And the other Mountain West schools no doubt see the tremendous value Boise State brings to all of them.  But give those non-Boise State presidents and athletic directors a few years of conference meetings looking over financials, and watching the revenue flow into the conference and out to Boise State.  Give them a few years of conference meetings observing how decisions are made.

The camaraderie that exists today may not continue very long.  And without a grant-of-rights or similar level of commitment, Boise State is for all intents and purposes a perpetual free agent, available to accept the next best conference offer that comes along.  The Mountain West’s current and future members no doubt wanted to make decisions which ensured stability over the long-term.  And while the league certainly got immediately stronger with the addition of Boise State, it may be that the deal they made guarantees the long-term will be anything but stable.

Follow Daniel on Twitter: @DanielHare

How Pinterest Boosts Athletic Programs to the Next Level

By James Maddox

It’s no secret that Facebook is far and beyond the leading platform in social media. This is true not only in college athletics but overall in the sphere of the internet. Twitter coming in right behind Facebook as the 2nd most popular social media platform might not be a surprise either. The third most popular platform, however, is what seems to surprise people.

According to Experian’s “2012 Digital Market: Benchmark and Trend Report,” released last year, Pinterest received over 104 million views in March 2012. This number was big enough to surpass the social media likes of Linkedin, Google+, and MySpace. It seems obvious that this presents an excellent opportunity for college athletic programs to expand their horizons outside of Facebook and Twitter to reach their audience in a unique manner. Unfortunately, there are only a handful of programs actually taking advantage.

The challenge college athletics programs are facing is one of the biggest conundrums in sports marketing today: how do you take a female-dominated social media platform such as Pinterest and use that platform to market a male-dominated form of entertainment such as sports? The successful college programs on Pinterest have already figured out the solution. According to a Forbes article published in late-2011, one-third of the audiences for large US sporting events are women.

This data clearly indicates that a not insignificant portion of sports fans are women. The Pinterest page of the University of Texas does an excellent job appealing to women. They have a board dedicated to arguably the most popular women’s sport at the school (volleyball) as well as a board for the official team shop, which can appeal to both men and women.

However, what makes the University of Texas stand out compared to other Pinterest pages are the individual boards for each football game. There’s no doubt Texas is a football school and is most likely the sport fans will want to see when they visit the Pinterest page. This unique approach gives fans the chance to go through each board and experience the games all over again. Although the university recently launched their Pinterest page, they have already attracted more than 800 followers.

While some programs are discovering ways to use Pinterest to draw women’s attention to their sports, others are attempting to discover ways to use their sports to draw men’s attention to Pinterest. According to an article on econsultancy.com, 19% of women that are online use Pinterest compared to 5% of men.

Similar to women, men are interested in boards that are both innovative and creative. The University of Louisville and the University of Oregon do a great job of fulfilling both.

Despite a somewhat weak Pinterest presence (298 followers) UofL has done an excellent job of being innovative. UofL’s biggest strength is finding ways to intertwine their Pinterest page with their other social media pages. For example, the university has five boards titled with Twitter hashtags at the beginning. ‘#FrameitFriday’ for instance consists of photos that UofL has taken using social media website and phone app Instagram. This particular venture invites fans to go to UofL’s twitter page and add a caption to the photo they post, engaging followers in a unique social media experience. They also have a board solely dedicated to the football team titled ‘@UofLFootball’, the twitter handle for the official UofL football team page.

As mentioned earlier the number of followers doesn’t always reflect the quality of the page. However there is at least one exception for a school that is considered one of the most creative and perhaps overall best Pinterest pages among college athletics: the University of Oregon.

Oregon is one of the few college programs that is consistent with updates and is always posting fresh and interesting content and does so in a creative manner. They have a ‘What’s Hot – Top 10 Items’ board that is updated when needed as well as a ‘Just Ducky’ board highlighting interesting Oregon Ducks mementos, interesting Duck-themed foods, and more.

The board that stood out to me and gave me the feeling that Oregon’s page was well-rounded and universal was the board titled ‘Where We Work & Play’. In this unique board you will find locations both on campus and through the city of Eugene, giving the very real sense of community that takes place at the University of Oregon.

The sad truth is that there are not many more ‘Pinterest titans’ in college athletics. The Pinterest page for the SEC, South Carolina, and Virginia Tech are all pages that could be considered among the likes of Texas, Louisville, and Oregon. College athletics pages on Pinterest are saturated with programs that don’t regularly update their pages or programs that created their official pages and completely gave up due to lack of faith in Pinterest being a legitimate social media platform.

There is no denying the benefits reaped from having an extraordinary Pinterest and general social media presence online; the impact of social media on ticket sales is highlighted in a recent article published on businessofcollegesports.com. However, it’s also a great opportunity for fans to gain exposure to other lesser-followed sports, to interact with followers, and to cross-platform with other social media platforms and the university’s athletics website.

It’s an easy and free way to increase a university’s social media presence. It’s simply a matter of time before college athletics program jump on the Pinterest bandwagon.

For those that are curious here is a list of the top 5 NCAA Division I college athletics programs from BCS conferences on Pinterest with the most followers (as of 1/19/2013):

  1. Oregon Ducks – 2,847 followers
  2. Texas Tech Red Raiders – 1,632 followers
  3. Washington Huskies – 1,379 followers
  4. Tennessee Volunteers – 1,070 followers
  5. Virginia Tech – 975 followers

UK Aims to Financially Compete with SEC Football Powerhouses

By: James Maddox

Recently, the University of Kentucky launched kfundonline.com, a website dedicated to athletic fundraising efforts. One of the main purposes of the website is to help raise funds for upgrades to Commonwealth Stadium where the football team plays.

The website states that the stadium will undergo a $110 million renovation beginning later this year and ending in time for the 2015-2016 season. Stadium upgrades will consist of additional suites and club seats, new press facilities, upgrades to the Nutter Training Center, and a new team store, amongst other additions and improvements. The school is also considering reducing the seating to improve the quality and value of the remaining seats, in hopes of increasing the game day experience for fans.

Known for its prominent basketball program that is coming off a national championship last season, it is clear the athletic department at the University of Kentucky is making strides to compete with their conference foes in football in the financial arena. According to the latest available data, the SEC powerhouses that have won a championship in the past 10 years, such as Alabama, Auburn, and Florida, reported a net income of at least $40 million during the 2010-2011 year; Kentucky only cleared half of that. During that same time period Alabama, Auburn, and Florida spent at least $1.2 million on facility upgrades; Kentucky spent approximately $101,548.

UK seems to be making the right steps to create a more well-rounded athletics program. Their website has also stated intentions to improve Memorial Coliseum where the volleyball and women’s basketball teams play.

Newly hired football coach Mark Stoops took to Twitter to give his stamp of approval of the renovation of the football facilities. He recently tweeted “Renovation of Commonwealth Stadium and Nutter Training Center will be fun for fans and help our recruiting. #BBNUnited”.

Impact of Social Media on Ticket Sales

By: James Maddox

Social media is becoming increasingly more important for sports fans around the world. It can be as easy as ‘liking’ a page on Facebook and instantly gaining access to news updates, exclusive photos, and creative video content. It’s becoming more apparent, however, that fans are not the only one’s reaping the benefits of social media. Many teams and universities in general are seeing increases in ticket sales, donations from donors, and increases in overall revenue. Does social media deserve some of the credit for these increases?

The benefits of social media are enormous when capitalized in an effective and efficient manner. It’s ultimately a free tool that allows you to connect and engage with fans and followers by sharing news, posting video content, and hosting contests. Some schools, however, take it a step further and use their social media platforms to promote events and ultimately drive ticket sales.

For example, if you take a quick visit to the Facebook page of the University of Tennessee athletics, you will see a picture promoting an upcoming game for the women’s basketball team with a web link on the bottom of the page: UTtix.com. That picture alone had over 200 likes and 20 shares. Thus, the university was able to direct a portion of their 250,000 followers to their ticketing website, allowing fans to not only purchase tickets for that women’s basketball game, but any other sport that they may be interested in.

While visiting the website, fans may find that they are interested in season tickets for the upcoming football season, an excellent source of revenue for any athletics program. By simply posting a photo through social media, the University of Tennessee may have been able to lock in a future football season ticket holder, all for the beautiful price of ‘free’.

Athletics programs across the country are doing the same thing the University of Tennessee is doing across several different platforms. For example, the Louisville Cardinals athletic program is using Pinterest among several different platforms to push ticket sales. There is a board on the UofL page titled ‘Promotions’ in which ads for upcoming games are posted and includes ticket prices, links to other social media pages, and links to the ticketing website.

Additionally, the University of Texas uses Twitter to push ticket sales to fans through several techniques. They recently ran a contest for the best fan photo with the winner receiving tickets to the Texas vs. UCLA men’s basketball game. Another tweet lets followers know that tickets are going fast but still available for the volleyball team that is competing in the NCAA Austin Regional this upcoming weekend.

Whether it’s Tennessee on Facebook, Louisville on Pinterest, or Texas on Twitter, it becomes quite clear that some schools are using social media the right way.

After seeing how some of the elite programs in the country are using social media to drive ticket sales, it begs the follow question: does it work? Are universities seeing increases in athletics revenue, primarily in ticket and donor revenue, due to social media? Social media is a very small factor in the grand scheme of revenue for college athletics, especially when you look at factors such as the wealthy donors in Austin, Texas, and the new KFC Yum Center! generating revenue for the Louisville Cardinals.

However, it’s hard to say that social media hasn’t positively impacted athletics programs across the country. Though in the past it may have been more relevant and useful to call individual donors to gauge interest in purchasing or renewing season ticket packages, programs can now use social media platforms to get the job done. They can reach out to more fans and donors at the same time by tweeting the deadline for ticket renewal on Twitter or posting the link to the website in which you can purchase season tickets on Facebook.

Many programs send out emails regarding ticket packages, season tickets, and upcoming promotions. However, you have to wonder how many of those emails get overlooked or aren’t even given the opportunity because they fall into the spam folder. Social media fixes this problem.

The University of Michigan is a prime example of a program that is dominating social media in college athletics and the results of their social media campaigns confirm this. Every year the Wolverines athletic department holds a social media-only ticket presale for the football team during a two-week period in July. According to Paciolan, the team generated approximately $75,000 in 2011 and was looking to do even better in 2012. With no signs of social media slowing down they did just that by nearly doubling their number in 2011 and raking in over $140,000.

Despite a near 100% increase the number is not so significant considering the athletics department revenue and even football-only revenue is well into the tens of millions. However the impact goes beyond the financials of this successful campaign. The landscape of social media in sports and ticket sales dramatically shifts with drives like this. The idea of making season tickets literally a ‘Like’ away makes it easier for potential buyers and opens up marketing possibilities for the University of Michigan athletic department as well as programs across the country.

Coaches Getting Bought Out On Their Way Out

By: James Maddox

It can be costly these days to hire a coach that will lead a program to great success. It’s unfortunate, however, when it doesn’t play out that way and the head coach is getting kicked out of the door when expectations aren’t met. In these cases schools are forced to buyout the contracts of their former coaches, causing big paydays for said coaches.

An article recently published on ESPN.com by sports business writer and BusinessofCollegeSports.com founder Kristi Dosh shows the financial implications some programs are facing over the next few years.

The biggest is centered around former SEC powerhouse Auburn’s recent firing of coach Gene Chizik, who’s 4 year head coaching tenure included 3 bowl wins, one of those being a national championship, and more recently a dismal 3-9 record in 2012. Chizik received a lump sum of $7.5 million, approximately $2.4 million more than the reported $5.1 million buyout Auburn paid for previous head coach Tommy Tuberville.

Not only does Auburn have to pay the $7.5 million for Chizik’s buyout, but it is also planning to buyout Chizik’s staff for approximately $3 million, pay a $500,000 salary to new coach Gus Malzahn, and pay for the $700,000 buyout to Arkansas State for Malzahn’s departure. The buyout is considered a loan for Malzahn and will be repayed through his contract according to the letter of agreement released by Auburn.

Although the Auburn Tigers have paid the biggest coaching buyout of the year so far, it seems as if another program was financially hit worse by their own buyout. Dosh points out that former Southern Mississippi coach Ellis Johnson is due $2.1 million from his buyout. While that amount doesn’t ring close to that of Gene Chizik’s, it is still considered a high number for a school in a non-automatic-qualifying BCS conference. To put things in perspective, the $2.1 million is equal to over 10% of the schools athletic department revenue generated last year.

The craziness of the coaching carousel doesn’t stop at Auburn and Southern Miss. The former buyouts of coaches from Tennessee, Cal, and Kentucky are well into the millions. In fact, in just the past month the total amount programs have had to place toward buyouts of previous coaches has toppled $31 million collectively.

New Arkansas head coach Bret Bielema will be facing an even bigger payday than that of Chizik or any of the previously listed coaches if he is let go during the next 3 years. If so, he is expected to receive $12.8 million from Arkansas in a buyout. One of the biggest payouts in recent years belongs to Charlie Weis, who has received nearly $9 million so far. Although he was let go in 2009, he will continue to receive annual payments well into December 2015 with the amount expected to near $19 million by then.