Everything you need to know about the first season of the College Football Playoff. Continue reading
The divide between the haves and have-nots is increasing, expense growth is outpacing revenue growth, donors are still the largest source of revenue for most programs, and sports outside of football and men’s basketball aren’t generating enough revenue to cover expenses. That’s the short version of what the NCAA’s latest revenue and expense report tells us….
Click here for some interesting details from the report in my piece for Outkick the Coverage.
Until now, we haven’t had a mailbag feature here at BusinessofCollegeSports.com, but I do check the search terms people use to find our site almost every day. So many times I wish I could reach out to the person and see if they found what they were looking for, but I don’t actually know who searched the term or how to get in touch with them…so, I’m going to pretend they emailed me and answer a few I’ve seen over the past week.
If you want to submit a question for a future edition of “Ask SportsBizMiss,” instructions are at the bottom of this post.
Here’s a sampling of searches I’ve seen over the past week….
“volleyball program turns profit”
If you were searching for a college volleyball program that turns a profit, you probably didn’t find one. It’s extremely rare for a sport outside of football or men’s basketball to end the year with net revenue (it’s not technically correct to call it “profit” since athletic departments are nonprofit entities). I’m asked about baseball and ice hockey most often, and you can find a program here or there that has a small amount of net revenue, but I’ve never seen a volleyball program with net revenue at the end of the year.
I decided to take a look at a couple of women’s programs first. Penn State and Texas finished last season ranked #1 and #2, so I checked out their financials for women’s volleyball:
Unfortunately, I don’t have the time to do this for every school, but I think you get the picture.
Men’s volleyball isn’t doing any better. Penn State’s men’s team only generated $222,044 but spent $346,791.
The fact of the matter is that few (and by few, I mean a handful) of programs outside of football and men’s basketball generate any net revenue. Many don’t make enough to cover scholarships for the student athletes within that sport, much less coaching salaries, trainers, insurance, travel, etc. I wrote last year about how even the top women’s basketball programs don’t generate enough revenue to cover their expenses.
So, sorry whoever searched this, but I doubt you’ll find any volleyball programs generating net revenue.
“licensing naming rights”
If you were looking for naming rights on stadiums, I have an entire database of every deal I know of in college athletics here.
If you were looking for the more recent issue of student athletes licensing their naming rights, the O’Bannon ruling didn’t give student athletes the right to license their own name individually. I think I analyzed O’Bannon from just about every angle and on just about every platform possible:
- Are college football video games coming back?
- “Saturday Millionaires” podcast on the O’Bannon ruling [Podcast]
- What does the O’Bannon ruling mean for fans? [Video]
- Three things the O’Bannon ruling doesn’t mean
- Are O’Bannon ruling and Title IX at odds?
- What the O’Bannon ruling means for the NCAA and college sports
“ticket revenue Florida State”
This one is easy: $20.3 million total, $17.6 million from football. The Seminoles also had another $15.3 million in contributions to football, and no doubt much of that came from ticket-related contributions (those donations you have to make in order to buy season tickets, get better seats, etc.).
“government subsidies for athletics”
There seems to be great concern that state and local governments are subsidizing athletic departments, because the NCAA financial disclosure happens to include a category by this name. Don’t fret. Many times I’ve found the amount reported by an athletic department as support from governmental entities is lottery revenue earmarked for Title IX purposes, meaning it goes to fund scholarships for female student athletes. State and local governments aren’t just cutting checks to athletic departments to fund losses or otherwise bail them out. I looked at a couple of examples in my book, Saturday Millionaires, if you’re interested in learning more about this subject. You can download Chapter 1 for free here.
Any financial numbers I share are from financial disclosures each university files with the NCAA annually. The latest figures are from 2012-2013.
A student athlete who fails to complete his or her degree prior to exhausting eligibility is out of luck, right? Fail to graduate in five years or suffer an injury that prevents future competition and you’re on your own, right?
Despite congressmen questioning the ability of student athletes to complete their degrees and recent letters penned by the presidents of the Big Ten and Pac-12 that mention degree-completion goals for student athletes, the issue here isn’t about the lack of programs. At best, the issue is a lack of awareness of all of the existing degree-completion programs.
Click here to keep reading my SportsBusiness Journal piece on degree completion programs.
Could autonomy for the Power 5 mean fewer applications to universities in other conferences? Fitch Ratings, a global agency which issues credit ratings to companies (similar to the way Equifax issues you a credit score), indicated in its latest release today that it expects schools with major sports programs who fall outside of the Power 5 to experience a decrease in applications.
Fresno State in the Mountain West is called out specifically as a likely victim. From the Fitch Ratings release:
There is much anecdotal evidence to suggest that success in sports has a positive impact on the number of applications received by colleges and universities. Most schools that enjoy unpredictable success in basketball or football often see a one-year bump up in their applications. In our view, the proposed changes are unlikely to have any effect on the number of applications received by the “Big Five,” as the recognition their sports teams already provide would not change significantly. If these rules were adopted, we would also expect few changes to schools with smaller or less successful sports programs, as they make smaller contributions to their schools’ brands.
However, there could be some modestly negative effect on the number of applications to schools that have successful sports teams but are not included in the “Big Five.” As an example noted in a recent New York Times story, Fresno State is one institution that has invested in and expanded its athletic successes. But it is in the Mountain West Conference and, if the proposal is approved, could lose the publicity it gains from performing well against the best teams.
Indeed, numerous studies have found a correlation between success in football or men’s basketball and new student applications. Most studies focus on the impact of winning a national title or a BCS bowl game, but one study I detailed in my book Saturday Millionaires found mere membership in Division I increased out-of-state applications at a university by 2-4 percent. It wouldn’t be surprising then that membership in the Power 5 might also have an impact.
Here’s an excerpt from Saturday Millionaires on some of the studies that have found a positive correlation between football or men’s basketball success and new student applications:
On average, the most recent study by the Popes shows winning the national championship in football results in a 7-8 percent increase in applications. Finishing the season in the top 20 in the AP poll results in a 2.5 percent increase in applications the following year and a 3 percent increase if the team is ranked in the top ten.
As was stated previously in the chapter, the Popes study found that in order to achieve the same results, a 2-24 percent adjustment would have to be made to tuition/financial aid.
At an even more basic level, increasing the team’s winning percentage from one season to the next has been shown to increase application rates. A 1998 study found teams whose winning percentage increased by .250 over the previous season saw an average 1.3 percent increase in applications. A more recent study in 2005 found that number to be larger when in-conference winning percentage increased. A .250 increase in conference winning percentage was associated with a 6.1 percent gain in applications the following year. A decrease in winning percentage was found to produce a 0.4 percent decrease in applications.
A new study, released in mid-2012, found a large increase in wins, such as three wins to eight, was followed by a 5 percent increase in applications.
Some of the largest impacts found by many researchers were in relation to out-of-state students. The Popes 2012 study concludes, “While a sports victory for a given school may not change the awareness of in-state students regarding its existence, the sports victory may present a significant shock in attention/awareness for out-of-state students.”
One study showed mere membership in NCAA’s Division I increased the number of out-of-state students at a university by 2-4 percentage points.
[Footnotes have been removed for this blog post]
Check out Saturday Millionaires for an entire chapter on the intersection of athletics and academics, which details other areas of a university that have been shown to benefit from athletic success.
I spoke with a licensing director at a Power 5 school yesterday about the possibility of college football video games coming back after the O’Bannon ruling. You can see his answer in my latest piece for Outkick the Coverage. Or, if you prefer a podcast, you can check out my latest podcast for a full discussion.
Thus far, EA Sports has not replied to my request for comment.
The O’Bannon ruling: What does it mean? What doesn’t it mean? Are there Title IX implications? Are EA Sports video games returning? Continue reading
If you’re not inclined to read my full report on the ruling in the O’Bannon case that came down on Friday, you can probably get away with simply knowing what it does not mean.
- It does not mean all student athletes are getting cost-of-attendance stipends. In fact, it doesn’t even mean all football and men’s basketball student athletes are getting cost-of-attendance stipends. What the ruling said was that the NCAA cannot set a rule limiting stipends to anything less than cost-of-attendance for football and men’s basketball student athletes. If I were a betting woman, I’d say the NCAA sets the limit for stipends at cost of attendance and allows all student athletes to receive that stipend. Some schools will be able to afford to implement the stipend, some will not. There is no requirement in the ruling that schools must starting funding cost of attendance stipends, merely that the NCAA cannot legislate against it.
- You’ve probably heard about the $5,000 tied to the trust fund idea. It does not mean every football and men’s basketball student athlete is automatically accruing $5,000 per year in a trust fund to access after graduation or exhaustion of eligibility. What the judge said was that the NCAA cannot prevent schools from offering at least $5,000 per year to football and men’s basketball student athletes (to be placed in a trust for disbursement upon graduation or exhaustion of eligibility). The NCAA will likely set the cap at the minimum $5,000/student athlete/year. Each individual school can then decide if they want to participate, but they are not required to do so. One school might decide on the $5,000 number, another might only be able to do $2,500, and yet another might decide they cannot afford to do anything. Whatever the schools choose, they must implement it equally across a recruiting class. You can’t offer higher-profile recruits more than other recruits. You can, however, change the amount with each new recruiting class.
- Sadly, it does not mean the NCAA Football video game is coming back. The judge did not rule that football and men’s basketball players could pursue individual commercial sponsorship or endorsement deals. In other words, they can’t sign on their own with EA Sports or Nike or Gatorade or anyone else. The ruling simply forces the NCAA to allow schools to share some licensing revenue with student athletes under the two very limited circumstances explained above. Is still means schools will have to decide to license with EA Sports or other video game producers in order for the games to come back. Student athletes cannot join together and go license their name, image and likeness to create video games, at least not under this ruling.