Category Archives: Finance

Neutral Site Game Payouts

Neutral Site College Football Game Payouts

Neutral Site Game PayoutsWhile technically the FBS football season kicked off last night with Abilene Christian at Georgia State, tonight we get some ranked teams and the Chick-Fil-A Kickoff Game!

For the past few years, the college football season has always started with neutral-site games. The two major ones have been the Chick-Fil-A Kickoff Classic (since 2008) and the Cowboys Classic (since 2009). This year there will be two Chick-Fil-A Kickoff games: Ole Miss vs. Boise State (tonight – August 28) and Alabama vs. West Virginia (August 30). There will also be one Cowboys Classic game which pits Florida State against Oklahoma State (August 30).

Neutral site games have proven to be extremely lucrative for the teams participating in them. When teams venture to the Georgia Dome in Atlanta, GA for the Chick-Fil-A Kickoff Classic or AT&T Stadium in Arlington, TX for the Cowboys Classic teams are typically giving up a lot; not only are they missing out on a potential home game, but they also lose all the revenues associated with hosting a home game such as ticket sales and concession sales. In addition, the surrounding area loses out on the revenues it usually makes when thousands of fans and alumni come into town for game day weekend. As such, payouts from these neutral site games have seemingly been enough to persuade teams to miss out on these potential earnings.

In last year’s Chick-Fil-A Kickoff, there was a total team payout to Alabama and Virginia Tech of $5 million. Typically, Alabama makes millions per game at Bryant-Denny Stadium, which seats over 101,000 people. Yet, the allure of being on center stage in a big city, coupled with the generous payouts has made playing in these games worthwhile. Alabama itself has played in 3 Chick-Fil-A Classics and 1 Cowboys Classic to date and is scheduled to play in one of this year’s Chick-Fil-A Classic games and next year’s Cowboys Classic. Furthermore, these games also have the potential to lure in key recruits as future players may be excited by the chance of playing for a big time school in a big time city.

Chick-Fil-A Kickoff

Year

Teams

Total Payout (Millions)

2008 Alabama vs. Clemson  $4.2
2009 Alabama vs. Virginia Tech $4.5
2010 LSU vs. North Carolina $3.6
2011 Boise State vs. Georgia $3.7
2012 Tennessee vs. NC State $4.2
2012 Auburn vs. Clemson $4.8
2013 Alabama vs. Virginia Tech $5.0
2014 Ole Miss vs. Boise State  $3.1
2014 Alabama vs. West Virginia $6.4 (expected)
2015 Louisville vs. Auburn  TBD

The payout for the Chick-Fil-A Kickoff Classic has increased over the past few years. In 2012, one game has total team payout of $4.2 million, whereas the other game had a total team payout of $4.8 million. This year, the total team payout for the Alabama and West Virginia game is expected to be $6.4 million. However, in 2008 and 2009, the total team payouts were $4.0 million and $4.5 million respectively, and then decreased in 2010 and 2011, to $3.6 million and $3.7 million respectively. Thus, there has not always been an upward trend in determining payouts. To determine the payout, Chick-Fil-A keeps its $5.5 budget and then returns the revenues above the budget to the participating teams.

Numbers for the Cowboys Classic have been more difficult to confirm, but here’s what we do know….

Cowboys Classic

Year Teams Per Team Breakdown (Millions)

Total Payout (Millions)

2009 BYU vs. Oklahoma
2010 TCU vs. Oregon State $1.0
2011 LSU vs. Oregon $3.5/$2.0 $5.5
2012 Alabama vs. Michigan $4.7/$4.7 $9.4
2013 LSU vs. TCU ?/$3.0
2014 FSU vs. Oklahoma State
2015 Alabama vs. Wisconsin
2016 USC vs. Alabama
2017 Michigan vs. Florida $6.0/$6.0 $12

The Cowboys Classic has also seen its payouts increase over the years. In 2011, LSU earned $3.5 million and Oregon earned $2.0 million, for a total team payout of $5.5 million. In 2012, Alabama and Michigan both made $4.7 million, for a total team payout of $9.4 million. In 2017, Michigan and Florida are each expected to make $6.0 million, for an expected total team payout of $12 million.

After observing these trends, it is obvious that payouts are varying not only from team-to-team but from year-to-year. One explanation is that the more lucrative and successful teams are being paid more to participate in these games because they help generate more revenue. Another explanation is that the more a team stands to lose in revenue from giving up a home game (i.e. Michigan and Alabama due to their huge stadium capacities), the more these neutral site games are willing to payout. One thing is for certain, though: the neutral-site kickoff game, with its lucrative payouts, will be around for many more years to come.

NCAA Report Shows Gap Between Haves and Have-Nots

Revenue and Expense Gap in College Athletics

NCAA Report Shows Gap Between Haves and Have-NotsThe 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.

Ask SportsBizMiss (1)

Ask SportsBizMiss: volleyball profit, licensing naming rights, ticket revenue and government subsidies

Ask SportsBizMiss (1)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:

School Revenue Expense Net Revenue
Penn State $850,993 $1,395,721 -$544,728
Texas $1,387,377 $3,177,635 -$1,790,258

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:

“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.).

Need tickets to a Florida State game?

“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.

Ask SportsBizMiss

CWS 2011 Opening Ceremony

How much money does Vanderbilt make for winning College World Series?

CWS 2011 Opening Ceremony
Photo credit: White & Blue Review via Flickr

Zero.

Outside of men’s basketball, participation in postseason NCAA competition is not rewarded with monetary compensation. Not even for the College World Series, where hundreds of thousands of fans pack the stands over the course of the series and the games air on national television.

This year, the College World Series drew an average of 21,734 fans per game, just edging out the 20,533 per session for the Division I Men’s Basketball Championship. Total attendance for the College World Series this year was 347,740. However, the television contract pales in comparison: the CWS is part of a $500 million television contract signed with ESPN in 2011 for 24 sports championships through 2023-2024, while the men’s basketball tournament averages $771 million annually.

According to a presentation I attended by NCAA CFO Kathleen McNeely at the CABMA convention in 2013, the NCAA banked approximately $9 million from the baseball tournament the previous year, which amounted to 12 percent of all NCAA championship revenue.

Before you think the NCAA is unfairly depriving baseball teams of the revenue generated by postseason tournaments, keep this in mind: McNeely also shared that only seven sports bring in revenue for the NCAA from championships. By my count, the NCAA hosts championships for 92 sports across Division I, II and III. McNeely’s presentation pegged the annual cost of championships at $74 million for programming costs, which does not include the cost to staff those championships.

Brighthouse Networks Stadium at UCF (photo credit: Breezy Baldwin via Flickr)

How much are college athletic facility naming rights worth?

Brighthouse Networks Stadium at UCF (photo credit: Breezy Baldwin via Flickr)
Brighthouse Networks Stadium at UCF (photo credit: Breezy Baldwin via Flickr)

UPDATE: Boise State’s new naming rights deal with Albertsons was unintentionally omitted. It has been added, which has changed the average annual values in the original post.

What’s the market value for naming rights deals on college athletic facilities? It’s much more difficult to estimate than if we were talking about professional athletics. Universities often complete these deals at less than market rate in order to acknowledge past gifts by major donors.

For example, naming right for Papa John’s Cardinal Stadium at University of Louisville is officially on the books as a $5 million donation for 52 years. In total, however, Papa John’s had donated approximately $22 million for the football stadium through 2011.  Would University of Louisville have agreed to a naming rights deal with a company it had never done business with previously for 52 years for $5 million? Not likely.

It’s not uncommon in these deals for past donations to be taken into account, causing the naming rights deal itself to be below market rate. That’s somewhat unique to college athletics thanks to its nonprofit status and history of relying upon donations.

We’ve recently updated our database for naming rights deals on college athletic facilities. Quite a few of the deals are for the life of the stadium or arena, and details of the deals aren’t always disclosed, especially when it involves a private university.

However, just for the sake of trying to pinpoint something approximating an average annual value, here are some average annual values based on what we do know: Continue reading

Men's wrestling at Rutgers has seen scholarships increase since sports were cut

Data: Cutting sports fuels more than football

Men's wrestling at Rutgers has seen scholarships increase since sports were cut
William Smith (Rutgers) and Nick Gwiazdowski (NC State) at the 2013 Cliff Keen Invitational (photo credit: Chris Hunkeler via Flikr)

From a public relations perspective, cutting sports is a nightmare for universities. There’s no avoiding the photographs of student athletes with tears streaming down their faces as they learn they’ll have to transfer if they want to continue competing in their sport. The raw, human element of it makes it tough to look at the situation from a business perspective, in the same way it’s tough to learn about a company laying off employees.

All that being said, it is a business decision. And lest you think it’s a business decision meant to further support fledgling football programs, I took a look at the aftermath of the cuts Rutgers made seven years ago in a recent piece I wrote for SportsBusiness Journal. The piece was inspired by the more recent cuts at Temple, but I think Rutgers is a good case study for Temple if they want to see where they could be in seven years.

You can read the full piece here (SportsBusiness Journal has made it available even if you aren’t a subscriber), but just to whet your appetite, here are a few interesting facts I uncovered:

  • With approximately $124 million more in revenue than Temple, University of Texas supported just 16 more student athletes than Temple in 2012-2013.
  • Temple ranked 74th in FBS in 2012-2013 for total athletic department revenue, but 30th in total number of student athletes supported.
  • Within its own conference, Temple ranked dead last in spending per student athlete but second only to UConn in number of student athletes supported.
  • Despite cutting six sports in 2007, Rutgers funded 30.73 more scholarships in 2012 – 26.59 of those scholarships were for women’s sports. Rising tuition costs increased athletic department expenses by $3.4 million over the same time period.
  • Thirteen sports at Rutgers have seen their expenses increase by a greater percentage than football since the cuts in 2007.
  • Interesting fact not included in the final article: from 2006 to 2012, the Scarlet Knights wrestling team saw its expenses increase by 120 percent from $304,000 to $670,000, despite decreasing donations to the program and only a small increase in ticket sales. The bulk of that increase in expenditures came from raising the scholarships awarded from 5.11 in 2007 to 9.44 in 2012, just shy of the 9.9 NCAA limit.

I encourage you to read the full article to learn more about the difficult decision schools face in cutting sports. In the end, it all comes down to this quote from Maryland President Wallace D. Loh from a letter he penned in response to a report of the President’s Commission on Intercollegiate Athletics on November 21, 2011 as his school was facing the decision to cut sports:

“In a time of constrained resources, we have to choose: should we have fewer programs so that they can be better supported and, hence, more likely to be successful at the highest level? Or, should we keep the large number of programs that are undersupported compared to their conference peers?”

Want to learn more about the finances of intercollegiate athletics? Check out my book, Saturday Millionaires!

Adidas - Texas A&M

Selling Jerseys with Current Players’ Numbers Isn’t Worth the Risk

“…it’s foreseeable they might get out of the business of selling jerseys with numbers corresponding to current student-athletes if push came to shove.”

No. 12 jerseys will be the only ones available at retail for Texas A&M this year (photo credit: Adidas)
No. 12 jerseys will be the only ones available at retail for Texas A&M this year (photo credit: Adidas)

I made that prediction last August, and now it seems push has come to shove.

ESPN’s Darren Rovell is reporting today that several schools – Texas A&M, Arizona and Northwestern – will discontinue the use of current player’s numbers on jerseys, sidestepping any future litigation or obligation to split proceeds with student athletes. A licensing director told me last year he thought this would happen before schools would divide the revenue with student athletes, and certainly last week’s EA Sports settlement renews the discussion about sharing revenue arguably driven by student athletes with those student athletes.

At the end of the day, the revenue simply isn’t worth the risk for schools. As I reported for ESPN last year, schools don’t really make that much from jersey sales in the grand scheme of things (similar to their situation with regards to video game revenue). Here’s a sampling of jersey sales numbers from the 2012-2013 school year, which include jerseys for all sports, not just football: Continue reading

EANCAAFB14-Gameplay-SCRN6

How Much Did Schools Really Make on EA Sports Video Games?

EA Sports NCAA Football 2014By now you’ve likely heard about the $40 million settlement between EA Sports/Collegiate Licensing Company and the current and former student athletes involved in three class action lawsuits. Estimates have those current and former student athletes receiving  $48-951 per year they appeared on a video game roster.

Have you ever wondered how much money the schools made off the games? I’ve got your answer in my latest piece for The Motley Fool:

NCAA Football2012-2013 NCAA Basketball2012-2013
Louisville $85,845 $26,594
UCLA $57,230 $26,593
Clemson $85,845 $18,616
Wisconsin $143,076 $26,593
Texas A&M $57,000 $18,616

To learn more about the settlement and about the revenue schools received from these video games, click here to go to my piece on The Motley Fool.