Everything you need to know about the first season of the College Football Playoff. Continue reading
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.
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….
|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.
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