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 →
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!
The Athletics Construction Roundup is a monthly series on construction of athletics facilities. Each month I’ll provide you with a list of athletic construction projects in progress (and recently completed) across the country, including details on budget and scope of the project.
Notre Dame is replacing its football surface with a synthetic turf. Maintaining the natural surface at Notre Dame Stadium had been a struggle for many years.
Work has begun on Arizona State’s renovation of Sun Devil Stadium. The project will result in a reduced capacity of 60,000, down from 71,700.
NC State’s Reynolds Coliseum, the home of women’s basketball, volleyball, and wrestling, will soon receive a $35 million renovation. Also included in the project is an athletics hall of fame.
The previously announced renovation of Arizona’s McKale Arena has begun.
Both the men’s and women’s Conference USA basketball tournaments are heading to Birmingham.
Florida expects to begin work on an estimated $50 million renovation of the O’Connell Center after the 2014-2015 basketball season. The work will result in a reconfiguration that eliminates the building’s ability to host indoor track events.
Here is a great update on the numerous projects currently underway at Middle Tennessee.
Georgia State wants to transform the Turner Field area into a mixed used complex that would include housing, retail, and athletic spaces. Perhaps the most ambitious facet of the project involves transforming the current home of the Atlanta Braves into a 30,000 seat football stadium.
Ground has been broken on Colorado’s previously announced $143 million master plan.
Oakland has announced a 108,000 square foot indoor facility. The $4.9 million project will include space for baseball, softball, football, and soccer.
A large videoboard project has announced by UTEP. The $3.4 million plan includes a new board for the Sun Bowl which will measure as the largest in Conference USA.
The NCAA has reached a proposed $20 million settlement with current and former student athletes in the class action led by former ASU and Nebraska quarterback Sam Keller. If approved by Judge Claudia Wilken, it would be in addition to the $40 million settlement agreed to by EA Sports and CLC less than two weeks ago.
The Keller case involves similar issues as the O’Bannon case, which officially went to trial today: use of player likenesses in EA Sports video games. However, the plaintiffs in the Keller case were seeking monetary damages for current and former student athletes who allege their likenesses were used in the games, while the O’Bannon class is asking for an injunction that would prevent the NCAA from limiting student athlete’s ability to be compensated for use of their names and likenesses in video games, television broadcasts and other forms of marketing. In essence, Keller’s case sought to compensate current and former student athletes whose likenesses have already been allegedly misappropriated, whereas O’Bannon’s case seeks an NCAA rule change that would benefit future student athletes.
“This is the first time in the history of the NCAA that the organization is paying student-athletes for rights related to their play on the field, compensating them for their contribution to the profit-making nature of college sports,” said lead attorney for the Keller plaintiffs Steve Berman. “We’ve long held through our various cases against the NCAA that the student-athlete is treated poorly in everything from scholarships to safety. This settlement is a step toward equity and fairness for them.”
The $20 million will be available for claims by current and former student athletes who competed in FBS football or Division I basketball and who believe their likeness was included in a video game produced by EA Sports since 2005.
“With the games no longer in production and the plaintiffs settling their claims with EA and the Collegiate Licensing Company, the NCAA viewed a settlement now as an appropriate opportunity to provide complete closure to the video game plaintiffs,” said NCAA Chief Legal Officer Donald Remy in a statement.
The NCAA has also stated that it will allow current student athletes to make claims and collect settlement funds without risking their eligibility.
Ever wondered how much schools actually made from the EA Sports games? I have the answer here, and it might surprise you.
“…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.”
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 →
By 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:
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.
USA Today has released its annual report on college athletics finance. One category, “Total Subsidies,” always draws the most criticism. In USA Today’s explanation of its methodology, it defines this category as, “The sum of students fees, direct and indirect institutional support and state money. The NCAA and others consider such funds “allocated” or everything not generated by the department’s athletics functions.”
The definition provided by USA Today is 100 percent correct…however, it’s an area I’ve found to be misunderstood by other media members and fans alike. People generally understand the student fees portion. It’s the direct and indirect institutional support and state money portions that cause people to draw inaccurate conclusions. Generally speaking, those are not simply checks written by universities and state governments to cover shortages in the athletic department. In fact, with respect to direct institutional support, it’s almost always a reduction in expenses for the athletic department rather than incoming revenue.
I tackle this subject it in the very first chapter of my book on the business of college football, Saturday Millionaires. Since the entire chapter is available for free (here), it’s easiest to simply give you the relevant section here to educate you about direct institutional support. Continue reading →