A story caught my eye last week about Kansas State University implementing a pilot program to sell beer to its fans during the six remaining home baseball games of the season. Several universities have experimented with the concept recently, and now there are approximately 21 Division 1 FBS schools selling beer at their home games. I thought it would be interesting to examine what we’ve learned thus far.
The University of Minnesota sold beer for the first time in its new football stadium last year, to mixed results. Sales totaled over $900,000, exceeding expectations and certainly demonstrating the demand is there. Astonishingly, however, UM claims to have LOST money on the program overall. The extra security personnel, tents and facilities, as well as equipment rental ate every bit of that $900k. UM officials admitted to perhaps being overly cautious, but still it is hard to imagine not making money on the sale of alcohol at a sporting event.
West Virginia University’s first year of selling beer at football games profited the athletic department between $500,000 and $700,000 depending on the source. WVU also said allowing sales in the stadium, along with prohibiting the ability to leave the stadium and return, cut down on alcohol related incidents commonly associated with binge drinking that goes on at pregame and halftime tailgate parties.
A quick glance at other schools showed Bowling Green State University profited between $20k-$25k in 2011, and Kent State University broke even. Syracuse University didn’t provide sales or profit numbers, but did say that beer sales make up 47% of total concession revenue.
It is difficult to find a consensus regarding the financial impact of selling beer to fans. Certainly some schools are making money while others are not. Two major factors appear to be playing into that: 1) pricing – the universities above range from $2/beer to over $7/beer; and 2) non-product expenses – Minnesota invested in large tents with generators, as well as extra security personnel, while other schools added minimal costs.
There does, however, appear to be a consensus that alcohol related issues did not increase as a result of the new policies. Further, several schools claimed they saw fewer incidents when selling beer in the stadium than they did before.
We’re still fairly early in this growing trend and more data needs to be collected and examined. But if there is a way to enhance the fan experience, increase revenue, and drive down alcohol related incidents by selling beer in the athletic venues, it won’t be long until a majority of schools will be on board.
Follow Daniel on Twitter at @DanielHare
Quite frequently in the debate over the BCS there are comparisons to March Madness. Proponents of moving to a playoff system point to the approximately $771 million a year (beginning in 2011) March Madness generates in television alone (previously an average of $545 million). Meanwhile, the BCS bowls will generate just $125 million beginning in 2011 (previously$96.4 million per year ).
While it’s true March Madness generates more television revenue overall, that doesn’t necessarily mean more money for each athletic department. A total of $452,200,000 was distributed by the NCAA in 2010-2011, and less than half of all monies distributed went back into the athletic department with no strings attached (via the Basketball Fund). Here’s the breakdown:
Basketball Fund ($180,467,000): Monies are distributed based on a six-year rolling period. Institutions receive one unit for each appearance, not including the championship game. Each unit was worth $239,664 in 2010-2011.
Academic Enhancement ($22,461,000): Each Division I institution gets $66,000 to use for academic support service for student-athletes.
Conference Grants ($8,115,000): Each conference receives $261,744 less an agreed upon amount remitted to the regional officiating advisors program. Funds must be used to improve officiating, enhance conference compliance and enforcement programs, drug abuse education, enhancement of opportunities for ethnic minorities, and development of gambling education programs.
Sports Sponsorship Fund ($60,155,000): Each school’s share is determined based on the number of varsity sports sponsored. Points begin with the 14th sport (the number required in Division I), and $30,091 is distributed for each sport above thirteen. These monies may be directed to individual institutions or to the conference for distribution, as decided upon by each conference.
Grants-In-Aid Fund ($120,309,000): Each school’s share is determined based on the number of grants-in-aid awarded. These monies may be directed to individual institutions or to the conference for distribution, as decided upon by each conference.
Student Assistance Fund ($59,738,000): This fund also consists of the Special Assistance Fund and the Student-Athlete Opportunity Fund. For the Student Assistance Fund, all athletes are eligible to receive these funds, even if they have exhausted eligibility or no longer participate due to medical reasons. These monies are distributed to the conference who decides how to allocate. This fund is to be used to assist student-athletes with financial needs that “arise in conjunction with participation in intercollegiate athletics, enrollment in an academic curriculum or that recognize academic achievement. The Student-Athlete Opportunity Fund is distributed by conferences based on the formula used for sports sponsorship and grants-in-aid. The Special Assistance Fund is to be used to meet student-athlete financial needs of an emergency or essential nature for which other financial aid is not available.
Supplemental Support Fund ($955,000): Used to support campus-based initiatives designed to foster student-athlete academic success at eligible limited resource institutions.
At the end of the day, most conferences receive larger payouts from the BCS than March Madness when it comes to money going back into the athletic department with no strings attached. Below is a look at the payouts for the past four years. Totals in red reflect conferences who received a larger payout from basketball than football for the given year. You should also note the football payouts indicated for the non-AQ conferences (Mountain West, Mid-American, Sun Belt, C-USA and Western Athletic) are based on the payout from the BCS before the agreement between the conferences to split BCS money equally between all non-AQ conferences kicks in. Also, these numbers do not include payouts for non-BCS bowl games.
I think it’s interesting to note that AQ football conferences are bringing in more from March Madness than non-AQ football conferences. Some of that has to do with the smaller size of some of the non-AQ conferences, but it’s still rather sizeable disparity. Nonetheless, I imagine people still find the March Madness system more digestible because it is a playoff system and because payouts are based on number of appearances.
Special thanks to my research assistant Eric Heckman for helping me compile the data.
Because I know how much you all hate the Department of Education financial numbers, and because I strive to give you what you want, I’ve begun amassing budgets and audited financial statements from universities.
Today I have the audited financial statements for the University of Florida’s athletic department. I’ll be covering a variety of interesting information from these over the coming days and weeks, but let’s start with what I know you all care about the most: football.
Some basics to get started. Football brought in 57% of all revenue received by the athletic department in fiscal year 2010 (which would be the 2009 football season). The next largest contributor was Royalties and Sponsorships at 15 percent. Next is something I try to stress on this site all the time. Football revenue does not sit in a vault marked “Football Only”. It is used to fund as many other areas of the athletic department as possible. Accordingly, just 19% of total expenses in the athletic department were for the football program, despite bringing in more than half of all revenue. Remember, rarely do sports other than football and men’s basketball turn a profit. For example, at Florida, football revenue accounted for 86% of all revenue generated by sports at Florida in 2009-2010. Thus, profits from football must be used to support sometimes dozens of other sports.
So where does the money come from and where does it go? As you’ll see below, the majority of money comes from boosters and fans. Although SEC distributions for television, bowls, and the SEC Championship Game total over $13 million, they account for just 21% of all revenue generated by the football program. Booster contributions, luxury seating and suites account for just shy of half of all football revenue.
Here’s the full breakdown of all football operating revenue from the 2009 season:
|Subtotal Home Games||$16,815,128.00|
|Subtotal Games Revenue||$17,408,547.00|
|Other Football Revenue|
|Sec Bowl Distribution||$2,208,661.00|
|SEC Surplus Distribution||$801,992.00|
|SEC Championship Game||$1,211,858.00|
|Ticket-Related Booster Contributions||$15,029,567.00|
|Gator Booster Contributions||$9,502.00|
|Subtotal Other Football Revenue||$44,611,224.00|
Total operating expenses for the athletic department total $105.2 million. Thus football revenue only covers 60% of the athletic department’s expenses. On top of not being able to pay just football players because of Title IX issues, there’s also the issue of how you fund the rest of the athletic department. Do you up student fees and ask non-athletes to help pay the athletes? Do you ask boosters for more money? Do you ask the taxpayers for more? Do you cut non-revenue producing sports, which let’s face it, would be men’s non-revenue producing sports because few schools, if any, would risk cutting a woman’s sport alone and facing a possible Title IX suit. I’m not saying a school like Florida can’t come up with the funds to pay players (although they’re one of just 22 I think could even consider it), I’m just saying it’s more complicated than most realize.
Back to the topic at hand. What do Florida’s football expenses look like? I’ll give you the full line-by-line detail after the jump, but wanted to point out a few things first. Since 2005, Florida’s football expenses have increased by 52 percent. However, football revenue has increased by 54%, so they’re allowing revenue to grow at a slightly faster rate than expenses. And again, although football revenue accounts for 57% of all revenue in the athletic department, only 19% of all expenses are football-related.
In the end, football generated a profit of $44,244,129. The total operating expenses for all sports at Florida was $40,129,000 (total athletic department expenses are much higher at $105,236,000). Like I’ve said before, a successful football program funds all other sports.
Follow the link to see the full expense chart for Florida football for the 2009 season…. Read the rest of this entry
To kickoff Ohio State Week on the BusinessofCollegeSports.com I want to start by looking at the line item football budget. Check back each day this week for more Ohio State numbers, including recruiting expenses and overall athletic department budget.
Below you’ll see numbers for both the 2010-2011 and 2011-2012 school years. These numbers were obtained directly from the Ohio State University athletic department. Please note this 2011-2012 budget was prepared before the events of this past weekend, so you can expect some changes, especially with regards to coaches salaries. Also, decisions on raises for all personnel have not yet been made.
One thing to note as you take a look is that Ohio State has 7 home games in 2011-2012 compared to 8 in 2010-2011. Interesting to see how that impacts the overall budget both in terms of revenue and expense. Be sure to read after the chart to see how some of these numbers fit into the athletic budget as a whole.
|Season Tix – Fac/Staff||6,868,000||6,009,500|
|Season Tix – Students||5,002,500||4,785,000|
|Public Ticket Sales||30,310,760||25,605,040|
|Postage & Handling||0||0|
|A & P||3,447,937||3,707,931|
|Benefits Fee Waivers||48,000||72,000|
|Clothing & Equipment||173,400||173,400|
|Equipment Rep & Maint||53,000||59,300|
|Building & Grounds Rep & Mnt||25,000||25,000|
|Game Day Expenses||1,120,000||925,000|
|Dues & Memberships||1,800||1,800|
|Shipping & freight||0||0|
|Grant In Aid||3,307,000||3,413,000|
A few of the categories probably need clarification. A&P is Administration and Professional staff salaries. This category includes the salaries of all coaches. CCS is pay for Civil Service Personnel, who are support staff belonging to a union. Specials can cover a number of items from special event staff to incentives that may be paid to coaches as a part of their contract.
I think it’s interesting to see all the expenses associated with running a top-notch football program like Ohio State’s. I won’t comment on many of the categories, but I wanted to let you see them all. As I noted earlier, Ohio State has one less home game for the 2011 season. Amazing what a difference one game can make. The loss of that one home game costs Ohio State roughly $3 million!
As you can see, the two biggest expenses are salaries and grants-in-aid (payments back to the university for scholarships). Administrative and Professional salaries for football account for 18% of all salaries in that category in the athletic department, and grants-in-aid for football are nearly 22% of all aid granted by the athletic department. Football has the greatest number of athletes participating, so this should be no surprise.
I often hear fans lament the great amount of money spent on football compared to other sports. However, football is the one sport where you can likely spend more to make more. Revenue from football accounts for 73% of all revenue generated by individual sports at Ohio State, and football is one of only two sports who turn a net profit. Later this week I’ll show you how the profit generated by football supports the athletic department as a whole, proving the investment in football is a wise one. Until then, you can read my previous piece on how “other sports” are funded.