Thursday, March 17, 2016

Is College Football Big Business?



Is College Football Big Business?
By Paul Pulczinski
3/13/16

Much has been said lately about the business of college football.  Should athletes be paid to play? Is there money to be made from athletics at this level?  

When universities recruit high school students, they sell the kids on their “academic support centers.” The University of Oregon boasts the Jaqua Academic Center, a lavish three-story, 40,000-square-foot, $42 million facility financed by Nike founder and Oregon alumnus Phil Knight. It is equipped with tutors, ADHD specialists, life-skills advisers, psychologists and other staffers, as well as plenty of laptops on loan.

At Texas, Michigan, Auburn, Alabama, Georgia, Florida, Penn State, Notre Dame, Louisiana State University and Arkansas, revenues have increased to $762 million from $229 million from 1999 to 2012. That is a whopping 233 percent.

At the University of Texas at Austin, the school’s athletic department budget ballooned from $4.5 million to $170 million. A big chunk of that increase came in the past decade when the school added thousands of stadium seats (including premium spots), television fees doubled, and royalties, licensing fees and advertising revenue grew nearly fivefold.

For alumni, Saturday afternoons are filled with nostalgia about the good old days. Students are no longer the focus of filling the college football stadium, with athletic departments pumping wealthy fans and alums for every dollar. One amazing way to do this is “seat donations” — making particular ticket purchases contingent on financial gifts to the university. Depending on the seat, these fees can range from a few hundred dollars to tens of thousands. In 2012, University of Georgia fans paid $22 million not for football tickets but for the right to buy football tickets. At the University of Michigan, seat donations bring in $20 million per season. At the University of Alabama, it’s nearly $30 million. Listed as ‘charitable donations supporting the schools’ educational missions’, they are tax-deductible.  That’s just one tax break the game enjoys. “Congress has effectively decreed that college football is exempt from paying taxes on billions in seat donations, television broadcast rights, bowl-game payments, and corporate sponsorships,”

Today, 75 college football head coaches make $1 million or more per year, and five earn beyond $5 million. Alabama coach Nick Saban takes in nearly $7 million annually.

It’s no wonder some players want to be paid for playing.  64 schools in the five major conferences brought in a combined $2.8 billion in revenue in 2015, mostly from broadcast rights and ticket sales. And since these teams don’t have to pay their players, they keep nearly half of that revenue -- a profit margin that would make any professional team owner envious.

On November 6, 1869, Rutgers and Princeton played what was billed as the first college football game. I can’t imagine they had any idea the big business that sport would have today.



Works Cited
Forbes.com/economics of college football
NY Times/2015/8/26/books/review/economics of college football
Washington Post, August 21, 2015

Foxbusiness.com, January 11, 2016

3 comments:

  1. I do believe that college football is big business, but I don't believe that the players should get paid for it. First of all, a majority of these players are going to their college for free due to full athletic scholarships or at least a half paid athletic ride. That is more than enough for anyone. Second of all, they are there to transition themselves in the real adult world. If they get paid to play football, and they don't make it into a professional league afterwards, they won't have any experience with an actual career due to the fact that they didn't need to get a job in college. They would be dumbfounded when the real world hits. Anyways, good article.

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  2. Without doubt, college football is BIG business. It may be even better than the NFL since there's more teams to cheer for (and purchase goods from). One of the most expensive costs for NFL teams is the paychecks to the players. As everyone know's, no players get paid for playing football in college. This means the schools are making just that much more because their not paying for any salaries of the players. This income also helps the more local economies nearby the college/team. As shown in your article, their's a football team for every state in the United States (and many more than 50)! There's only 32 football teams in the NFL! Regardless, good job on your article.

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  3. I agree with you about college football being a big business completely. Though, your information is lacking the most valuable college football program. I realize that it is the program that I cheer for, but it would have been worth a mention. The University of Ohio State boasts a program worth almost 1 billion dollars. The next program does not even come within 50 million dollars of Ohio State. Going along with that, Ohio State made a deal with Nike for $252 million dollars to extend their sponsorship. That's larger than any other program, including Oregon.

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