Follow the Money - The Big Business of College Football

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With the College Football playoffs and conference media rights deals, 2014-15 revenue distribution is expected to skyrocket for the Power-5 teams. Some conferences are additionally collecting more revenue from local or regional media. The Longhorn Network brings revenue to the University of Texas.

SEC and the SEC Network
For example, the SEC distributed $20.9 million to each of its members for the 2013-14 year. For 2014-15, from the SEC Network alone, each university will receive an estimated $23 million. The SEC Network is estimated to generate $468 million or $33.4 million per team per year with full distribution. (However, ESPN and the SEC office gets cuts of tha total, which will reduce that per team total). The NCAA tournament brings in an additional $11 million per SEC team.

The College Football Playoff
The College Football Playoff will bring in an additional $87.5 million to the SEC conference for 2014-15. Each Power-5 conference begins with $50 million and then divides the remaining pie and distributes the revenue first based on participation in different bowls and then subdivided among the conference schools based on formulas devised by each conference.

COLLEGE FOOTBALL PLAYOFF PAYOUTS/REVENUE DISTRIBUTION FOR 2014-15

The Big Ten and their media money
Big Ten is the leader in conference revenue. The Big Ten estimates each team will receive $44.5 million for the 2017-18 year in their first year of a new media contract deal. Each media deal is backended so that the most money will come towards the end of the contract. (That's just the media deal money.)

So, it's hard not to consider Power-5 football as a big business. Coaching contracts and building lavish facilities, recruiting budgets are reflections of the huge revenue burst. With pending lawsuits, it may be difficult to argue against players getting paid from some of this.

What do you think about these issues?
 
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MNIrishman

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I like the idea of schools making a great deal of money to support their educational missions, but would appreciate it if spending outside this mission were reduced. I don't really like the idea of coaching salaries exploding and ESPN being the real winner in all of this. I have no problem with a nonprofit taking in millions as long as it's spent on things like new lab equipment (the Jordan Hall of Science was the main beneficiary of our bowl revenues in 2005/2006) and books.

Also, the players being paid debate is played out. Still think it's an idea both stupid and pernicious.
 

NDdomer2

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Question, and maybe this is dumb. If the power 5 conferences are getting all that money from the new CFP, how long will ND be independent missing on their chunk of that $. (maybe they get some already and i dont know it).
 

MNIrishman

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Question, and maybe this is dumb. If the power 5 conferences are getting all that money from the new CFP, how long will ND be independent missing on their chunk of that $. (maybe they get some already and i dont know it).

ND tries to avoid letting economics be the primary driver of sports decision-making, which explains how we didn't jump at the chance to join the B1G. However, I believe we basically get treated as our own conference (with limitations) at the big boy table-- Swarbrick gets to sit on the committee directly, whereas I think everyone else is a conference commissioner.
 

JTLA

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My thoughts:

All good with everyone making more money and the separation for the Power-5 (and ND) from the rest. Hopefully it will lead to a future where there are less non-competitive games.

Looking at these numbers, I simply don't understand the argument barring compensation for players. What is the harm in it in today's society? I don't think it even needs to be cash from the schools. Ironically, getting the money on the table instead of under the table would be cleaner and easier to regulate. Seriously, if Jaylon Smith wants to sign autographs for $20 at a Chevy dealership or Will Fuller wants to introduce the WSBT news for an endorsement fee, what is the harm? If supporters want to donate money to some fund that will someday result in money for the players, what is the downside again? I guess that would mean less donations going directly to the schools. Tax it, manage it, spread it around, etc... but let them exploit the market!

THEY PLAY FOR MILLIONS OF DOLLARS A GAME, just not for themselves. It seems rooted in some kind of puritanical BS and it's feels kinda racist too in 2015 terms. I mean what other segment of society is barred from leveraging their value in the open market while others capitalize? The idea that they get nothing from video game licensing is insane and will have to change with those lawsuits.

Lastly, and I'm not surprised by this, but it seems Notre Dame really shit itself signing their current deal with NBC through 2025. $15m seems like chump change compared to where these Power-5 conference members will be headed by 2025. Live broadcast rights are rising faster than any other licensing in sports and entertainment. Perhaps a future enhanced ACC deal will allow ND to renegotiate.
 

Cali_domer

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My thoughts:

All good with everyone making more money and the separation for the Power-5 (and ND) from the rest. Hopefully it will lead to a future where there are less non-competitive games.

Looking at these numbers, I simply don't understand the argument barring compensation for players. What is the harm in it in today's society? I don't think it even needs to be cash from the schools. Ironically, getting the money on the table instead of under the table would be cleaner and easier to regulate. Seriously, if Jaylon Smith wants to sign autographs for $20 at a Chevy dealership or Will Fuller wants to introduce the WSBT news for an endorsement fee, what is the harm? If supporters want to donate money to some fund that will someday result in money for the players, what is the downside again? I guess that would mean less donations going directly to the schools. Tax it, manage it, spread it around, etc... but let them exploit the market!

THEY PLAY FOR MILLIONS OF DOLLARS A GAME, just not for themselves. It seems rooted in some kind of puritanical BS and it's feels kinda racist too in 2015 terms. I mean what other segment of society is barred from leveraging their value in the open market while others capitalize? The idea that they get nothing from video game licensing is insane and will have to change with those lawsuits.

Lastly, and I'm not surprised by this, but it seems Notre Dame really shit itself signing their current deal with NBC through 2025. $15m seems like chump change compared to where these Power-5 conference members will be headed by 2025. Live broadcast rights are rising faster than any other licensing in sports and entertainment. Perhaps a future enhanced ACC deal will allow ND to renegotiate.
15 mill was the previous deal... This deal is 22-25 million a year. Either way if we wanted the most money we would join the Big 10(Yuck).

ND is at a disadvantage when it come access to the playoff I think because it's us versus these mega conferences.
 

irishtrain

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Of course there is a difference between being in a conference and not pertaining to revenue generated but from a trusted source who went to Notre Dame I was told that basically the bills are paid before the season even starts with the endowments promised. Everything else is just gravy and $$$$ made to spend on the university for whatever need arises. Or to put it more bluntly Notre Dame has more $$$$ than these other schools could ever dream of generating.
 

texbender

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have you ever walked around campus on a football weekend and wondered how much $$$$ is really flowing through the coffers? And the cash......parking, bookstore, programs, club fundraisers, + 80,000 x $85....the amount I staggering.
 

phgreek

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I like the idea of schools making a great deal of money to support their educational missions, but would appreciate it if spending outside this mission were reduced. I don't really like the idea of coaching salaries exploding and ESPN being the real winner in all of this. I have no problem with a nonprofit taking in millions as long as it's spent on things like new lab equipment (the Jordan Hall of Science was the main beneficiary of our bowl revenues in 2005/2006) and books.

Also, the players being paid debate is played out. Still think it's an idea both stupid and pernicious.

...what he said
 

Legacy

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College Football's Most Valuable Teams (Forbes) Always a good read.

"Our valuation methodology for college football teams looks at the value generated by college football's top teams for four key areas: their universities, athletic departments, conferences and local communities. Academic value includes football scholarships and contributions to university initiatives, while athletic value consists of football profit used to support non-revenue sports. Conference value is money generated for other conference teams by playing in bowl games, and community value is the economic impact generated by home football games. Financial data is for the 2013-14 season, and last year the top 20 teams generated $1.42 billion in revenue, up from $1.33 billion the year before."

have you ever walked around campus on a football weekend and wondered how much $$$$ is really flowing through the coffers? And the cash......parking, bookstore, programs, club fundraisers, + 80,000 x $85....the amount I staggering.

"2. Notre Dame Fighting Irish
Team value: $122 million
Revenue: $81 million
Profit: $48 million
Conference: Independent
Head coach: Brian Kelly

A single home football game attracts almost 62,000 visitors from outside the South Bend area; on average, each of those fans injects close to $200 into the local economy.
"
 

MNIrishman

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'All your dough are belong to us,' - the Backer and Finny's, probably.
 

Legacy

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I like the idea of schools making a great deal of money to support their educational missions, but would appreciate it if spending outside this mission were reduced. I don't really like the idea of coaching salaries exploding and ESPN being the real winner in all of this. I have no problem with a nonprofit taking in millions as long as it's spent on things like new lab equipment (the Jordan Hall of Science was the main beneficiary of our bowl revenues in 2005/2006) and books.

Also, the players being paid debate is played out. Still think it's an idea both stupid and pernicious.

I have had to rethink this based on two factors- the explosion in revenue and the "college football is a business" philosophy of some conferences. That philosophy can come back to bite you. Most SEC teams/fans espouse giving players who may come from poorer backgrounds an opportunity for education and for making the kind of money that will help them and their families. Recruits usually have a couple of years on scholarship, unless there is some egregious act, to prove their value to the team. Since football is a business and they are, in effect, employees without any guarantees of a four year education and degree, why shouldn't they be paid a very small percentage of the university's $40-50 million income (from CFP and media money only) to help them and their families? Especially if they are steered to coursework which is aimed at keeping them eligible for football, but is worthless. "If it's a business, pay us." Colleges are losing their moral high ground when they ignore a player's education and welfare to pursue huge profits.

Those universities who do give four year scholarships, direct players to degrees that the rest of the student body pursues, and allocate their profits to furthering their general academic missions should be considered separate from this.
 
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MNIrishman

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I have had to rethink this based on two factors- the explosion in revenue and the "college football is a business" philosophy of some conferences. That philosophy can come back to bite you. Most SEC teams/fans espouse giving players who may come from poorer backgrounds an opportunity for education and for making the kind of money that will help them and their families. Recruits usually have a couple of years on scholarship, unless there is some egregious act, to prove their value to the team. Since football is a business and they are, in effect, employees without any guarantees of a four year education and degree, why shouldn't they be paid a very small percentage of the university's $40-50 million income (from CFP and media money only) to help them and their families? Especially if they are steered to coursework which is aimed at keeping them eligible for football, but is worthless. "If it's a business, pay us." Colleges are losing their moral high ground when they ignore a player's education and welfare to pursue huge profits.

Those universities who do give four year scholarships, direct players to degrees that the rest of the student body pursues, and allocate their profits to furthering their general academic missions should be considered separate from this.

My answer, and the point I was trying to make, is that I think schools ethically ought to be heading in the opposite direction. Run it less like a business. Four year scholarships (contingent not on performance, but on commitment in the classroom and weightroom. You can't control whether the coach chooses you to play, but you can control your effort. Four year scholarships but controls against complacency). Limit games and travel on school nights in the name of a TV schedule. Universities only sell players' images with permission (in the same way they use pictures of students in labs and playing Frisbee on the quad for promotional purposes). Sanctions against schools that provide their athletes with sham educations, since that education needs to be revered as the reason college athletics exists. No coaches teaching classes, since that represents a conflict of interest when players are involved. The opportunity to go to school for five years for every varsity athlete (five year scholarships?), so they can have a more reasonable schedule with fewer classes at any given time. No more one and dones (in basketball). A push by the NCAA to set up a for-profit D-League that takes kids out of high school who have no interest in college education. Higher grade and score minima for entering collegiate athletics.

No more NCAA hypocrisy---put the student back in student athlete.
 

stlnd01

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Is it really, though? I mean, how many med schools fund the business and engineering schools like football and basketball fund non-revenue sports, and sometimes the entire rest of the athletic department? I mean, I get that sports are just games, and should not be the main focus of any University. But, if these programs are doing more for other programs than their academic counterparts, doesn't it make sense that their key personnel would be more highly compensated?

Yeah. To be honest at most big-time football schools I don't really have a problem with the head football coach earning more than a professor or administrator.
A big-time head coach is essentially the CEO of a (in a major conference) $75-100M corporation that's also a highly visible arm of the broader university's marketing and fundraising operations and often finances much of the rest of the athletic department. They also work insane hours, serve as the face of the university for everyone from 17-year-old recruits to 65-year-old boosters to reporters, and highly accountable for their performance (in a way neither tenured professors nor most corporate CEOs typically are).
It's a tough job. And a good coach has economic leverage. I'm not going to be begrudge him his paycheck.
 

stlnd01

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My answer, and the point I was trying to make, is that I think schools ethically ought to be heading in the opposite direction. Run it less like a business. Four year scholarships (contingent not on performance, but on commitment in the classroom and weightroom. You can't control whether the coach chooses you to play, but you can control your effort. Four year scholarships but controls against complacency). Limit games and travel on school nights in the name of a TV schedule. Universities only sell players' images with permission (in the same way they use pictures of students in labs and playing Frisbee on the quad for promotional purposes). Sanctions against schools that provide their athletes with sham educations, since that education needs to be revered as the reason college athletics exists. No coaches teaching classes, since that represents a conflict of interest when players are involved. The opportunity to go to school for five years for every varsity athlete (five year scholarships?), so they can have a more reasonable schedule with fewer classes at any given time. No more one and dones (in basketball). A push by the NCAA to set up a for-profit D-League that takes kids out of high school who have no interest in college education. Higher grade and score minima for entering collegiate athletics.

No more NCAA hypocrisy---put the student back in student athlete.

Four-year scholarships and real accountability on the schools for ensuring their kids get an education would go a long way towards fixing much of what morally ails college football. Throw in a little cash for players (not too much, as, let's be real, most of them don't have that much market value) and you might actually save the sport from itself.
 

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My answer, and the point I was trying to make, is that I think schools ethically ought to be heading in the opposite direction. Run it less like a business. Four year scholarships (contingent not on performance, but on commitment in the classroom and weightroom. ...

No more NCAA hypocrisy---put the student back in student athlete.

I hear what you are saying, MnI. In fact, this is what I believe. I am glad ND joined the ACC for this reason - like-minded schools.

But developments over the last couple of years have unleashed a reality that cannot be avoided. The NCAA is weaker. The money has skyrocketed. The Power 5 has autonomy. It will be difficult, if not impossible, to achieve consensus on four year scholarships.

The SEC will be more and more perceived as taking advantage of their players because their teams operate so differently than the ACC, the Big Ten, the Pac 12, maybe even the Big 12.

Why shouldn't players in the SEC get paid? If the money goes into a pot for the student when he leaves in good standing, more players will gravitate towards programs that do offer four year scholarships. If you know a coach like Rich Rod, for instance, is taking over and cleaning house or oversigning and keeping to one year only, why not go somewhere else?

The last resort for a recruit who goes to a school with promises of an education over four years is the school's administration who either keeps to that philosophy or sacrifices it towards the goal of a wining program.
 
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2014-15 SEC revenue distribution

The average amount distributed from the conference office, excluding bowl money retained by participants, is slightly over $31.2 million per school.

"The ability to provide a significant distribution of revenue is more critical than ever for our institutions as they offer more financial and educational benefits to current and former student-athletes," said Slive. "Beginning this year, our schools will fund new costs associated with providing scholarships based on full cost of attendance, enhance lifetime educational opportunities to former student-athletes and they are developing new facilities such as athletic nutrition centers to the benefit of student-athletes."


(Last year's distribution per team was $20.9 million.)
 
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Comparing Revenue Distributions 2015

Comparing Revenue Distributions 2015

Pac-12 Conference: Comparing finances with SEC, Big 12 and Big Ten

"SEC: $31.2 million per school
Big Ten: $30.9 million
Big 12: $25.6 million per school (critical point: does not include revenue from Tier 3 media deals)
Pac-12: $25.1 million per school
"

"1) Distributions for Big Ten schools will jump when the league signs a new Tier 1 deal in a few years.

2) SEC income will continue to soar as its first-year network matures ($5 million per school in Year 1: Wow!).

The Pac-12 has no such revenue windfall coming, as least none that I know of. (A DirecTV deal would result in a modest, not major, increase.)

Bottom line: Unless Scott has something in the works – entirely possible!!!! – the distribution gap projected to separate the SEC and Big Ten from the Pac-12 in FY15 will only continue to expand.
"
 

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Report: Under Armour to make record-setting apparel offer to Texas

"Instead, the Horns may be wearing the same Under Armour crest as the Fighting Irish. That's because the upstart apparel company is set to make a market-setting offer to Texas and athletics director Steve Patterson, according to Chip Brown of Horns Digest. The eye-opening numbers? Brown reports the deal could be worth $150 million over 10 years"

"The current market-setting deal came from Under Armour, too, as Notre Dame inked with the Maryland-based company last year for a reported $90 million over 10 years, a deal that also reportedly includes the ability for the Fighting Irish to take some of the contract in stocks.

With the rise of Under Armour stock overall -- up 80% from early 2013 to early 2014 -- and the 3% boost provided by the Notre Dame deal alone, the addition of Texas could create an even more pronounced bounce. Not to mention the fact that it would give the university significantly increased earning potential from a deal that would in turn, if Brown's report is true, make Texas the recipient of the most lucrative apparel deal in college sports history by an astounding 66.7%
."
 

wizards8507

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Are we still the "market-setting" deal? I thought Michigan got a bigger haul from Adidas when we signed with UA.

Sent from my Samsung Galaxy Note 4 using Tapatalk.
 

phork

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Are we still the "market-setting" deal? I thought Michigan got a bigger haul from Adidas when we signed with UA.

Sent from my Samsung Galaxy Note 4 using Tapatalk.

The scuttlebutt is that Michigan is about to take its talent to Nike so we'll see.
 

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Media Rights

Media Rights

With the Big Ten signing a media rights deal worth $45 million next year (split between twelve teams - Maryland and Rutgers are excluded next year), the Pac 12 saw themselves fall further behind. The distribution gap between the SEC and Big Ten and the Pac 12 is widening.

So, the Pac 12 has chosen a different path for multimedia rights. Eliminating the third party, the Pac 12 ADs have approved media rights to be controlled by the conference and their individual schools. There will be costs involved in setting this up, but this model should bring in more revenue to the conference and their schools with each institution having the option to control their own media rights.

Pac-12 Conference would build familiar structure

The Pac 12 has also taken the step to include student-athletes into their conference governance.
 

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Taxing College Football

Taxing College Football

Subsidized Saturdays: The Tax-Free World Of College Football (From Fortune magazone)

"The same year, oil magnate and Twitter mic-dropper T. Boone Pickens gave $165 million to a charitable foundation attached to Oklahoma State University for a new football stadium and new housing and dining options for OSU athletes. Whether that is worthy of charity is not even the issue here: Less than one hour later, the foundation invested all of Pickens’ donation money – plus another $37 million in other donations – into a hedge fund run by Pickens. The university feted Pickens as a charitable hero and honored him with a wood-paneled locker next to the players’ in the new stadium."
 

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Prices of Guarantee Games May Stop Rising, or Even Fall

A supply and demand analysis for "Group of Five (conferences)" games with Power 5 conference teams.

With a noticeable drop in demand, simple economics would predict a fall in prices. Because the market for these games isn't perfect, thanks to things like needing to schedule games well in advance and match making problems caused by games that are already in place, I don't know that we'll see costs actually go down by all that much, if at all. I do expect to see the costs for these games to stop growing for a time, though.
 

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Coaches Bonuses

Coaches Bonuses

Million-Dollar Bonuses on the Line for Bowl-Bound College Coaches

U.S. median household income of $53,657, according to the U.S. Census Bureau

Only 24 of the 125 schools in the NCAA's top division can pay their bills without student and taxpayer subsidies, according to the NCAA

Swinney's $50,000 bonus for clinching the ACC Atlantic Division last month is just the start of his potential extra earnings. A victory in the ACC title game against the University of North Carolina on December 5 will add another $100,000.

An appearance in the College Football Playoff semifinals would earn Swinney $400,000, which doubles if the team qualifies for the title game. A victory in the national championship on January 11 in Glendale, Arizona, is worth another $100,000, according to his contract.

He can also earn $25,000 if he is named the ACC's Coach of the Year, and $50,000 for National Coach of the Year honors.

All told, Swinney, who earns $3.3 million in base salary, could earn $1.125 million in bonus money with a conference championship, national title, and ACC and National Coach of the Year honors.

Iowa Coach Kirk Ferentz is having a good year, too. He earned a $200,000 bonus—well more than Iowa's median home price of $130,300, according to Zillow.com—when the Hawkeyes beat Purdue, 40-20, last weekend to clinch the Big Ten West Division. This week holds special significance for Ferentz. He could bump that to $250,000 if Iowa (11-0, 7-0) beats Nebraska (5-6, 3-4) Friday to finish the Big Ten regular season undefeated, or by winning the Big Ten championship December 6 at Lucas Oil Stadium in Indianapolis.

Iowa was ranked No. 5 by the College Football Playoff committee last week, and will likely move higher following No. 3 Ohio State's 17-14 loss to No. 9 Michigan State on Saturday. A Top 5 finish in the Associated Press, USA Today, or ESPN poll earns Ferentz $350,000. That jumps to $500,000 for a No. 2 ranking, and $1.5 million if they finish the year No. 1.

Altogether, between bonuses tied to titles and coaching accolades, Ferentz could potentially earn $2.275 million on top of his $4.075 million salary.

Alabama Coach Nick Saban is the highest-paid coach in football with a $6.9 million salary this season. He stands to earn as much as $600,000 in bonus money.

If the No. 2 Crimson Tide (10-1, 6-1) beat in-state rival Auburn (6-5, 2-5) on the road this Saturday, they earn a trip to the SEC title game against Florida and guarantee Saban a $75,000 bonus, which jumps to $125,000 with a victory.

Saban already earned $65,000 when the team became bowl eligible after a 41-23 victory at Texas A&M October 17. That bonus increases to $200,000 if Alabama plays in the College Football Playoff semifinal game, $300,000 if it advances to the championship, and $400,000 if it wins the national title.

Add $25,000 for SEC Coach of the Year and $50,000 for National Coach of the Year honors, and Saban will have quite the nest egg.
 

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Courtesy of T Town...

College athletic departments are taking in more money than ever – and spending it just as fast | The Washington Post

Big-time college sports departments are making more money than ever before, thanks to skyrocketing television contracts, endorsement and licensing deals, and big-spending donors. But many departments also are losing more money than ever, as athletic directors choose to outspend rising income to compete in an arms race that is costing many of the nation’s largest publicly funded universities and students millions of dollars
 
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