Commentary: Sports’ Economic Bubble
I’ve given up trying to keep track of conference expansion rumors these days. All I know is that the B1G and the SEC are working to make moves, unless they’re not… and we’ll know more about something happening after the Bowl Season, unless we don’t. It’s pretty fluid, including people talking about Texas coming to the B1G and an eventual split of the major programs from the NCAA into their own self-governing body. Buckle up.
But what I do know is that we seem to be heading for a similar situation to the tech bubble that we saw in the ’90s- people are chasing paper based on a product that’s expect to grow but might also collapse in on itself. Let me explain what I mean.
During the 12-year contract for college football’s new playoff format, the nation’s five power conferences (SEC, Big Ten, Big 12, Pac-12 and ACC) will earn an average of nearly $75 million more per year than the smaller leagues known as the “group of five.”
From 2014 to 2025, the SEC, Big Ten, Big 12, Pac-12 and ACC will earn an average of at least $91 million annually, sources told ESPN Tuesday. By comparison, the average for the group of five — Big East, Mountain West, Mid-American, Conference USA and Sun Belt — during that 12-year period will be about $17.25 million annually.
So, the Bowls are going to bringing in more and more and more money for the conferences/schools- but only via television revenue, and only for the top games.
Meanwhile, either due to the “schedule issues” that we talked about last week, the struggling economy, the over saturation of games featuring programs that are less than deserving of the “opportunity”, or a combination of these features, current bowl games are still struggling just to sell their mandatory ticket allotment. Minnesota has sold 350 tickets thus far for their game in 16 days. The Orange Bowl teams are nowhere near their required sales- again, these are tickets that the school has to buy for the “chance” for their team to participate… in other words, losses for the University for a BCS game.
We’ve discussed this before- there are about five bowl games that break even or make money for anyone other than the tax free “bowl committee” and “partners” (ESPN broadcasts all but two bowls, and is the majority partner for at least seven of them). Schools’ general funds, state tax dollars all suffer for the bottom lines of others; and yes, some of it will come back to the schools via this new agreement, but don’t be fooled that there’s not a ton more money out there for others. Oh, and still not a cent other than “the usual” for the “student athletes”.
And, in some ways, schools chasing television revenue (and research dollars, if you’re in the B1G) makes sense- it’s another source of income during a time where traditional funds are drying up, and TV is growing as the preferred medium for the sport. However, one causality for all of this also comes at the hands of technology- More and more, people are preferring to stay home at watch the game than go and actually cheer their teams on.
We make fun of Miami and Purdue for their “late arriving” fanbase, but I totally understand their rationale; I was in a suite for The Game this year (humblebrag), and we had a TV stream of sorts but I found myself missing the close up view of the action and replays that I’ve got on the plasma over in the man cave (humblebrag two).
Heck, even Jerry Jones realized this when he built his new stadium- it’s not complete without the TVs hanging over the field to keep everyone’s ADD fixated in the way that they’re most used to.
This trend, coupled with the changing landscape of college sports and loss of great rivalries might go a long way toward explaining why it’s not just the Bowls that are suffering- WVU lets people drink beer in their stadium, and still had some of the lowest numbers for attendance this season than they’d had for a long time.
It makes me wonder if we’re not seeing what the music industry experience several years ago; as someone who frequently books concerts for up and coming bands I’ve discovered that people often aren’t interested in seeing someone that’s not already a huge “name” and known commodity; they can download the one song that they like from the group, or watch their last show on YouTube. There’s no reason to go and wait for three hours in line to watch a group sing for an hour in a crowded venue.
As Ohio State fans, this will never be a reality- we’re the Black Keys, Carrie Underwood, Kanye West of college sports, along with about 15-20 other programs. But for the rest of the schools, the reality might be pretty grim… particularly if the TV revenue dries up because lack of connection on gameday leads to lack of connection and eyeballs during bowl season- or of schools start following Louisiana Tech’s model and skipping bowl “opportunities” altogether.
Is college sports “too big to fail”? For a lot of reasons, including the ones listed above, I believe that the answer is “no, but it can’t continue along the current path without some significant problems in the future”. Luckily for us, we’ve only got 9 days before the Mayans’ prophecy makes it all a moot point.
This Week In The Freek Of course there’s a BCS preview:
Across The NCAA
NCAA president Mark Emmert doesn’t think the overt marketing and cashing in by Texas A&M is unfair. He rationalizes this by projecting out his future.
“The position of the NCAA has always been that when a student is playing for their university, they are getting the full advantage of being part of that university,” Emmert told ESPN.com. “They are able to build on that popularity, and when they go pro, they are extraordinarily well-positioned to monetize their brand. And why will Johnny Manziel be able to do that? Because he played at Texas A&M and was successful and perhaps won the Heisman.”
Emmert says one of the reasons it’s hard to pay Manziel is because it’s not known how much Manziel himself helped to sell an item.
“It’s not just that it’s a No. 2 [jersey],” Emmert said. “It’s a Texas A&M No. 2. I can’t parse out the value of the number on one side and the university on the other. They go together. So A&M can enjoy the advantages of having this spectacular athlete play for them, and ticket sales and filling the stands and being on TV more, and then he’s going to go out and play in the NFL and they don’t get anything for that. I could also say, ‘Shouldn’t they have a share having groomed him for the NFL?’”
I’m trying to imagine another field of study at a school that is going to hit you up when you’re successful in your chosen profession after you’ve left the institution… well, other than the alumni office, that is.
This is seriously becoming one of my favorite Christmas songs… when you think about it, the “Santa” thing is pretty creepy, with all the “Sit on a stranger’s lap in the mall and he’ll give you something” and the “he sees you when you’re sleeping” stuff: