“The entire economic model is being broken apart, and its vulnerability to disruptive events (like the pandemic) is being exposed.”
Owls score (photo, Picks and Parlays)
Last October, the Florida Atlantic football team beat Middle Tennessee, 28-13, to go 4-2 on the season. About 12,000 fans were in the stands in Boca Raton to witness what was the beginning of a turnaround season.
From a 0-2 start with losses to national powers Ohio State and Central Florida, the Owls finished 11-3. Along the way, they had a 7-game winning streak, won a conference championship, and beat SMU in the Cheribundi Bowl.
What seems to be just another football story—something to cheer about, too—is also something else. Away from the turf, the stadium lights, and parking lot tailgates, there’s another storyline in college football. It’s the unsustainable business model that enables schools like FAU and MTU to participate in ‘big time’ college athletics.
It’s about money and the gobs of money needed to play. According to data compiled and reported by USA Today, in 2017-18 FAU and MTU spent about $70 million (combined) on athletics. $42 million of that total came from non-athletic sources—student fees and university fund transfers to athletics—or about 60% of total athletic expenditures.
The storyline is clear: except for major schools (those playing in the so-called ‘Power 5’ conferences—the Atlantic Coast, Big Ten, Big 12, Southeastern, and Pacific 12 leagues), the rest of the over 150 major football-playing public schools need subsidies to balance the books.
What’s it mean? For one thing, the old saw, ‘Football pays the bills for non-revenue sports.’ is a myth at those schools. Football, you see, can’t even pay for itself.
There’s something else, too. Schools lean increasingly on athletic donors to help cover expenses and projects—coaching salaries, facility upgrades, and other things that go into the athletic budget. But donor dollars only go so far; they are supplementary sources.
Schools like FAU and MTU also lean on other schools for big money. That’s right: in America’s college athletics, there are donor schools.
In exchange for big paydays, schools like FAU schedule road games against national-level opponents. FAU was to have opened the 2020 season at Minnesota in exchange for $1.8 million. But just a few days ago, the Big Ten announced their teams wouldn’t play non-conference games this year. The outcome? Big Ten will still get big payouts from media rights and other sources for playing conference games, but schools like FAU will lose out entirely—unless the revenue loss is interpreted as the result of a force majeure.
And FAU isn’t alone. This fall, Bowling Green and Buffalo were scheduled to play at Ohio State for a combined take of $3 million. Bowling Green expected to get a second big check from visiting Illinois. Three other schools—Northern Illinois, Ball State, and Central Michigan—also had two games scheduled against Big Ten opponents. Other mid-major schools affected by the Big Ten’s decision include Illinois State, Western Kentucky, Northern Iowa, Towson, Toledo, Tennessee Tech, South Dakota State, Morgan State, Kent State, San Jose State, Monmouth, Southern Illinois, and Appalachian State.
If unplayed as expected, those 13 schools will lose out on $10 million-plus (combined) from games not played at Big Ten schools. If other leagues follow suit (and the PAC-12 has done that already), other mid-major schools will suffer the same fate. For example, Western Michigan is scheduled this year to play at Notre Dame for a paycheck of $1.25 million.
The storyline isn’t really about ‘an uncaring’ Big Ten. On Friday, parent NCAA declared publicly that conferences and schools need to do what they feel is best as they grapple with the impacts of COVID-19. The storyline is that the financial model is inherently unsustainable, and COVID-19 is pushing the model toward the edge of a cliff.
For schools like FAU, circumstances are even dicer. If the Owls play football this fall, SUNY Stony Brook will come calling the week after the Owls were to have played Minnesota. On that weekend, the shoe that Minnesota wore a week earlier will be on the Owls’ foot. How so? SB’s guaranteed take from playing that game is $400,000.
Courtesy News Break
The financial system, you see, is built on stratified levels, such that payees sometimes become payers.
For the right to ‘appear’ to be big-time operations, schools all over the country have taken and continue to take substantial financial risks. To make matters worse, the macro-environment of COVID-19 is affecting universities writ large. At a time when schools can least afford to allocate more money to athletics (they are facing steep financial pressure on the academic and operations sides of the ledger), they may be faced with doing just that.
Will it happen? It’s a question that will be answered school by school, conference by conference, and state by state. Some schools are cutting sports (e.g., Old Dominion), and others are cutting budgets (e.g., Florida State), including eliminating athletic positions.
And not all states are in the same leaky financial boat when it comes to subsidizing college athletics. Those that are—California, Florida, Ohio, Virginia, and Michigan are examples—could be in a pinch. Take Ohio, for example. Just a few months ago, The Cleveland Plain Dealer reported that ten of the state’s public universities subsidized college sports last year to the tune of nearly $200 million. Mostly from Ohio State, you ask? No. OSU’s subsidy level = $0.
Athletic subsidies at Cleveland OH area public universities from cleveland.com (data as of March 2019)
There are lots of ways of interpreting what’s happening—and also to predict what might happen in the weeks and months ahead. After inspecting some of the data I’ve presented here, my colleague Bill Rizzo put it this way: “The entire economic model is being broken apart, and its vulnerability to disruptive events (like the pandemic) is being exposed. For me, the big question is this: Will whatever emerges reflect lessons learned and be sustainable? (italics added)
The odds are …?
A message to be heeded: football and basketball may be the next victims of this plague