Riddle me this...

[Lennys Tap]

Things we know:

1.This is all about money
2.Football drives the bus because TV revenues from football are huge. Basketball, not so much.

Yet we are constantly told that most universities playing D1 football are awash in red ink because of it. I'm assuming the losses are real (after they get their check from the TV networks). Why wouldn't schools for whom football is a money pit (as it was for MU) just drop the sport? Indiana, Duke, Kansas and Kentucky are blue bloods in basketball but doormats in football. Couldn't they a) stop the bleeding from football and b) get a record breaking deal for basketball by forming a new basketball centric conference?

[Chicago_inferiority_complexes]

Most government programs operate at a loss. That's why we have the annual deficits and debt that we have. The thing keeping it going is that these programs act as giant welfare programs for thousands of football and other staffers, all of whom have a vested interest in keeping the money coming and their jobs existing, so they chalk up the intangibles like university exposure or promise that such exposure keeps alumni dollars flowing elsewhere at the school.

[mu03eng]

And most of the expense of football programs are in fixed assets like stadiums, pratice facilities, work out spaces, and equipment.  You shut down the programs and you cut operating revenue but you still have the fixed costs.

I think most of the red ink is actually accounting tricks to hide losses for other athletic teams.  Football in of itself is probably relatively profitable at any of the top 100 schools.

[Brewtown Andy]

And most of the expense of football programs are in fixed assets like stadiums, pratice facilities, work out spaces, and equipment.  You shut down the programs and you cut operating revenue but you still have the fixed costs.

I think most of the red ink is actually accounting tricks to hide losses for other athletic teams.  Football in of itself is probably relatively profitable at any of the top 100 schools.

Not to mention any losses don't include the massive amounts of charitable giving that's being done at Notre Dame and Alabama right now because they're in the BCS title game.

[frozena pizza]

Things we know:

1.This is all about money
2.Football drives the bus because TV revenues from football are huge. Basketball, not so much.

Yet we are constantly told that most universities playing D1 football are awash in red ink because of it. I'm assuming the losses are real (after they get their check from the TV networks). Why wouldn't schools for whom football is a money pit (as it was for MU) just drop the sport? Indiana, Duke, Kansas and Kentucky are blue bloods in basketball but doormats in football. Couldn't they a) stop the bleeding from football and b) get a record breaking deal for basketball by forming a new basketball centric conference?

That's not exactly right.  Most football programs in the major conferences (particularly the SEC and Big Ten) are profitable.  To give you an idea, football is more profitable at Kentucky than basketball, and it's not even close.  But football revenue is used to support the entire athletic department, so in many cases the overall athletic department operates at a loss.  However, football (and to a lesser degree basketball) bring in other benefits that are difficult to quantify.  When Alabama goes from being in the lower tier of the SEC to a perennial national title contender, what do you think that does for alumni donations, treatment by politicians, student applications, sports tourism, merchandise sales, etc.?  If you are at the top, it is very lucrative, but if you are not highly visible and not in a conference with a major TV deal, it is hard to make a profit after all the expense of maintaining a football program, especially if you aren't getting public funding.  In other words, it really doesn't make sense to have a football program in the Big East.

[Blue Horseshoe]

Most government programs operate at a loss. That's why we have the annual deficits and debt that we have. The thing keeping it going is that these programs act as giant welfare programs for thousands of football and other staffers, all of whom have a vested interest in keeping the money coming and their jobs existing, so they chalk up the intangibles like university exposure or promise that such exposure keeps alumni dollars flowing elsewhere at the school.

Considering big time universities have hundreds of millions & billion dollar endowments, this is a ridiculous post. Universities are fantastic at making money, large governments are fantastic at spending it.

[Lennys Tap]

And most of the expense of football programs are in fixed assets like stadiums, pratice facilities, work out spaces, and equipment.  You shut down the programs and you cut operating revenue but you still have the fixed costs.

I think most of the red ink is actually accounting tricks to hide losses for other athletic teams.  Football in of itself is probably relatively profitable at any of the top 100 schools.

Good point - weight rooms, stadiums, etc are still there as a cost long after football might be dropped.

[Lennys Tap]

That's not exactly right.  Most football programs in the major conferences (particularly the SEC and Big Ten) are profitable.  To give you an idea, football is more profitable at Kentucky than basketball, and it's not even close.  But football revenue is used to support the entire athletic department, so in many cases the overall athletic department operates at a loss.  However, football (and to a lesser degree basketball) bring in other benefits that are difficult to quantify.  When Alabama goes from being in the lower tier of the SEC to a perennial national title contender, what do you think that does for alumni donations, treatment by politicians, student applications, sports tourism, merchandise sales, etc.?  If you are at the top, it is very lucrative, but if you are not highly visible and not in a conference with a major TV deal, it is hard to make a profit after all the expense of maintaining a football program, especially if you aren't getting public funding.  In other words, it really doesn't make sense to have a football program in the Big East.

I was unaware that football is more profitable at Kentucky (and presumably Duke, Indiana and Kansas). If that's true there's no reason any of those schools would ever consider dropping football.

As for "other benefits" though, the four schools are perennial doormats and there's nothing to suggest that won't remain the case. No ancillary benefits to being everybody else's b*$ch.

[frozena pizza]

I was unaware that football is more profitable at Kentucky (and presumably Duke, Indiana and Kansas). If that's true there's no reason any of those schools would ever consider dropping football.

As for "other benefits" though, the four schools are perennial doormats and there's nothing to suggest that won't remain the case. No ancillary benefits to being everybody else's b*$ch.

Large state schools like Kentucky, Indiana and Kansas are not in the business of dropping football.  Their fan support is better than you think and it just won't happen.  Duke is somewhat a different case because they are private and can't rely on state funding.  But with them being bowl eligible for the first time since 1994, donations are probably rolling in and I would think the conversation is more about how to build the program rather than whether to drop it.  Now, Wake Forest?  Maybe.

The attached chart shows the profits and revenue of several athletic programs for 2010-2011.  Notice how many major conference football powers are in the upper right quadrant.  You'll find most of the Big East football schools in the lower left.

http://assets.sbnation.com/assets/1119333/RevProfit.png

[mugrad99]

http://businessofcollegesports.com/2011/06/20/which-football-and-basketball-programs-produce-the-largest-profits/

Here are the football programs less profitable than Marquette basketball:
University of Pittsburgh
Mississippi State Univ.
University of South Florida
Stanford University
Syracuse University
Washington State
University of Louisville
Univ. of Virginia
Florida State Univ.
Baylor University
Duke University
University of Cincinnati
Univ. of Maryland
University of Kansas
Boston College
UCONN
Vanderbilt Univ. 
Rutgers University

O

[Lennys Tap]

http://businessofcollegesports.com/2011/06/20/which-football-and-basketball-programs-produce-the-largest-profits/

Here are the football programs less profitable than Marquette basketball:
University of Pittsburgh
Mississippi State Univ.
University of South Florida
Stanford University
Syracuse University
Washington State
University of Louisville
Univ. of Virginia
Florida State Univ.
Baylor University
Duke University
University of Cincinnati
Univ. of Maryland
University of Kansas
Boston College
UCONN
Vanderbilt Univ. 
Rutgers University

O

Based on this it appears that most D1 football programs (including UK and IU) make boatloads of money. I guess the "sea of red ink" that most D1 football programs swim in is largely a myth.

[bilsu]

I suspect the effect on level of donations make most football programs profitable.

[Dawson Rental]

Large state schools like Kentucky, Indiana and Kansas are not in the business of dropping football.  Their fan support is better than you think and it just won't happen.  Duke is somewhat a different case because they are private and can't rely on state funding.  But with them being bowl eligible for the first time since 1994, donations are probably rolling in and I would think the conversation is more about how to build the program rather than whether to drop it.  Now, Wake Forest?  Maybe.

The attached chart shows the profits and revenue of several athletic programs for 2010-2011.  Notice how many major conference football powers are in the upper right quadrant.  You'll find most of the Big East football schools in the lower left.

http://assets.sbnation.com/assets/1119333/RevProfit.png

Here's a suggestion to help along the fiscal cliff discussions:

              DROP AIR FORCE FOOTBALL!!!!

[MUBurrow]

i cant believe FSU isnt more profitable than that. Tallahassee must suck more than I even thought it does

[Goatherder]

Things we know:

1.This is all about money
2.Football drives the bus because TV revenues from football are huge. Basketball, not so much.

Yet we are constantly told that most universities playing D1 football are awash in red ink because of it. I'm assuming the losses are real (after they get their check from the TV networks). Why wouldn't schools for whom football is a money pit (as it was for MU) just drop the sport? Indiana, Duke, Kansas and Kentucky are blue bloods in basketball but doormats in football. Couldn't they a) stop the bleeding from football and b) get a record breaking deal for basketball by forming a new basketball centric conference?

First, it depends on how you crunch the numbers.  Indiana, Duke, and Kansas usually suck in football.  They do not bring in huge crowds, and do not get big checks for appearing in bowl games.  However, they are in major conferences with teams that do.  So they can go 2-10 for the year and still get a big check at the end of it for being in a conference with good teams.  So Kentucky sucks at football, but it is in a conference that put two schools in the national championship game last year, and UK got a share of that.  That is probably more than any school made on basketball.


Their presence in those big leagues gives them a chance to be really good at basketball and make money from that.  And there are advantages to being in some of those conferences.  No way Indiana wants to drop out of the Big Ten regardless of the money involved. 

Finally, there is no way these schools drop football.  It is too much a part of their identity, and something valuable for people to get excited about.  Alabama sells caskets with their logo on them.  People are that crazy about the place.  What else is there to be excited about in Alabama?

[The Equalizer]

Things we know:

1.This is all about money
2.Football drives the bus because TV revenues from football are huge. Basketball, not so much.

Yet we are constantly told that most universities playing D1 football are awash in red ink because of it. I'm assuming the losses are real (after they get their check from the TV networks). Why wouldn't schools for whom football is a money pit (as it was for MU) just drop the sport? Indiana, Duke, Kansas and Kentucky are blue bloods in basketball but doormats in football. Couldn't they a) stop the bleeding from football and b) get a record breaking deal for basketball by forming a new basketball centric conference?

I think the football attendance numbers may surprise you:

Indiana's football att. in 2011 was 41,300
Duke was 24,393 (lowest in the ACC, and 7
Kansas was 42,283
Kentucky was 60,007
Syracuse was 40,504 

Even lowly UConn averaged 36,600.

http://fs.ncaa.org/Docs/stats/football_records/Attendance/2011.pdf

[Tugg Speedman]

Before you continue with the idea that football is a giant money profit machine ....

http://www.muscoop.com/index.php?topic=34465.msg421983#msg421983

[In late November] 60 minutes did a story on college football.  

http://www.cbsnews.com/video/watch/?id=50135410n

http://www.cbsnews.com/8301-18560_162-57551556/has-college-football-become-a-campus-commodity/

In it they flat out stated the purpose of football is to raise the profile of the school.  That is mission 1.  Mission 2 is to make Alums feel good about the school so they donate.

Most interesting is this statement by Dave Brandon, former CEO of Dominos Pizza and now Michigan AD ...

-----

Dave Brandon: The business model of big-time college athletics is primarily broken. It's, it's a horrible business model.

Armen Keteyian: Broken.

Dave Brandon: Broken. You've got 125 of these programs. Out of 125, 22 of them were cash flow even or cash flow positive. Now, thankfully, we're one of those. What that means is you've got a model that's not sustainable in most cases. You just don't have enough revenues to support the costs. And the costs continue to go up.

Why? A big reason is universities are in the midst of a sports building binge. Cal Berkeley, for example, renovated its stadium to the tune of $321 million. The list is endless. Michigan's athletic department floated $226 million in bonds to upgrade the Big House.

-----

I assume the "125" he was talking about is actually the 127 schools that make up the FBS.  Only 22 are cash-flow positive.  That's it!  I find that statistic unbelievable.

Why would you want to subject a university that already has national name recognition through basketball to this terrible business model?  I cannot see it.

And, how does a non-scholarship or lower division program help in mission 1 (raising name recognition) or mission 2 (increasing donations)?

[brewcity77]

As you pointed out, a big part of why they are cash-flow negative are because they are spending the massive amounts of money coming in. But without a doubt, college football is a giant money machine, just not for the universities. It is making huge amounts of money for the networks and I would guess to a lesser extent the NFL by creating interest for the combine, draft, and all the offseason stuff. The money is big and there, and if these schools pay off all their massive projects, their programs will become profitable. But right now they are cashing in and hoping the bubble lasts long enough to pay for what they have already bought.

[real chili 83]

Lenny and Brew.....

Great posts.

[Tugg Speedman]

As you pointed out, a big part of why they are cash-flow negative are because they are spending the massive amounts of money coming in. But without a doubt, college football is a giant money machine, just not for the universities.

You're right so I corrected my post above

[forgetful]

Its all in the accounting.  To make Football appear more profitable and to justify the expenses the Universities fake earnings. 

Apparel sales get devoted almost exclusively to football revenue, regardless of what was sold.  Expenses for tutoring and support staff get paid for out of University dollars allocated from other funds, but counted as revenue for Football.  There are numerous other ways that the Universities cook the books.

Clean up and organization of game day activities can cost millions, but it gets charged to general University accounts not the football program.

Bottom line is many Universities are hemorrhaging money to support football and the related costs.  They may bring in more donations, but who is to say that a different fundraising model couldn't be as effective without the costs.

Also, since they are having their donors on campus 6-7 times a year for games they expect it all to look pretty, hence money being allocated for such things as flowers, fountains and sod instead of improving the overall mission of the University.  It would be interesting to see someone really break down all the details surrounding football.

[downtown85]

Things we know:

1.This is all about money
2.Football drives the bus because TV revenues from football are huge. Basketball, not so much.

Yet we are constantly told that most universities playing D1 football are awash in red ink because of it. I'm assuming the losses are real (after they get their check from the TV networks). Why wouldn't schools for whom football is a money pit (as it was for MU) just drop the sport? Indiana, Duke, Kansas and Kentucky are blue bloods in basketball but doormats in football. Couldn't they a) stop the bleeding from football and b) get a record breaking deal for basketball by forming a new basketball centric conference?

2. Is false. Revenue for college hoops is 50% more than college football when you count post season revenues.  Revenue per game is greater for football but you play fewer games so it is about a wash.  You ask good questions and actually your questions actually provide answers as to why MU will never consider football as an option.

[classof70]

Lenny and Brew.....

Great posts.

Unless you're Blue Horse.... "Considering big time universities have hundreds of millions & billion dollar endowments, this is a ridiculous post. Universities are fantastic at making money, large governments are fantastic at spending it."