Category Archives: It’s Just Bidness

Pay as you go.

For once, I welcome our new legislative overlords.

With the athletic departments of Washington’s two biggest public colleges reporting budget deficits two years in a row, state Sen. Michael Baumgartner (R-Spokane) is proposing a bill that will subject college athletics budgets to legislature approval if their athletic departments run deficits for three consecutive years.

Washington State’s athletics department has reported deficits of about $13 million in each of the last two fiscal years, while UW’s athletics department projected a deficit of about $15 million for the 2016 fiscal year, but that figure was later updated to about a $7 or $8 million deficit. Last year, new WSU President Kirk Schulz also proposed a plan that he believes will get WSU’s athletic department solvent by 2019.

Under the new bill Baumgartner is proposing, if a college athletic department cannot get back in the black after three consecutive years, its budget will have to be reviewed and approved by the Commerce, Labor and Sports committee before it can be adopted by the college.

‘Bout damned time.

“I’m a big fan of college athletics, but I have no doubt much of the public would appreciate a timeout on the arms race of college athletics spending,” Baumgartner said in the news release. “This is about ensuring the long-term viability of these programs that give our state’s students so many opportunities. This bill gives our state’s universities a three-year runway from today to get their budgets balanced, and if they can’t do it, my committee will help do it for them.”

Help us to help you!

Of course, the hard part comes in deciphering a college athletics department’s budget.

“The overriding goal is to bring transparency and public oversight to the use of public resources,” Baumgartner said in a phone interview with The Seattle Times. “I think sports is an important part of the university experience, but within balance and reason. More than determining the outcome, I want to make sure public dollars are protected.”

If this bill passes, what do you want to bet those deficits come down faster than planned?

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Filed under It's Just Bidness, Political Wankery

“I think, if we have that same commitment in football, we’ll have championship football teams.”

I linked to this Bloomberg piece the other day.  It paints a pretty horrendous picture of the finances of the Cal Berkeley athletic department.

By another measure, Cal sports are in big trouble. After completing the most expensive college football stadium overhaul ever, the Golden Bears now owe more money than any other college sports program. Hobbled by debt service payments, the athletic department ran a $22 million deficit last year and expects to end this fiscal year deep in the red.

A university task force is looking for possible solutions, including reducing the total number of Cal’s sports programs. Any cuts could endanger some of the school’s most successful teams, which cost a lot more than they bring in, and Chancellor Nicholas Dirks recently gave the group more time. “Everything is on the table,” said Robert O’Donnell, a lecturer at Berkeley’s Haas School of Business who co-chairs the task force.

“Everything is on the table” is kind of an ironic sentiment in light of the fact that a scant few days later, the school canned football head coach Sonny Dykes.  Of course there’s a hefty buyout of his contract, made even worse than you’d expect because of the kind of dumbassery that’s unsurprising in the college athletics business (yeah, I use the term loosely).

With our intercollegiate athletics department’s typical management finesse, we extended our football coach’s contract about a year ago…and fired him this week. He walks away with about $6m in severance, but that’s OK because we’re just finishing up the zillion-dollar severance payments for the previous coach, and the AD who is now at Penn State, so there’s lots of money just lying around that would otherwise be wasted on fixing classrooms, or scholarships for non-athlete students who just play sports for fun and don’t put any eyeballs on TV commercials.

Add to that the money that will have to be laid out to bring in the next staff, and it’s lather, rinse and repeat time at the ol’ hacienda.  Even better, Cal’s athletic director has no time for the Rule of Holes.

… Our objective is long-term financial sustainability for our department. In order to do this, we understand that investing in football is critical. We believe that this change will reinvigorate the program, stimulate lagging ticket sales and renewals, and energize our donor base.

In other words, he has to destroy the athletic budget in order to save it.

What passes for leadership in college athletics shouldn’t be entrusted with running a lemonade stand.  But let’s keep insulating these idiots from the free market because… well, do they really need a reason?

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“You’ve got all day to spend with football.”

Meet the Pacific Pro Football League, the latest attempt to come up with a new professional football league that attempts to fill in the gaps between college and the NFL.

The plan: Four teams based in Southern California, each playing an eight-game schedule on Sundays during the sports dead zone of July and August. Roughly 50 players per team making an average salary and benefits package of $50,000 a year, which they’d be free to supplement with endorsements. Rules tweaked to enhance safety and give NFL scouts matchups they want to see. Coaches with NFL experience, who would teach pro-style schemes in an immersive environment unbound by rules regarding classroom time. Any player four years or fewer removed from high school would be eligible, including college underclassmen who’d entered the NFL draft.

Numerous minor leagues have tried and failed in recent years to expand the American pro football landscape by relying on players who’d missed the NFL cut, which inevitably limited the potential for creating a compelling consumer product. Money has been a common problem, too, and remains a central question here. Don Yee, a veteran NFL agent who is CEO and principal founder of “Pac Pro”, says the league has received angel financing from family and friends and he has met with a potential investor, as well as media distributors. But there is a lot of work to be done. There’s no endorsement or backing from the NFL or its players’ union.

What makes the concept intriguing is it targets a previously untapped talent base: players who currently have no option to play for pay because the NFL’s collective bargaining agreement bars them from the league…

The interesting thing about this business model is that it isn’t really directed at the college football superstar, or sure NFL prospect.

… But like minor league baseball or junior hockey, Pac Pro would be an option for players who either can’t or choose not to play on college scholarships, some of them straight out of high school. Think academic non-qualifiers, juco players paying their own way, players with urgent need to provide for their families, those transitioning from another sport, those who would have to sit out a year under transfer rules, those who have been dismissed from a college program, those who simply want a different path – perhaps, eventually, some top college players who want to start cashing checks and use the league as a sort of football graduate program.

“You’ve got all day to spend with football,” said former NFL coach Mike Shanahan, who’s on the league’s advisory board.

If players want to attend school, the summer schedule wouldn’t interfere and there’d be an option to receive one year’s tuition and books at a community college.

I can see how somebody like a typical SEC coach who skims off the best JUCO talent every year to touch up a roster wouldn’t be happy to see this kind of league come to fruition, because every kid who takes up the offer can never play college ball again.  (It would also have the potential to cripple every Second Chance U program out there.)

What’s interesting is that there appears to be a lot of serious names attached to it.  Whether that equates to serious money is the rub, though.  It would seem to me that if this isn’t sufficiently capitalized, it’ll be hard to sway kids from giving up their amateur status before they’re eligible to sign with an NFL team.

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Maybe that business model isn’t quite dead yet.

You keep asking why ESPN shells out the big bucks for college football.  ESPN sees the answer in numbers like this:

Consider the St. Petersburg Bowl (formerly the Beef O’Brady’s Bowl) that took place at 11 a.m. Eastern in St. Petersburg, Fla., on the Monday after Christmas. The setting was Tropicana Field, a baseball stadium that holds more than 40,000 fans. The game drew only 15,717 attendees and ended with 6-7 losing records for both Mississippi State and Miami of Ohio.

However, it garnered 2.045 million viewers for ESPN, which is close to what Comcast’s CMCSA, +0.40%  NBC managed for a rerun of “Hairspray Live” (2.45 million viewers) that night. Yes, a terrible bowl game that started at 8 a.m. on the West Coast put in a better prime-time performance than network shows that actually aired in prime time.

This wasn’t an anomaly, either. Between Dec. 17 and 26 — well before the college football playoffs — only one bowl game that ESPN and its Walt Disney Co. DIS, -0.06%  sibling networks ABC, ESPN2 and ESPNU aired failed to draw 1 million viewers.

We’re junkies.  It’s that simple.

What’s more interesting is that, for once, the NCAA and schools may be taking note of our addiction and reacting to it in real time.

… An audit of the 2012-2013 college bowl season by the NCAA found that 35 bowls gave out $300.8 million to conferences, while individual schools reported spending $90.3 million on bowl trips.

The NCAA report found that bowls received $445.6 million in gross receipts and spent 26% of that sum on operating expenses, keeping only 7% of the total. However, schools participating in bowls ate $12.1 million in unsold tickets, for an average of $173,479 in losses per team. While big-conference schools with major athletic revenue can take that hit — especially if they’re playing in one of the premier bowl games — it’s tougher for schools with less sports income to cover those costs. Unfortunately, it’s those schools that end up playing in lower-tier regional bowls.

However, starting in 2015, the NCAA began arguing that the new playoff system now functions as a sort of revenue-sharing model that helps take pressure off of the small-conference teams and the lesser bowls. That year, after receiving reports from the 39 post-season bowl games and the schools that took part in them, it was determined that the bowls distributed $505.9 million to participating conferences and schools. The schools, meanwhile, spent $100.2 million to take part in bowl games. The NCAA presented this as a net profit of $405.7 million. While there’s little evidence that any of the above makes it easier for smaller schools to travel to and participate in lower-tier bowls, it gave ESPN the go-ahead to streamline the process a bit.

Of ESPN Events’ 13 bowls, five — New Mexico, Bahamas, Boca Raton, Idaho and Camellia — pay out less than $500,000 per team, which is divided among all schools in that team’s conference. Only four of its bowls — Texas, Celebration, Las Vegas and Birmingham — pay out $1 million or more, and Birmingham only pays that to one team from the Southeastern Conference.

In other words, the economic structure of the postseason is shifting from focusing on asses in the seats to eyeballs on the tube.  ESPN is more than happy to bring that change of course to fruition, naturally, because that’s how Mickey gets paid.  And if the small fry don’t like it, tough shit.  They’re not where the money is.

However, if that number seems a little light, it’s likely because ESPN is paying a whole lot more for rights to the bigger college bowl games. It paid $7.2 billion for exclusive rights to college football’s playoffs through 2026. It pays another $80 million a year through 2026 for the Rose Bowl alone and billions more in deals with college football’s Atlantic Coast Conference ($3.6 billion), Southeast Conference ($2.3 billion), Big 12 ($2.5 billion), PAC-12 ($3 billion) and Big 10 (nearly $1.2 billion). Why pay so much for college football in particular, you ask? Because it’s one of the last safe bets.

In 2015, NFL games accounted for all of the top 25 broadcasts and 46 of the top 50. One of those outliers was a Michigan State-Alabama football playoff game shown by ESPN. That said, ESPN faces a whole lot of competition for those properties, with Fox paying for the other half of Big 10 rights, its pick of games and the rights to the Big 10 championship. But ESPN knows its future lies in the rights to live sports broadcasts, and it’s loading up on them no matter the cost to the rest of its programming.

In the short run, you might welcome that.  After all, are Keith Olbermann, Rachel Nichols, Jason Whitlock, Skip Bayless and Bill Simmons going to be missed?

But the next thing to consider is what happens when ESPN turns that same logic towards college football’s regular season.  The conferences and schools can mumble all they want about preserving the live fan experience, but money talks and the loudest money comes from their broadcast partners.  Just ask the NFL.

Sports attendance has been either flat or falling for much of the past decade, even as live sporting events continue to outperform other broadcast or streamed entertainment. After nearly having to take three playoff games off television in 2014 thanks to its blackout rule requiring 100% attendance, the National Football League owners began phasing out attendance-based blackouts team by team in 2014 before shelving them altogether in 2015. With total revenue of more than $10 billion — including $1 billion a year apiece in broadcast rights from NBC, CBS CBS, -0.40%  and Fox through 2022 and $1.5 billion a year from AT&T-owned T, -0.28%  NFL Sunday Ticket provider DirecTV, also through 2022 — the NFL and its owners are beginning to realize that attendance is becoming a smaller part of the game-day equation.

It’s just one more reason to acknowledge that the game as we know it is slipping away from us in its current form and there’s not much we can do about that, because we’re a part of the problem.  In other words, enjoy it while you’ve got it.

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Filed under College Football, ESPN Is The Devil, It's Just Bidness

A penny saved, a dollar borrowed

Do you ever get the feeling that players do a better job managing their money than certain academic institutions do?

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This is why he’s called Dabo.

Coach Swinney has always subscribed to the “I got mine, don’t worry about his” school of thought when it comes to player compensation, so him coming out forcefully against players sitting out bowl games to prepare for the NFL draft is no real surprise, but you gotta love the logic to his thought process.  Or, to be more precise, the lack of logic:

Dabo Swinney comes out strong on players sitting out of bowls, saying those players might as well skip their entire final season. “You can get hurt in any game and every game is huge…”  [Emphasis added.]

Dude, guys like Fournette and McCaffrey are skipping their senior seasons.  That’s the whole point.  Does that mean you actually approve?

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“So what is Alabama’s secret?”

You can, if you like, buy into the New York Times’ myth making and chalk it all up to Nick Saban being the college football epitome of Mr. Small Stuff, or you can take the prosaic approach and believe it’s more about the remarkable sums of money Alabama pours into its football program year after year after year.

From the 2014-5 fiscal year, here’s what each school in this year’s college football playoffs spent on football:

  • Alabama:  $48.3 million
  • Clemson:  $27.3 million
  • Ohio State:  $29.2 million
  • Washington:  $29.1 million

That’s a helluva spread, especially when you consider that Ohio State typically generates more athletic department revenue than ‘Bama does.  Ultimately, this is why I have a hard time believing that the importation of the Process into Athens, Georgia is going to be seamless.

Sure, it’s not that UGA doesn’t have the money to compete.  Georgia pulled in $116,151,279 for the same fiscal year, good for 15th nationally.  And if you’re looking for a positive note from that, keep in mind that Jon Solomon has this for you:

Since 2005, no school has won football’s national championship while ranked outside the top 20 in total athletic revenue.

But when it comes to spending money on football, Georgia hasn’t been in the keeping up with the Joneses department, let alone the Sabans.

For starters, check out the football operating expenses, including the cost of scholarships per scholarship football player, for Alabama and Georgia, over the last four seasons data has been reported:

  • 2011:  Alabama — $363,722; Georgia — $275,701
  • 2012:  Alabama — $376,320; Georgia — $279,480
  • 2013:  Alabama — $465,127; Georgia — $318,965
  • 2014:  Alabama — $347,050; Georgia — $293,724

The gap has narrowed between the two programs, but that’s still the financial equivalent of Mark Richt’s roster management snafus.

From 2009-14, Georgia’s football spending per player increased 21%.  That’s less than the SEC median (27%).  It’s also less than the median for all FBS programs (31%).

Now, you can spend money wastefully, of course, and you don’t have to look very far afield for examples of that.  But if you aren’t going to keep up on the spending front, you sure as hell better have the smarts to build a better mousetrap than the expensive one they’ve got in Tuscaloosa if you expect to show up in Atlanta for a conference title game.  That hasn’t been the case for a while now.

Now the obvious caveat here is that we’re two seasons past the data available, and one of those is Smart’s first season in Athens.  It’s reasonable to expect that we’ll see a narrowing of that financial spread when those spending numbers come into view.  What remains to be seen is whether the dollars Butts-Mehre spends are enough to keep up with Saban on the field in the coming years.  A couple of years from now, we should have enough information to assess both.

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Filed under Georgia Football, It's Just Bidness, Nick Saban Rules