"The Business of College Football" Part 1 - Big Time Ball
Monday, November 12, 2007SUSIE GHARIB: The regular college football season is in its final weeks, as teams jockey for rankings and a spot in the bowl championship series. It's important to the players and to the schools because of the $6 billion generated by college football. In the first of our special four- part series, "The Business of College Football," Jeff Yastine looks at the game and the finances behind it.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: A Saturday afternoon of west Texas football, the Red Raiders of Texas Tech University versus their visiting cross-state rivals, the Aggies of Texas A&M. But as important as the game is to the more than 50,000 fans in attendance here, it's perhaps even more important to Texas Tech administrators and alumni. They've raised millions of dollars in the past decade to expand and upgrade the football stadium and to sign head coach Mike Leach, now in his eighth season. What they received in return is a series of winning seasons and post-season bowl games and a Texas-sized helping of publicity and TV exposure.
JON WHITMORE, PRESIDENT, TEXAS TECH UNIVERSITY: It gets people to know
that you exist as an institution.
YASTINE: That, the school's president, Dr. Jon Whitmore says, is the real dividend.
WHITMORE: It gets them to see that we're high quality and competitive in athletics. And hopefully, we have ads on when these major events are broadcast and they tell the academic side of the story.
YASTINE: This is an era when colleges and universities have to compete harder to attract attention, to attract students and funding. And college football, like it or not, is figuring into an ever more prominent role in helping schools like Texas Tech achieve those goals. University Chancellor Kent Hance says the benefit to the school can be measured in dollars and cents. Specifically, he notes Texas Tech's move to the high visibility big 12 conference a decade ago.
KENT HANCE, CHANCELLOR, TEXAS TECH UNIVERSITY SYSTEM: At the time that we started in the big 12, our endowment was less than $50 million. Now it's over $700 million. So it definitely helps you in fundraising. The athletic program is your front door and that's what people see.
YASTINE: But endowments are just the beginning. The revenues generated by the nation's large college football powerhouses, from television, from ticket sales and logo licensing, equal that of a mid-sized corporation. Sports business analyst Rick Horrow says the football programs are run in similar corporate fashion.
RICK HORROW, CEO, HORROW SPORTS VENTURES: It's probably one of the biggest businesses you would ever find. A coach is a COO of a major multinational corporation. The athletic director is the CEO of that corporation. You have teams right now -- Ohio State, according to the latest revenue numbers -- and they have to disclose them, by the way, because they are Department of Education numbers; this isn't just made up - - their revenue from last year was $105 million.
YASTINE: Of that $105 million, $28 million was profit for Ohio State. That same year, the 2005 season, the University of Florida earned $32 million on football; U.S.C., $10 million. But other schools playing in the top tier of competition, division one, ended up in the red. Ball State and San Diego State each lost nearly $2 million or more on football. As for Texas Tech, the school earned a $200,000 profit. Those funds are typically used to support the rest of a university's athletic department budget. According to the National Collegiate Athletic Association, most departments operate at a yearly multimillion-dollar deficit. But the profits and costs of football, inside the academic, non-profit world of a university, can be a lightning rod for controversy. William Kirwan is chancellor at the university system of Maryland, a former president of Ohio State and co- chair of the Knight commission on intercollegiate athletics.
WILLIAM KIRWAN, CO-CHAIR, KNIGHT COMMISSION ON INTERCOLLEGIATE ATHLETICS: There's increasing concern about the cost of big-time revenue sport programs such as football, the increasing professionalism that is coming into these programs and quite frankly, the distortion in values that can result from this obsessive attention to big-time college athletics.
YASTINE: Texas Tech's head coach Mike Leach sees it differently.
MIKE LEACH, HEAD FOOTBALL COACH, TEXAS TECH UNIVERSITY: Did the English department at Texas Tech make money last year? Did some of the non- revenue producing sports make money last year? Well, they may not have, but that doesn't mean that there's not a tremendous value to them because universities are to provide opportunities. But when you have something like football that does make money, you need to do what you can to cultivate that potential, because that's best for everybody.
YASTINE: Alumni contributions also play a big role in the business of college football. Cecil Preas and Mickey Long are Texas Tech alumni who lease this skybox and see that contribution as helping the team and the school.
CECIL PREAS, ALUMNUS, TEXAS TECH UNIVERSITY: It's a group effort, as far as the team itself and then that permeates into the broader university and to have a great university or a great football, it takes teamwork. It takes lots of diligence. It also takes lots of money.
STEVE URYASZ, SR. ASSOC. ATHLETIC DIR., TEXAS TECH UNIVERSITY: It's an arms race. When you take a look at all the different construction that's gone on, we've done a little over $200 million in athletic facilities in the last 10 years at Texas Tech University.
YASTINE: Professional fundraisers like Steve Uryasz says many schools are servicing the debt on multimillion-dollar stadiums, training facilities and other assets and that's why alternative revenue sources are critical.
URYASZ: So in order for us to continue to grow, we have to continue to go out and find the types of individuals and businesses that can help us compete.
YASTINE: For schools like Texas Tech, aiming to become a bigger institution with a national profile, that competition will continue on the field and off. Jeff Yastine, NIGHTLY BUSINESS REPORT, Lubbock, Texas.
KANGAS: Tomorrow, why even small schools are getting in on the game, as our series, "The Business of College Football" continues.
