Is It The End Of The World As We Know It For Collegiate Athletics?

            In almost every “David versus Goliath” college football matchup, Goliath wins. But those types of games may soon be a thing of the past. The Big Ten Conference recently announced that its schools had voted to no longer schedule games with non-Football Bowl Subdivision (FBS) members. Many followers of the Big Ten applauded this move. Not only would it increase the competiveness of Big Ten programs, in terms of their national strength of schedule, but also it would eliminate games with lopsided scores, such as the beatings Savannah State suffered against Oklahoma and Florida State (where the school lost by a combined score of 139-0).

            Yet this impending decision means there are bigger losers off the field than Savannah State was on the field. In a Forbes article entitled “Elimination Of Guarantee Games Increases Likelihood Of NCAA Breakup,” Jason Belzer does an excellent job highlighting how many Football Championship Subdivision (FCS) teams need these “paycheck” games to survive. For example, he points out, “Northern Iowa (UNI) collected almost $1 million in guarantees from playing Iowa and Wisconsin, which accounts for almost 1/3 of the school’s $3.3 million dollar football budget.” More importantly, Belzer notes that the Big Ten’s decision would reverberate throughout the rest of the FBS. He argues that conferences such as the SEC, ACC, Pac-12, Big 12 and Big East will follow the Big Ten’s lead and stop scheduling FCS opponents. In addition, Belzer then suggests that schools in these conferences may limit the amount of games they play against smaller schools in basketball because these programs face similar competitive pressures as their football counterparts. 

            Belzer then argues that FBS schools’ impending decisions to eliminate games with FCS schools leaves these smaller schools in a very perilous competitive situation. Losing this substantial revenue will force these schools to generate revenue in other ways or “essentially be forced to stop competing at the same level as the larger institutions.” But according to Belzer, there is no real way for FCS schools to make up this revenue. The resulting gap between FCS and FBS will ultimately lead to the “eventual breakup of the approximately 340 school’s that compete at the NCAA Division I level.”

            B6A disagrees with virtually every point with Belzer’s analysis in the last paragraph. First, paycheck games are not going to be eliminated. In fact, non-BCS conferences have potentially new lucrative revenue generating opportunity. BCS schools still need to schedule games but have fewer schools to compete against in these games. Therefore, schools in conferences such as the MAC, Mountain West, Sun Belt, and Conference USA are going to have the opportunity to charge more money to play in these paycheck games. This means that at least some NCAA Division I schools not in BCS conferences should actually be in a economically healthier position then they were before this decision.
            Second, FCS schools can take steps to enhance revenue streams outside of the on-field competitions with big schools. For example, very few schools FCS schools have media rights deals. Yet there are an increasing number of regional sports networks (RSNs) and national networks that are looking for programming. In fact, NBC Sports Network signed a media rights deal with the FCS Ivy League to “broadcast football, men's basketball. and lacrosse.” FCS schools can and should continue to pursue these deals to be less dependent on paycheck changes.

            Even outside of traditional revenue streams, FCS schools have opportunities to attract subsidies. One of the reasons that the Bowl Championship Series schools are in such a strong competitive position is that it has spent $670,000 in federal government lobbying since 2003. Because of its lobbying efforts, the BCS has helped defeat legislation ranging from preventing BCS bowls from losing their nonprofit status to reducing federal funding to “colleges participating in a Division IA college football season that lacks a head-to-head playoff.” And it is not just BCS schools that lobby Congress. The Mountain West Conference has spent $250,000 in federal lobbying over the same time period.

While FCS schools have limited resources, many of these institutions rely on public funds to subsidize their athletic programs. Yet many institutions do not lobby at the federal or state level for their athletic programs or rely the schools’ lobbyists for their athletic programs. As schools like UNI receive more state funding, it is unclear how much of that funding will go to its athletic department. Therefore, FCS can and should make larger commitments to lobby on their athletic programs’ behalf, especially if paycheck games are eliminated.

The primary problem with Belzer’s article, however, is his assertion that the elimination of paycheck games will lead to the elimination of NCAA Division I athletics. It is critical to remember that the BCS is not part of the NCAA. Instead the BCS is “a partnership among 11 college football conferences, the University of Notre Dame and four major bowls – Fiesta, Orange, Rose and Sugar.” Therefore, revenue generated by BCS games goes to NCAA schools but not the NCAA. According to the NCAA, “Most NCAA revenue comes from a 14-year, $10.8 billion agreement with Turner Broadcasting and CBS Sports for rights to the Division I Men’s Basketball Championship.”

One may argue that it is madness to have such a seemingly large organization completely dependent on one deal. However, this deal also means the NCAA will do everything in its power to ensure that there are enough Division I basketball programs to continue “March Madness” (also known as the Division I Men’s Basketball Championship). This requires that schools outside of the BCS have basketball programs that compete at the Division I level. In addition, this dynamic may allow smaller schools to actually ask for an increased amount of subsidies from the NCAA – especially given the elimination of paycheck games.

Belzer is correct that the elimination of lucrative football games will cause problems for smaller schools. It is a stretch, however, to say that this means the elimination of the NCAA as we know it. Instead, smaller schools need to examine non-traditional revenue streams and sources of financing to subsidize their athletic programs.    

Note: The current BCS will be replaced by a new post season structure in 2014. This includes a six bowl games and four team playoff to determine the national champion. The current system has five BCS bowl games and a national championship game between teams rated number one and number two in the BCS Standings. 

Northwestern Nabs A Piece Of Wrigley

           On Tuesday, Northwestern University signed a new five-year agreement with Wrigley Field to play at least five football games at the Chicago Cubs’ famous stadium. For many people, there are two surprising parts of this “agreement that truly is the first of its kind.” The first is that many people wonder why Northwestern would want to play football at the stadium after the public relations fallout caused by the Wildcats’ last game at Wrigley against the University of Illinois in 2010. After discovering safety issues posed by the outfield wall being too close to the field just days before the game, officials decided that both offenses could only drive towards the east end zone, upsetting many fans who had purchased outfield seats. The second surprise surrounding the deal is that the new partnership does not just include football; Northwestern’s baseball, lacrosse, softball, and soccer teams will all soon be competing in the Friendly Confines.

            The first issue should be relatively simple to resolve. Wrigley Field is undergoing construction that should address the field dimension issues and allow teams to compete on both sides of the field. Both Northwestern and Wrigley Field have not yet set a date for the first football game under the new agreement because both sides are waiting to the see the results of pending construction. However, numerous reports have the first game being played in 2014.

            The second element of the deal – the inclusion of sports outside of football – is a more interesting development. For Northwestern, playing non-football contests at Wrigley Field seems like a no-brainer. The school will drive increases in revenue, awareness, and perception by hosting games at the stadium. In addition, Northwestern has been trying to build its brand as “Chicago’s Big Ten Team” for years – even though the school is located north of the city in Evanston. By creating a partnership with Wrigley Field, Northwestern is implementing what Haas School of Business Professor Emeritus David Aacker calls a “brand as place strategy.” By using iconic venues associated with the city, Northwestern creates ethos around its core brand message. It is easier to consider Northwestern as “Chicago’s Big Ten Team” if the school actually plays a significant number of games in Chicago. 

            The more intriguing question is why Wrigley Field would be interested in hosting Northwestern games in the stadium.  After all, it is unlikely that any of the sports outside of football will attract enough fans to fill the stadium to capacity. Yet Wrigley Field is trying to address a place marketing issue that has hampered large sports stadium venues for years. Including pre-season, regular season, and post-season games, baseball teams will have, at most, 95 home contests. This means there are 270 days per year when the stadium lacks its primary occupant and the revenue that comes with it. (This problem is much more acute for other sports with fewer home games, such as football, basketball, and hockey.) Sports organizations have long tried to fill these non-game days with other activities, such as concerts, tours, corporate events, trade shows, and festivals. These venues are, however, sports venues. Having the non-primary occupants play at the venues does present an opportunity to unlock the most value from these stadiums and arenas. Therefore, having Northwestern play at Wrigley Field allows the Chicago Cubs to potentially generate new incremental revenue growth that other sports organizations have not been able to achieve consistently in the past.

            This agreement also shows why sports property rights are currently the most lucrative asset in sports. The strategy of using both traditional and non-traditional sports has been at the heart of the increasing value of media rights deals. One only has to look at the Chicago-based Big Ten Network’s strategy when it first launched in 2007. Not only was the new network going to broadcast football and basketball, but it was committed to broadcasting baseball, softball, wrestling, soccer, and swimming because it believed that these events could command large enough audiences to justify a year-round channel.

            This agreement, however, also does represent another step in the seeming professionalization of collegiate amateur athletics. It will be increasingly difficult for Northwestern, or any school that follows a similar a path, to argue that it does not use professional athletes when their teams are playing in the same venues as professional athletes. This agreement also presents an interesting dichotomy for the NCAA in that it often does not allow high school athletes to compete in college facilities because of the appearance or reality that a school would receive an unfair recruiting advantage. Yet, it seemingly does not have a problem with collegiate athletes playing in professional venues. These ethical questions will certainly deserve further consideration and should be closely examined.   

While Northwestern may be the first college to sign this type of an agreement with a professional team, B6A does not anticipate it to be the last. Professional teams are looking to maximize the revenue streams their venues produce. Collegiate and Universities will continue to look for new ways to generate money from their athletic programs. For schools that lack the infrastructure or funds to develop their own stadiums and venues, professional stadiums and arenas provide a new channel to increase revenue and brand awareness. The success of the Big Ten Network launched a new wave in collegiate sports channels and media rights. It will be interesting to see if an agreement signed by a Big Ten school will become a catalyst for a wave of new collegiate-professional venue partnerships.