Monday, April 25, 2016

Three Excellent Articles on the Current State of College Sports

Recently I have come across several really excellent articles on the current state of college sports.

First, John Gasaway (@JohnGasaway), who analyzes college basketball for ESPN, writes a thoughtful piece on why college sports are not facing an existential crisis, though the NCAA may be:
Far from being an “unstable situation,” college sports in general, college basketball more especially, and the NCAA tournament in particular instead present a series of successively smaller and progressively more advantageously situated concentric circles characterized by an unusual degree of hardiness solely as media properties. There are variables in play, naturally, and it’s not too much to term the threat of legal exposure “existential” — with regard to the NCAA. I don’t know who or what will be governing the sport in 2032, and I do trust that by then the players will have long since been receiving their fair share of the resulting revenues.

But if we view the essentials of the tournament as nothing more or less than 68 college teams playing 67 games of win-or-go-home basketball over three weeks from mid-March to early April, I’m yet to see anything even remotely persuasive in the way of a Book of Revelation. The essentials are eyeballs and basketballs, and if a tournament that earned record-setting revenues for a decade before, during and after the largest economic calamity since the Great Depression constitutes a bubble, well, put me down as bullish on this particular bubble. 
Second, Andy Schwarz (@andyhre), a sports economist, takes a good hard look at the economic realities of college sports, and makes a similar case backed by ample data. He explains:
Once or twice a year, as predictably as the launch of college football season or March Madness, we’re treated to the “everyone’s broke” meme in college sports. Sometimes it’s pegged to the football season. Sometimes we hear about it in the context of a new TV deal worth billions. And sometimes it’s tied to the release of new numbers, as was the case last week when USA Today released its trove of college sports accounting data as a resource for researchers everywhere. Along with the data they compiled, Erik Brady, Steve Berkowitz and Jodi Upton put out a companion piece addressing the familiar claim that college sports are reaching a crisis point where they will begin to crumble under their own cost. As economics professor Andrew Zimbalist says in the article, “It’s an unstable situation.” . . .

A sober reading of the history of these claims of unsustainable spending leads to a very different conclusion — specifically: NCAA expenses track with revenue and have done so for decades. But rather than hand-wringers learning from the past and ferreting out Occam’s ledger — the accounting isn’t telling the whole story — decade after decade we see similar fretting over schools losing money on college sports yet spending more and more, surely building to a “bubble” that has to burst. “This time it’s real” has been part of this sky-is-falling rhetoric for over a century.
Third, Dan Wetzel (@DanWetzel), of Yahoo Sports, looks at the dynamics underlying the flood of revenue that is coming to college sports and the political realities that result. He writes:
On Tuesday, SportsBusinessDaily reported the Big Ten is close to agreeing to a six-year deal with Fox Sports for half its television rights. It would pay about $250 million per year, or $17.9 million per school. And that's just half the deal. CBS and ESPN will pay handsomely to split the rest.

This report comes a little over a week after the NCAA agreed to an eight-year, $8.8 billion extension with CBS and Turner to broadcast the men's basketball tournament. It brings the annual value of the event from $786 million to $1.1 billion, an increase of $314 million per year.

That's new money. That's found money. That's money that has yet to be used or allocated.

It's the same as the college football playoff generating about $470 million in revenue that didn't exist three years ago. Or conference-owned cable television channels hauling in hundreds of millions. The SEC Network, which launched in August 2014, doled out $455.8 million in fiscal 2015, $31.2 million per school. The New York Times predicted last year that Big Ten Network revenue would soon exceed $40 million per school, per year.

All of this money – namely all of this brand-new money that isn't even needed – ratchets up cries to share it with the student-athletes.
 Read all three, in full. You'll be smarter for it.


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