JRsec
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RE: College sports thrive amid downturn
(05-07-2014 08:42 AM)arkstfan Wrote: (05-07-2014 07:34 AM)orangefan Wrote: (05-07-2014 06:51 AM)goodknightfl Wrote: (05-06-2014 08:56 PM)ClairtonPanther Wrote: I honestly don't think there is a bubble. I think college football is as popular as it ever been despite the attendance going down. People these days would rather watch the game on their 50+ big screen TV. And not only do you enjoy the game on the huge TV you don't have to deal w/ the drunks and the nonsense that goes along with it.
You sound a lot like home buyers in 2005 and 6.
First off, NCAA Football had a record year for attendance in 2013, both overall (50,291,275) and at the FBS level (38,135,118). http://www.ncaa.com/news/football/articl...re-tops-50
Second, the home buyer of 2006 was getting a loan with 0% down, possibly with a balloon payment at year 5, was taking on debt payment obligations that were too high relative to their income, and was paying too much for the house because he or she was competing against other buyers using the same techniques and/or speculators/flip artists. How is sports or college sports like this in any way?
There are three critical revenue streams for college athletics.
1. Attendance income. Unless there is some significant loss of disposable income and schools fail to adjust attendance pricing to reflect changing demand there is no potential for a collapse in attendance based income which remains the primary source of income for the elite programs (I include mandatory donations in attendance income). There could be falling revenue but a stadium that was drawing 65,000 one year isn't going to draw 20,000 the next. A school drawing 25,000 isn't going to draw 8,000 the next absent some sort of chemical, radiation or nuclear biohazard or catastrophic natural event of scale similar to the Japan Tsunami or the New Madrid earthquakes and those would be geographically finite. Any decline in attendance income will be gradual giving schools opportunity to identify and adjust.
2.University income. Either student fees or transfers of revenue. There is assuredly a downturn in enrollment coming but the impact will be felt most strongly in smaller private and public institutions. Publics below about 5,000 enrollment and privates below about 2,000 will face the highest risk. Declines are unlikely to be dramatic and overnight unless a school becomes publicly known to be financially unstable (believe this happened to Lambuth)
3. Conference income. From the CFP, NCAA, and the league TV contract, as well as league sponsorships and championship events. The conference tournament is already drying up as a cash cow for most leagues. Basketball starts its season before fans are ready for it to start, they play 4-6 weeks without students on campus, and then have a regular season that is meaningless for over 2/3rds of the schools. But TV collapsing is no given. TV changing is inevitable. There might be a short period of disruption that could be dangerous for the league having its contract come up in a transitional phase (see SWC/Big 8) but overall the marketplace should be relatively steady long-term.
The low end of Division I's greatest risk is going into the enrollment downturn carrying too much debt and being unable to service it. The high end's greatest risk is disruption when the TV model changes and with it changes the factors most desirable in effective revenue generation. In a future model market as we know them today may be of little value while the size of the fan base and engagement level of the fan base may become the measurables that drive future realignment.
Good post and very true. That is why I don't look for the SEC to add any school that doesn't fit its model. 60,000 or more attendance, state land grant or flagship school, top 100 academics preferred, and top 40 revenue producer. Right now one of the greatest unsung strengths of the SEC and Big 10 is the size of active alumni bases, strength of attendance, and strength of viewership. Consistency of Academics adds further backbone to both as well. What I think is too overdone in conversation is the definition of culture. Size of schools, relative income of schools, academic range of the schools, all form a culture of their own. The cultural differences of geography while relevant are much less of a factor. What is important is overhead costs of operating athletic departments and that more than anything else is why the geography remains an important factor.
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05-07-2014 09:31 AM |
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