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Money Ball: Oregon colleges follow the cash to football

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Articles - September 2010
Friday, August 20, 2010
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Money Ball: Oregon colleges follow the cash to football
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The University of Oregon Ducks have expanded their athletics department by a factor of five over 15 years and has sold out 68 straight football games. // PHOTOS COURTESY OF UNIVERSITY OF OREGON
Another huge driver in the college sports industry is television money.

The annual Civil War rivalry between the Oregon Ducks and the Oregon State Beavers routinely sells out months in advance, but last year’s game may have been the biggest year ever on the national stage. Scheduled on a Thursday night rather than a weekend, the game had ESPN all to itself, with the winner bound for the Rose Bowl. It ended up being one of the network’s most watched games of the season and that single game reportedly added about $350,000 each to the Duck and Beaver athletics departments.

The Beavers came up short in that particular contest, but not for lack of effort, both on the field and on the money side. Even without a super-booster on the level of Phil Knight, OSU athletic director Bob  De Carolis has nearly tripled his budget over his 12 years on the job, from $18 million to $50 million.

“The engine that drives the growth is football,” says De Carolis. “Football, and building the base there, going from paid attendance of 15,000 to …averaging about 42,000 tickets sold. And the growth of fundraising… In ’98 we were raising about $1.5 million. By ’04 it was $5 million. Then we hit an all-time high a few years ago at $11.4 million.” De Carolis estimates that about 70% of the revenues his department makes come from football. As he sees it, “football and to a lesser extent basketball finance the rest of the athletics department.”

Still, for all that growth, the Beavers are deep in the red. A 2009 NCAA report estimated that the Beavers ran a deficit of $3.8 million during the 2007-2008 season when factoring in subsidies from state lottery games and student fees.

According to ESPN’s college sports database, Oregon State earns about $8.5 million in annual ticket sales — a sizable sum but just half of what UO earns at the gate.

The department’s bottom line could soon be improving, however. The PAC 10 is expanding and is looking for a new television contract, which is divided among the teams in the conference based on TV appearances. The current contract pays the conference $58 million, while a future contract could pay twice that or more.

Besides, even if the Beavers lose money as a program, De Carolis believes the athletics program pays off from a marketing perspective, especially when you factor in the popularity of college sports on TV.

“It really is a good investment as a PR machine,” he says, “to help schools get their brands out there.”

Meyer Freeman, COO of the Oregon Sports Authority, agrees from a broader statewide perspective. “The impact of a Civil War game getting ESPN all to itself is huge in terms of great exposure for Oregon,” he says. “It generates an overall awareness of Oregon being a great place to live in, work in and visit, and that has benefits over the long term. It’s almost impossible to quantify what it’s worth, but it’s definitely valuable anytime you put your state on a platform that widely viewed.”

Lariviere says the money UO made by reaching the Rose Bowl “pales in comparison to having your logo in 15 million homes for four hours.”



 

Comments   

 
Nick McRee
0 #1 Football is a financial drainNick McRee 2010-08-25 15:00:00
There may be losts of reasons a person could be stoked about the re-emergence of Boxer football, but the "it's a moneymaker" argument doesn't wash. Accodring to a 2009 NCAA report, there are only 14 out of 300 Division I schools that showed a positive balance sheet last year. There is no program below Div. I that does not lose money. Accounting slight-of-hand that relies on budget size, instead of net revenue as a measure of solvency is absurd. So too is the notion that football pays for itself through increased enrollment. If Pacific wanted more (male) students, why not open an Engineering School? Why not just admit more students who applied?
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Dan Neef #23 Pacific Boxer Football Letterman, Class of 1993
0 #2 Dear Nick,Dan Neef #23 Pacific Boxer Football Letterman, Class of 1993 2010-08-25 21:23:56
Name an academic program on any college campus that results in a net gain? Pacific cancelled Football in 1991 and lost students. Not only lost students but lost male students. So now they are bringing it back and increasing gross revenue by 2 million. The bugdet for football is probably well under 400,000. (have your priced an engineering school?) I think it is absurd that athletics need to show a profit in order to be considered useful. How many english departments are profitable?

Your ignoring the forest because of all you see are the trees. Pacific gained at least a million, balanced there gender equity for very little cost. The offer a product and over a hundred students are willing to pay. Not sure where the big deception is.
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Nick McRee
0 #3 Dear Dan,Nick McRee 2010-08-25 22:32:14
Nice to hear from a fellow alum.
1) Pacific's enrollments grew significantly during the years in which football was exiled. I think you "miss this forest for the trees" to focus on the year following football cancellation in which disgruntled students departed. 2) The gender imbalance experienced at PU is not unique. It has little to do with whether a school has football. 3) Enrollments can be increased by simply admitting more of the applicant pool. The *only* way to make a case that football "pays" is to assert that enrollments would not have gone up *but for* football. That is balderdash. 4) According to the NCAA, there are only 14 universities in the entire country with football programs--all Div I--that report a net revenue gain for their athletic programs.

As I said, there are lots of reasons for people to celebrate football's return to PU. But the athletic director should justify the program for reasons other than the specious argument that it makes sense financially.
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Dan
0 #4 Hey NickDan 2010-08-26 08:21:09
So I guess I was wondering how many english departments make money nation wide?
I hope that you understand that my point is that Colleges rarely make money from any program. However most people agree that the various programs are useful in terms of providing an education. To conclude that because a program does not make money therefore it is deceptive or fiscally absurd, misses the point that the choice to have a football team is not neutral choice. It is a positive net gain. As for *only*, *but for* and balderdash, the bottom line is Pacific reduced gender imbalance, and increased net revenue.

Now if you say it is better to lower standards vs. adding a program that is a value judgment. How low do you go?
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Paul Blanchard PU Football 1984
0 #5 Hey NickPaul Blanchard PU Football 1984 2010-09-16 11:12:38
You are missing an important "revenue stream". The way in which Boxer football was cancelled was so unfair and distateful that a huge number of Alumni simply quit giving money to Pacific. I am one of those. This fall I will write out a check to the school for the first time in 20 years. Myself and several of my teamates have done fairly well professionally (even though we were lowly "student athletes") and I do not think this income source should be underestimated. The English department was instrumental in killing Boxer football last time - its a little uncomfortable to see similar attitudes remain.
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DB PU Football 85
0 #6 Hey Nick and PaulDB PU Football 85 2010-09-16 11:44:27
I will step foot on campus for the first time since attending a football game in 1991. I have purchased season tickets even though I live 500 miles away and will not be able to go to many games. I am a professional and donate a great deal of my time to coaching HS football. Over the last 20 years, I have helped a number of high achieving student-athlete s with choosing schools where they are able to continue to play football. These kids are not D-I type kids, they are student first, football is a bonus. My school, Pacific was not an option. Now it is. This story is about money, and the administration of PU has made some excellent decisions of late with program expansions, and this football decision is a great one. An expensive, small, private college adding those numbers to their enrollment in this economy is remarkable!
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Duff - Pacific alum and football player
0 #7 Nick - English departments have a negative NPVDuff - Pacific alum and football player 2010-09-16 11:48:33
Football done corrrectly is a positive for a university. The Ivy league plays football - why, if it is such a detractor from their academic mission? Calculate the NPV of a new engineering building and see how many years it takes to break-even on the project. Lowering standards to raise revenue is the quickest path to mediocrity for a university and academic ranking versus its peers.

Welcome back football.

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TD
0 #8 Gents:TD 2010-09-16 15:04:06
Harvard and Yale have continuously played football since 1875. Pacific, had it not dropped its program in 1991, would have completed its "100th" year in 1992 (16 years after "the game" was adopted and formally integrated into the "university experience" of two of world's leading universities (e.g., Harvard undergrad ranked #1; Yale is ranked #3 (see U.S. World & News Report and QS World University Rankings) (among others, I'll add). Notably, none of the Ivy League universities, like Pacific, offer athletic scholarships, merit admission only (with some assistance based on financial need)!

Let's not forget that educational programs, as a whole "almost never" generate revunue to pay for themselves ( by the way, the football program at larger universities are expected to fund (directly and indirectly, through donations) the other "non revenue" programs (i.e., soccer, track, et al) - as pointed out, just a few are successful enough to pay for "all" programs.

The reality is that, wether public or private, all colleges and universities are dependent on federal, state, and local tax based revenues. Private contributors and endowments, as well as federal and corporate grants, typically pick the remainder of an education institution's operating expenses.

Ever been to the Univ. of Notre Dame on game day? Does anyone seriously think that the english or engineering departments (sans the many student athletes from "all" sports (although football typcially provides the largest segment) that are enrolled in these fine curriculums) could create and establish the strong "academic" and "athletic" traditions that fine American institution has established in the middle of Indiana's northern cornfields?

Academics is the priority of the mission, but the strategy for getting that mission fulfilled should include the opportunity to have the full college and university student-athlete experience, which optimally includes fall saturdays filled with football and other college sporting activies. Isn't that, after all, the full liberal arts and science education philosophy?

Two of my all time favorite football quotes seem appropro here. First, "It's kind of hard to rally around a math class." - Bear Bryant Alabama); and, "A school without football is in danger of deteriorating into a medieval study hall" - Frank Leahy (Notre Dame).

When Fordham University dropped its FB program (which it later wisely reinstated after a significant drop in enrollment - endowment), Vince Lombardi (who, by the way taught Latin, physics and chemistry before becoming a full time coach) reportedly said, "Fordham is is a school without a soul."

I wouldn't go that far in describing Pacific that way these past 19 years, but I can tell you that a significant segment of successful alumni felt the school lost touch with it's "99 year" history of providing PU students with the full college experience when faculty seized the opportunity to make fall Saturday's at Pacific U. match the rest of Forest Grove's sleepy Saturday downtown demeanor.

So, instead of casting criticims at one of any university's rare "revenue generating" activities, I propose that we just say "Congrats" to Pacific and hope that the University community and those associated with the team enjoy having "another" competitive function to draw folks back to the PU campus this fall after all these many years!

Go Boxers!!!

TD
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