The poor get poorer.
On the heels of the venerable Ivy League’s Wednesday announcement to not participate in intercollegiate sports during the Fall 2020 semester due to the global pandemic, The Big Ten Conference announced on Thursday to move all fall sports to a conference-only model.
While the other Power 5 conferences (ACC, SEC, Pac 12, Big 12) have not announced their plans yet, I strongly suspect they all will similarly adopt the “conference games only” model in the coming days/weeks.
At least for now…until the unpredictable coronavirus foe calls its next audible which is bound to undermine the best of intended plans across both collegiate and professional sports.
Given that the Power 5 conferences are much more reliant on athletic finances than the Ivy League schools, it’s not surprising the Power 5 schools are reluctant to pull the plug on the Fall 2020 sports calendar just yet.
With at least $4 billion in college football revenues at stake collectively for America’s 65 Power 5 schools, I certainly don’t fault these programs and conferences for at least trying to devise a game plan, and the conference-only model is a logical strategy on many fronts:
Still not sure we’re going to see any college sports this Fall, but if you’re going to try, the conference-only model makes sense.
But there are casualties, and the biggest casualties may be the Division I athletic programs with the smallest budgets who reside outside the Power 5.
Enter the discussion of “guarantee games”, the long-standing practice where one school (often times one of the Power 5 schools) pays another school (usually a non-Power 5 school) a financial “guarantee” to travel to the payor’s venue. In 2019, these payments mostly ranged between $500,000 and $1.5 million, with Auburn paying the highest one-game guarantee just north of $1.9 million to Tulane.
These games are usually win-win propositions. The bigger school still generates a net profit from hosting yet another home game, the bigger school usually wins big in these games (touchy subject for Michigan fans circa the 2007 loss to Appalachian State), and the smaller school walks away with a payout which often times generates a sizable portion of their overall athletics budget…especially if such schools receive 2 or 3 “guarantees” in a single season.
Which brings us back to The Big Ten’s decision from Thursday.
By going to a conference-only schedule, this affects 36 scheduled opponents, including 28 from the FBS and eight from the FCS. Six FBS schools — Ball State, Bowling Green, BYU, Central Michigan, UConn and Northern Illinois — were scheduled to play two Big Ten opponents this season.
Of these 6 schools, I guarantee that Ball State, Bowling Green, Central Michigan, and Northern Illinois would have received “guarantees” from those games. If we conservatively estimate an average “guarantee” per game of $1 million (which seems plausible given the 2019 data), then each of these programs are foregoing at least $2 million in revenue.
According to the Equity in Athletics database for the 2018-19 reporting year, Ball State’s total athletic revenues was $27.9 million. $2 million in football “guarantees” is 7% of their athletics budget. Now gone.
Similarly with respect to total athletic revenues for the same reporting year:
So a $2 million reduction in football “guarantees” reduces the budget’s for these schools by at least 6-8%. Not whopping, but still something.
Let’s now think in macro terms:
Power 5 athletics will survive Covid, even if it means scraping the entire 2020-21 athletic calendar. There will be casualties (see Stanford’s sports cuts, MAC and Mountain West post-season tournaments in Olympic sports, and countless furloughed jobs never replaced, wage reductions, and more). But they will be back when we finally can say we’re living in a post-pandemic world.
But even if the conference-only model works for Power 5 schools in Fall 2020 – which I hope it will but have grave doubts it won’t – the financially weaker Division I football programs will collectively see a reduction in their budgets of at least $110 million as their “guarantee” games disappear from the 2020 college football season.
I’m the Founding Director of the Sports Business Program at Washington University in St. Louis, as well as a Professor of Practice in Sports Business within their Olin
I’m the Founding Director of the Sports Business Program at Washington University in St. Louis, as well as a Professor of Practice in Sports Business within their Olin Business School. I am also the Founder and CEO of Sportsimpacts, where I’ve conducted over 85 studies since the company’s inception in 2000…including research at 3 Super Bowls, 3 Final Fours, MLB All-Star Games, Ryder Cups, and numerous Division I NCAA Championship events. www.patrickrishe.com