What does college football realignment mean for schools like Georgia State - PART TWO
Welcome to the King Williams newsletter. I am a documentary filmmaker, journalist, podcast host, and author based in Atlanta, Georgia. This is a newsletter covering the hidden connections of Atlanta to everything else. This is for my dad, stay strong!
Written by King Williams
Edited by Alicia Bruce
You can read Part One here.
8. Value: The SEC, The Big Ten, and The Big 12
In terms of revenue, the Big Ten is first, followed by the SEC, Big 12, PAC-12, and ACC in that order.
Value creation: The SEC
The SEC contains several already established national brands: Alabama football, Kentucky basketball, plus Florida football and basketball; as well as several other league-wide brands LSU, Auburn, Tennessee, and Georgia. The SEC has always been ahead of the curve in finding new ways to make money and/or expand the current pot of money. The conference was the first to get to 12 members twice*, with the 1991 additions of Arkansas and South Carolina, opened the door for the first conference championship game in 1992, in the newly opened Georgia Dome in Atlanta. The conference has found ways to split off the rights to varying regular season football games including the opening weekend SEC-ACC challenge, Peach Bowl, Sugar Bowl, and annual 3:30 pm/7:30 pm Saturday football games. However, all of this pales in comparison to the SEC Network, a dedicated cable channel to all things SEC.
The SEC is the football brand
For the SEC, due primarily to revenues from football: television rights (3-tiers), specialty games (opening weekend games), bowl games, and the college football playoff. But also the NCAA men’s tournament (aka March Madness), which generates over one billion dollars per year in broadcast/cable television media rights fees alone. College basketball pays more per individual school if the program is successful during the regular season plus the NCAA tournament, but the tournament doesn’t guarantee automatic entry.
It also has THE basketball brand
The SEC is lucky because while its basketball product has had some mid-level successes, Kentucky is arguably the most successful college basketball program ever. Kentucky has the most wins, most championship appearances (12), most NCAA tournament appearances (58-out of-82), second-most championships (8), in addition to being the 3rd highest revenue-generating basketball team in the country at $39 million per year.
With other SEC schools such as Missouri or Florida having made consistent tournament runs over the years, these aren’t enough yet to sustain conference-wide revenues. Adding Texas and Oklahoma is akin to adding another Florida or Missouri, which means more overall money to the conference with a hopeful 4-7 (or more) teams per year making the NCAA tournament.
Value destruction: The Big 12 (and smaller conferences)
For college sports conferences, the value of licensing, merchandise, and other ancillary forms of revenue is derived primarily from the ‘brand’ of successful football teams, not basketball. In college football there are only about 10-15 ‘traditional’ marque brands (ex: Notre Dame, Alabama), brands that are both household names within the fandom and outside of it. The Big 12 lost two in July, capping off a 9-year run of losing teams to other conferences. This includes the loss of four additional league-wide brands: Colorado to the west coast-based PAC-12, Nebraska to the midwestern-based Big Ten, plus Texas A&M and Missouri to the SEC. Texas and Oklahoma were the two anchoring department stores that finally left the local mall to fend for its own.
Value neutral/stasis: The Big Ten
These payouts for a power five range from around $50 million/per year for just the television football rights for the Big Ten, the highest in college sports. This is due to the Big Ten’s combination of traditional powerhouse brands of Michigan, Penn State, and Ohio State universities; a large geographic footprint across the entire Midwest; plus the additions of traditional powerhouse Nebraska in 2012, and newer east coast members Maryland (DC metro) and Rutgers (NYC/NJ metro) in 2014.
Because of this the Big Ten may have peaked in terms of geographic reach as the conference spans from northern New Jersey to Iowa. In this model, a model dependent on revenues from college football and cable/broadcast television contracts, geography made sense. Each state allowed for new broadcast carriage fees, alongside very ripe cities + metros that could support a cable bundle.
9. Name, Image, and Likeness
This summer in a landmark decision, the Supreme Court’s ruling on NCAA v. Alston, struck down the provisions that made all college athletics amateurs. But set with an earlier case on the use of an athlete’s image in the case of O’Bannon v. NCAA. A case that temporarily halted the use of the NCAA video game over its lack of paying players for the use of their likeness.
That ruling ended the designation of all college athletes as amateurs, which allowed both the NCAA and schools to eschew labor laws but most importantly paying college athletes. The ruling allows for college athletes to be allowed to profit from their name, image, and likeness (NIL). College athletes can now seek out revenue avenues in lieu of payment. But with that ruling comes a new barrier as some states such as Georgia, have passed laws that will allow for schools to take 75% of any athlete’s earnings, while on the national level, US Congressman out of North Carolina is drafting legislation to tax college athletes’ scholarships as income.
There is a racial dynamic to this. The majority of college and professional basketball and football players are Black. The biggest detractors of payments to athletes have been people who aren’t. The biggest debates have been dog whistles focusing on the value of an athlete’s non-guaranteed scholarship versus the revenue created by these athletes for their universities, conferences, and channels that broadcast their games.
10. How do colleges make money from football?
The College Football Playoff
College Football brings in billions in varying ways. First is the college football playoff, a $475 million dollar a year, endeavor that sees four teams, almost all from either the SEC, Big Ten, ACC, Big 12, and PAC-12. Often with some of the same teams recycling in and out every year. In 7 years of the playoffs, 28 teams have played. Both the SEC and the ACC have had 8 teams in the playoffs, with Alabama and Clemson having the most appearances (6) alongside the most championships (2).
The college football playoff is cronyism
In this model, both the schools and the conferences get a slice of the money.
But unlike the annual NCAA Men’s and Women’s tournament, more of the preference is for successful established brands than it is for actual on-the-field success. The playoff selection committee is a combination of boosters, athletic directors, former coaches, and industry insiders who decide which four teams should make it. Often at the nudge of Fox and ESPN, who rely on the tier-1 schools and tier teams to guarantee rating success. There have been calls for equity for years as schools from outside the Power 5 conferences as Boise State, UCF, and Cincinnati have been left on the outside looking in. Even Power 5 schools with less clout such as Baylor and Iowa have not been selected. Or in an egregious move, the controversial 2017 decision to select an Alabama team who didn’t meet the qualifications, then eventually beat a Georgia team who did—in Atlanta no less.
The NCAA Tournament
The NCAA Men’s Basketball Tournament (aka March Madness) is the biggest one-time payout to universities. The deal pays hundreds of millions of dollars annually to the 68 schools that are invited to attend. That deal will move to over $1 billion a year in 2024. The NCAA has granted dual media rights to CBS Sports and Turner Broadcasting to air the games until 2032.
All 68 schools get an equal amount for their first game, then more thereafter should they win. But that win goes to the conference, which is supposed to distribute fairly, amongst every member. Which according to Sportico, is about $337,000 per win, which makes more sense as to why say the SEC or a Big Ten/ACC/PAC-12 ‘alliance’ would one day prefer to take over March Madness if not have more of a say so. With the possibility of creating a new tournament with only their teams or their teams being the majority participants.
Via Sportico: How much is an NCAA tournament win worth? (3/19/2021)
A unit system tallies how revenue is distributed through two key NCAA funds, which will distribute a combined $222.5 million to conferences this year. Units are awarded for each game played, minus the championship. A school can earn a maximum of five units for its conference in a single March Madness run.
This year’s units carry a $337,141 annual value, according to the NCAA. That number changes each year, typically increasing by about 3% annually. The current year’s value will be applied to units earned by conferences over the previous six tournaments.
Since units are paid out in annual distributions over a rolling six-year period, each one earned during the 2021 tournament will be worth a total of at least $1.68 million for the recipient conferences by the time it is fully paid out in 2027. While the NCAA encourages conferences to share this money equally among member schools, it isn’t required.
It’s also around the time the next big wave of college sports media rights comes up for sale amongst nearly all of the conferences.
Licensing, media rights, merchandise
Another way schools make money is by licensing their rights to third parties. Often this is via slapping their logos on consumer apparel, athletic clothing, household goods, toys, and accessories. But also schools can license out their uniforms to companies who are looking to be associated with the school. Often this can be for individual sports, typically football and men’s basketball. But also for the overall school athletic program.
Apparel
This has led some schools like Notre Dame to enter into exclusive agreements with companies like Adidas to brand their football team in their attire beginning in 1997. Since then, the Fighting Irish have become staples in setting the benchmark for licensing fees. The school in 2014 signed a then-record-setting six-year, $90 million dollar deal with Under Armour, only to see that deal be lapped by other tier-college football brands Texas, Ohio State, Michigan, and Alabama (all with Nike). In every case, those subsequent deals set new benchmarks for school payouts to athletic programs. Payouts that have benefited other non-tier 1 football schools such as the deal the University of Wisconsin entered with Under Amour. Plus for basketball-only schools like Gonzaga, having a sneaker company cover the costs of uniforms + paying for the right to put a logo on them is growing into a lucrative market. A market that is now seeing schools like UCLA a tier-1 basketball, tier-3 football program ink a whopping $280 million dollar deal with Under Armour. Only for Under Armor to drop them, four years later, prompting a court battle, that will likely be costly for Under Armour.
At the stadium
Schools also make their money from more traditional methods such as ticket sales and concessions. But as the college football spending spree has increased so have opportunities for revenue. This has caused some schools to operate more like minor league NFL teams than in the years past. Multiple schools have now started to build VIP suites similar or better than NFL stadiums, charge NFL-level parking fees, and have in-house sales teams for banner advertisements inside of the stadium. Or if your Texas A&M, all of the above. Even Georgia State has sold off the stadium naming rights of Turner Field to Center Parc Credit Union, in a 15-year deal. Georgia State now plays in Center Parc Stadium.
Oh, tv is still there, the SEC in December signed a 10-year, $3 billion dollar deal to broadcast just the Saturday games. A nearly sixfold increase from the $55 million CBS was paying.
11. What does college football have to do with collegiate funding?
For many universities, the last 25 years, dozens of American universities funding efforts have been in the pursuit of football. Some universities such as LSU which won the national title in 2020 have seen their football program grow in funding and expense at the expense of things such as the library not being renovated or maintained. But this is common throughout as many universities simply cannot keep up with the arms race of college sports. Schools can spend millions of dollars on the salaries of the coaching staff, tens of millions on practice facilities, and hundreds of millions on stadium (re)development.
Schools big and small are doing nearly all of their large fundraising endeavors for football facilities. Schools such as the University of Alabama Birmingham (UAB), which within ten years has gone from being shut down due to funding issues related to the athletic program, to spending nearly $150 million on a new stadium in downtown Birmingham. This has resulted in UAB being invited as a new member of the American Athletic Conference (the AAC), where schools such as Cincinnati, Houston, and UCF were poached from The Big 12.
While on the tier-1 level, the athletic facilities especially in the SEC in many ways are better than that of the NFL. For instance, SEC member Texas A&M has raised a whopping $485 million for athletic facilities and an upgrade to their stadium. For comparison, the NFL’s Chicago Bears stadium renovation is estimated to be around $665 million.
12. What does college football realignment mean for everything else?
Athletic budgets are in some cases larger than the overall academic budget of many universities. While some universities have become so successful that they’ve been able to spin off as completely separate entities such as Florida State and LSU, for most universities athletics is breakeven or negative expense. Especially football programs. There are only about two dozen football teams out of 128 FBS level schools that generate a profit every year. In fact, the majority of schools that house football programs rely on a system of bowl games, opening weekend matchups, rivalry games, and for smaller schools, the ability to play power schools in the SEC, ACC, Pac 12, and Big Ten. Even the big 12.
And many schools such as HBCUs rely on these games which can sometimes pay upwards of $1 million dollars to fund the entire football program for the year. The purpose of overall conference realignment and further siphoning off of funds by the power of five universities are to effectively grow and control the overall part of TV money. The long-term plan is to remove all non-power five schools for one NFL junior product. The product that could be worth it in the long run.
Other conferences:
The ACC
Conference realignment isn’t over until the SEC says so. Even schools in the rival ACC conference have been on the radar of a potential expansion of the SEC. Clemson Coach Dabo Sweeney even states that it makes sense for the South Carolina school to join the SEC. The ACC is home to other national brands Florida State and Miami. Both conferences had flirtations with the SEC, with Miami almost joining in the early 90s but Florida made such a fuss, it never happened. This isn’t limited to football schools as basketball royalty North Carolina has been a part of rumors of an SEC invite, albeit one that would not go far without its partner Duke University. While some schools such as Virginia Tech, NC State, have been pondered as potential expansion partners, as well as maybe Georgia Tech going back to the SEC. Tech was a founding member who left 1964 before ending up in the ACC in 1978, where it has been ever since. All of these are better than a 2012 plan by the Big Ten to have Atlanta-based Georgia Tech join the conference.
HBCUs and other small schools
For HBCUs conference realignment and the pivot by the SEC and the other power, five schools into a cartel light model could be detrimental to their athletic programs. The roommate structure of an NFL junior program with only see power five schools play each other over a 12 game span. That will likely for sure benefit the SEC in the Big Ten and for the second-tier conferences, they get more benefit out of it as well. But for every other tier 34 and so on there’s a high probability they get left out altogether.
This means an overall loss in revenue. In this scenario, both HBCUs smaller power five schools smaller group of five schools, as well as any division two school which was looking to move to division one, would likely have to stay in division two or downgrade. There could be a scenario with several football programs simply just having to dissolve. Another scenario with several football programs simply downgrades to the FCS level which is division two and three football. On that level students typically do not receive scholarships.
13. Women in collegiate athletics and Title IX
One of the additional concerns about paying Athletes came over where this rules out non-revenue sports including all of women’s sports in some universities. Title IX is a civil rights law that prohibits sex-based discrimination in any school or other education program that receives federal money.
Under the rules of Title IX, at any university that receives public funding for any men’s athletics that the same level of athletic funding is spent on women’s sports as it does men. This has led to the expansion of women’s sports in all categories over the last 50 years, as well as the growth of female scholarship athletes. In some cases, in schools like the University of Florida, the football budget covers tens of millions of dollars in the football revenue, dwarfing all of the other programs combined. Of that revenue, the football team’s revenue alone can cover the entire cost of athletics for the entire university for both male and female sports. With the exception being men’s basketball which has produced a sometimes successful product, entering the NCAA tournament on a semi-annual basis.
14. What does college football realignment mean for metro Atlanta schools?
One thing realignment could do is relegate smaller schools out of football entirely. For schools with upstart programs like Georgia State and Kennesaw State, this is trouble. For schools like Georgia Southern and HBCUs, this could lead to relegation or more drastic moves to continue their football programs.
Georgia State
For schools like Georgia State *(GSU), conference realignment and the revenue may not be there long term. The Sunbelt’s recent negotiators of its television deal with ESPN is 3x more than what it currently receives. The school has doubled down on football by building out a mixed-use community around the renovated Turner Field, now named Center Parc Stadium. Georgia State also has one of the highest athletic fees for students in the nation. Fees mostly go towards subsidizing football, despite the school’s success being in basketball where they have made several NCAA tournament appearances. While the revenue increase is in the right direction that’s not enough to cover the overall athletic budget of over $30 million currently.
Kennesaw State
Kennesaw State is another example of a growing football program trying to take the next step. Similar to Georgia State it’s a recent addition to the college football landscape trying to eventually make a tier-3 college football conference. But unlike Georgia State, it is currently not yet at the level of an FBS conference. It should be noted that a game with Georgia State was one of the most attended for both universities. This could be grounds for a future rivalry for both programs. Provided Kennesaw State can continually grow in both revenue and notoriety.
Georgia Southern
Georgia Southern has been a powerhouse on the FCS level and a pretty consistently successful team once entering the Sunbelt with Georgia State. Despite a very successful program, it suffers from a long-term regional issue being located on the Savannah coast. The media market needs the boost of competing against schools like Georgia State in Atlanta, and Carolina schools Coastal Carolina and Appalachian State for increased notoriety. The alumni base is growing, the base is also much more of a truer college football base than Georgia State but needs more regional viewership.
it’s just not big enough to command the fees and attendance and regional or national viewership to generate a bigger booth to a conference. But with Georgia State sticking into the sunbelt and building a rivalry alongside Georgia southern, this is a win-win for both teams. Both schools have large alumni within the Metro Atlanta area which is the largest and most of south’s college football marketplace in the country. Both of which are in the same conference which provides a growing audience for viewership of both programs and Notoriety.
Closing
The future of college sports is one that could be one of less competition, with fewer schools, but bigger paychecks. Depending on who wins out the next round of conference realignment + secures media rights will have the future of all sports in their hands. For schools like Georgia State, which has spent tens of millions of dollars in developing a football program, the dollars may never make sense.