College Football 2006: Bigger business than ever

Then there are the college bowls – incredibly dependent on corporate support. This year, the NCAA approved three new bowls – bringing the number to at least 31. Toronto will host the International Bowl; the New Mexico Bowl, and the Birmingham Bowl were also added. Depending on corporate support, the Sun Bowl in El Paso, Texas recently secured a deal with Brut through 2009, and the Independence Bowl (formerly of Poulan Weedeater fame) announced a three-year deal with PetroSun to underwrite that game. Though Toyota and MasterCard are ending their sponsorship of the Gator Bowl and Alamo Bowl, respectively, bowl sponsorships remain important in generating additional revenue.

3. Develop long-term television deals. Two months ago, the Big Ten Conference announced the creation of the Big Ten Channel, a 20-year joint venture with Fox Cable Networks for a comprehensive partnership in college athletics: 35 football games, 105 regular season men’s basketball games, 55 regular season women’s games, 170 Olympic sports events, and conference championships and tournaments. The deal is projected to provide at least $7.5 million of additional revenue annually for the schools athletic departments.

At the same time, the Big Ten announced a new 10-year deal with ESPN/ABC Sports to televise up to 41 football games, and other major sports as well. As with professional baseball and basketball teams, look for the development of more new “conference networks” as a major trend in the years ahead.

4. Find a rich athletic donor. Oklahoma State took this concept to the extreme last month, announcing the $165 million donation by Mesa Petroleum Founder T. Boone Pickens. While the endowment amount will exceed $250 million (after investment), the football program will receive $120 million of it for new offices, training rooms, and additional seating in the newly enclosed west end of (of course) Boone Pickens Stadium. The donation allows OSU to spend $316 million over the next seven years on athletic facilities -- $2 million more than capital projects planned for the science, business, and architectural schools – combined.

5. Raise ticket prices as much as possible. While athletic directors claim to be reluctant to do so, many high level schools have raised ticket prices 20-30 percent over the last three years. Miami, Alabama, Iowa, Louisiana State, Oklahoma State, and others have pulled the trigger in recent years. The University of Michigan increased the cost of their tickets to $50 per person in order to fund the Michigan Stadium renovation plan – adding 83 luxury suites and 3,200 club seats to its already massive structure.

University of Tennessee may set the standard, however. The new East Club boasts 422 new premium luxury seats. The cost: $4,000 a year for the seats, plus a $25,000 donation payable in equal installments over five years (meaning $9,000 for each of the next five years). The Tennessee Volunteers had better be very good for a very long time.

6. Capitalize on merchandise and retail deals. According to the Sporting Goods Manufacturers Association, colleges generated $2.9 billion in retail sales last year – up from $2.4 billion five years ago. Texas leads the way (after its first National Championship since 1970) with $8.2 million in licensing royalties last year, up more than 100 percent from the previous year. The top five licensing revenue schools are as follows:

Texas Michigan Notre Dame Georgia North Carolina

Most schools now seek large retail deals with apparel and sneaker companies – with substantial upfront revenues paid to the schools. Nike is in the process of finalizing the details of a multi-million dollar, long-term deal with Kansas State (increasing the number of major Nike deals to over a dozen).

II. FURTHER CONFIRMATION OF THE “BIG BUSINESS” OF COLLEGE FOOTBALL

The rules separating a “student-athlete” from a “paid professional” continue to be painfully clear for many in the college sports business. Former Oklahoma Sooners starting quarterback Rhett Bomar and offensive guard J.D. Quinn were banned from the team by coach Bob Stoops for receiving at least $15,000 for fake jobs at a Norman, Oklahoma car dealership. At the same time, the NCAA found no violation after football player Tom Zbikowski appeared on a South Bend talk show in the past year – ruling that there was no “intentional implied endorsement.”

Yet, most agree that top athletes generate tremendous value for their schools. After the National Championship, University of Texas saw freshmen undergraduate applications jump 14 percent to a record 27,326 this Spring. After George Mason’s improbable run to last year’s Final Four, fundraising is expected to increase by 25 percent to at least $20 million. Ad executives believe that George Mason would have had to spend at least $50 million for a public relations campaign that gave it the exposure it received during the tournament.

Last year, EA Sports made over $79 million from “NCAA Football 06,” its popular video game. Florida State received $130,000 and Florida received $112,000 from last year’s game. Player names are not used, but their uniform numbers, physical attributes, and other features are. Money for the schools, but not the players. No doubt, the NCAA will continue to revisit the eligibility rules – especially with new networking Internet sites like Facebook.com and MySpace.com allowing individual athletes additional vehicles for self-promotion. While seven states have debated the specific issue of compensating student-athletes (Nebraska has gone the farthest), the ambiguity and controversy will no doubt remain for the foreseeable future.

This has been a fairly turbulent off-season for college football. The NCAA Minority Opportunities and Interests Committee has ruled on most of the Native American nickname controversies. However, William and Mary has appealed its ruling, and University of North Dakota is suing over their result. Also, the NCAA has sought to ban more high school “diploma mills,” adding 16 additional high schools whose credits would not be accepted for athlete college eligibility. This, on the heels of a controversy at Auburn over questionable “independent study” courses.

With all of this, the new All American Football League is set to debut next year, “trying to capture a college-oriented fan base.” Originally playing at college stadiums, and selling franchises for $2-$3 million a piece, the league intends to reach out to the college football player who has finished his NCAA eligibility – but would not make it in the pros. Stay tuned.

With all of the controversy and excitement, college football remains a hot property. Nearly 33 million fans attended college football games last year, and the record will no doubt be broken this year. Whether college athletes should be paid or not, the big business of college football kicks off Thursday with great fanfare and expectation.