College Athletics: Business is Changing

College Athletics is changing. There are many reasons for this change ranging anywhere from increase in visibility and popularity to increase of public scrutiny on the student-athlete lifestyle. The 3 things that stood out to me were the amount of business professionals being brought in to run athletic departments, increase in pressure for student-athletes to get a bigger cut of the revenues, and the focus of building a brand & selling an experience. When speaking with industry professionals, these three points were consistently being brought up.

 

I think the increase of business professionals in college athletics is really interesting. College athletics is big business, regardless of their emphasis on creating better students and athletes. People with solid business acumen are being hired to run athletic departments on sound business principles. As budgets tighten the people who have the ability to not only cut costs, but maximize the use of athletic department assets will become invaluable. There are also outside pressures for schools to run the athletic department more as a business. Donors who give to the universities want to be sure that people qualified to do so are managing their donations and scholarship endowments.

 

The court of public opinion in many cases is difficult to ignore. People are calling for athletes to be paid, get a bigger stipend, or get a bigger portion of the pie. The unfortunate truth is that many of the people who are calling for these changes are blind to the fact that while schools do generate a lot of revenue from these student athletes, only about 20 schools actually earned a profit last year off of athletics. What people fail to realize is the true value that student athletes are gaining by playing college athletics. Student-athletes get private tutoring, first pick of class schedules, high class training facilities, opportunity to travel, and (in the full and partial scholarship student-athletes cases) graduate with little or no debt. The ugly reality is that as college athletics gets bigger, there will always be a loud voice advocating for student athletes to get more of the revenue that they help generate.

 

According to a college athletics professional “…by building a brand around athletics, you boost the visibility of your school and increase the profile of the program…” By increasing brand value, athletic departments are able to generate additional revenues and tap into resources from which student athletes can benefit. When talking about the biggest brands in college athletics, 4-5 schools come to mind: University of Texas, University of Alabama, Ohio State University, University of Michigan, Florida State University and University of Southern California. These 5 schools are consistently in the top 10 in terms of total revenue. But they all have one thing in common, they have historically been outstanding at the one sport that for the most part makes or breaks a brand: Football. Very few schools can build a widely popular brand without a successful football team. A few exceptions would be University of Kansas, University of Kentucky, and Duke University. Those 3 schools are known as the Blue Bloods of college basketball and for good reason. They are perennial contenders and their basketball teams generate a lot of revenue and visibility for their schools. Athletic Departments are now tasked with selling more than just a game or event. According to a college athletics professional “…Athletic Departments are transitioning from selling a game, to selling an ‘experience’, of which a game is a part of…” Schools now have to foster an experience in and around a game that is as attractive as the other seemingly limitless things fans could potentially spend their discretionary income on. A school’s ability to cut through the noise and get to the heart of the consumer is key to their long-term success or failure.

 

The nature of college athletics is changing. There is no denying that fact. Many schools are taking steps to evolve with the environment and in the case of college athletics it truly is a case of “Change or Die”.