Sudden Death

The stadium scene.
Dec. 12 1998 3:30 AM

Sudden Death

The consummate greed of the NCAA's dominant schools has doomed college sports.

College sports is heading toward a market-driven apocalypse, and when it arrives--perhaps within five years--only the 50 richest, most commercialized, and least academically rigorous athletics departments will be able to sustain significant athletic programs. Institutions such as the University of Michigan, the University of Florida, and the University of North Carolina will still flourish. But schools such as Appalachian State University, Southern Illinois University, and the University of Montana may find themselves without football and probably without most of the other sports--baseball, soccer, swimming, and volleyball--that make up a complete collegiate program.

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College athletic programs are already split into the Haves and the Have-Nots. The Haves consist of the universities that field nationally prominent teams in football and men's basketball or both. They number about 40 or 50, says Richard Sheehan, a professor of finance at Notre Dame University and the author of Keeping Score: The Economics of Big-Time Sports.

A few of these institutions, notably Michigan and Florida, receive more than $10 million annually in athletics revenues. Most of the Haves turn a more modest profit, and a few barely break even. The other 880-plus institutions that field teams lose money on athletics, some in the millions of dollars.

For the better part of this century, the National Collegiate Athletic Association, the nonprofit membership association that sanctions collegiate sports, redistributed wealth from the Haves to the Have-Nots: It negotiated a single national TV contract on behalf of all its football playing members, parceling out a share of the money to the smaller schools. The NCAA also limited the TV exposure of traditional football powers such as Oklahoma and Notre Dame and guaranteed air time to more obscure institutions.

Sharing the wealth did not put Valparaiso University on the same competitive footing as the University of Nebraska, but it postponed the day when a few powerful athletics programs would command national TV audiences, and other institutions would have trouble scaring up fans in their own backyards.

Of course, the major football schools hated this financial arrangement. In the early 1980s, a group of football powers, led by the University of Oklahoma and the University of Georgia, sued the NCAA, saying its TV policies constituted an unreasonable restraint of trade and violated federal antitrust laws. The court agreed, and the Supreme Court upheld the decision in 1984. By that time, 60 of the biggest football schools had formed the College Football Association to negotiate their national TV contract. The schools also sold regional TV rights to local network affiliates and cable outlets. These contracts were generally negotiated by the conference on behalf of its members.

The result was an upsurge in the visibility of college football. Under the old order, the NCAA fed the networks a handful of games each Saturday. But after the NCAA's strictures were removed, football saturated the airwaves. On Saturdays alone, a fan could watch college football without interruption from noon until after midnight. And almost every team he saw would be a CFA member.

The Haves got fat on TV money and plowed their profits back into their athletics programs: better facilities for athletes and spectators, higher salaries for executives and coaches, and aggressive recruiting and marketing programs that solidified their positions at the top of the athletic and economic heap. Unable to compete, poorer schools in such conferences as the Mid-American or the Big Sky have lost the attention of everyone but their own alumni.

Had football been the only high-revenue college sport, the NCAA might not have survived the loss of its TV contract. But at just that moment, the men's basketball tournament--a k a March Madness--was becoming an enormous spectacle and a huge source of revenue. For eight years of March Madness TV rights, extending through 2002, CBS Sports spent $1.75 billion. Currently, $210 million of the NCAA's $267 million budget comes from men's basketball. Because basketball requires neither the massive rosters nor the massive expenditures of football, smaller institutions such as Georgetown, St. John's, and Villanova, which are all based in urban areas, successfully competed against teams from the powerful football schools.

March Madness provided the NCAA with substantial revenue to share with its poorer members and the clout to entice corporate sponsors to continue bankrolling its championships. It also gave the big football schools the financial incentive to remain within the association rather than form a rival group.

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