Is bloated college football monster about to go on a diet? Cable implosion does not guarantee it
Clemson players celebrate after their 35-31 win over Alabama in the College Football Playoff national championship in January. Though the title game was unparalleled in excitement, traditional viewership ratings dipped.
KING OF PRUSSIA — It’s easy to say we’ve reached peak capacity. That the ever-building revenue stream of major-college athletics can do nothing but begin an inexorable and long-overdue plateau and taper-down.
The monster simply won’t be able to gorge itself much longer. Will it?
Regardless, if you glance at the revenue figures I did last week and posted yesterday morning, I don’t think you can say that’s a bad thing. The beast has grown so far out of control that it might not be sustainable. The cable-television revenue river that’s always fed it as much as it wants is beginning to lose its flow.
It certainly appears that this is last call for all the $5 million/year head coaches and 7-figure coordinators and layers on top layers of “support personnel”? That programs such as Texas and Tennessee and Alabama who raked in 9-figure gross revenue totals in the last reported fiscal year are going to have to start dialing back.
Or are they?
The elite – the top third or so of 128-school Division I football, will still lead a high life. And the gap between them and those in the middle and lower classes will only widen. But that upper crust cannot possibly hope to make off cable payouts what they are now after the latest Power Five deals start running out in the 2020s, right? Because that cable paradigm is dying.
That’s why ESPN has had such massive layoffs lately: It can’t budget the exorbitant fees it has paid in advance for so many big-sport contracts. Subscriber rolls are dwindling as traditional providers struggle to compete with budding a la carte platforms such as Netflix that millennials through Xers have embraced. The Disney channels are simply preparing for the inevitable in advance.
That means the next contracts ESPN pays – including to the Power Five conferences – will be much more modest. That austerity will eventually trickle down to bloated university athletic programs.
Unless, some streaming service such as Amazon or Google or Hulu or Netflix or someone — and maybe even some technology that’s not even out there now — decides to enter the marketplace in earnest. Then, we have a whole new ballgame.
Penn State athletic director Sandy Barbour, as most Power Five ADs, has her eyes wide open in such a rapidly changing landscape. The new football rights deal with ESPN and Fox that commences this fall runs through 2023. The separate Big Ten Network deal in partnership with Fox offers some stability through 2032.
I asked Barbour on Monday night at the PSU Coaches’ Caravan stop at the Valley Forge Casino Resort if she believes the revenue stream has peaked with cable. She’s ready for anything:
“I think there’s two options: One is that it kind of plateaus and it either it stays stable or we have some incremental annual growth. Or it goes back down.
“I think you’re right in that there’s not another big push out there with what we currently view as traditional TV media rights. [But] there might be something else out there that we’re not thinking about yet, or that hasn’t been invented.
“I actually think it’s just going to flatten off. I don’t think it’s going to go down. If you think about the value of live sports television, it is really the only thing left. And think about the space that college [sports] occupies in that.
Penn State athletic director Sandy Barbour listens to football coach James Franklin yesterday at the PSU Coaches’ Caravan stop in York.PennLive/Joe Hermitt
“I think that, although there will be some losses… I don’t think that’s going to have a huge impact. But that’s my guess. It’s also my job to protect against the other.”
Barbour gestured with her hand a big downward dip in visualizing “the other.”
Regardless, to appreciate where we are, you need to glance over the shoulder – and not all that far – to see where we’ve been. It’s always been about football filling the trough. But the degree of growth in those last two decades has been phenomenal.
Just 20 years ago, the most affluent college football programs were grossing in the range of $15-20 million. The most well-rewarded coaches – Florida’s Steve Spurrier and Florida State’s Bobby Bowden – were just barely topping seven figures into $1-2 million range in annual compensation.
Two decades later, both categories have multiplied six- to sevenfold.
Alabama just extended Nick Saban through the 2024 season at an average $8.1M annually. Five schools’ football programs (Texas, Tennessee, Alabama, Notre Dame and Michigan) reported gross revenue totals for the July 2015-June 2016 fiscal year very near or in excess of $100 million. Texas reported $127.5M with a net football profit of nearly $100K.
That’s how Michigan, according to documents obtained by The Detroit Free Press through an public-records request, can afford three assistant coaches each making more than $1M annually. How it can rationalize nebulous “support staff” jobs named with such euphemistic titles as “defensive analyst” – people who are not allowed even see the field or go on the road to recruit – making 6-figure salaries.
It’s how many head coaches at large state universities can become the most well paid public employees in their states.
But so much is changing so quickly that the crust and mantle beneath college football’s feet is shifting.
Is so-called “over-the-top” content – that is, online platforms increasingly favored by consumers – a threat to bottom lines or merely another opportunity that college athletic programs will manage to monetize on their own? How much will the traditional middlemen be involved?
If the value of live sports programming is still there, as studies seem to suggest, then can it be monetized through live-action ads, because so many people are reflexively zipping through advertising breaks with calculated mini-delays on their DVRs? How do interactive in-game ads play in, where viewers might make online buys as they are watching games on handheld devices?
The point is, collecting the profit is about to become much more complicated for not just the major colleges but the pros. The simple cable feeding station is being dismantled.
I have a feeling that means some downsizing for everyone at the big university athletic farms of the sort that media have been feeling for years now. It’s just a matter of time and degree. But squinting into a murky technological horizon, no one can be sure.
DAVID JONES: firstname.lastname@example.org