Critical Temple Article

[frankthetank]

The reality is that if you already have an FBS program, you're essentially "pot committed" (using poker terminology) at this point. Dropping down to FCS or even football completely is essentially not an option when it comes to finances, branding and other factors. Now, the good news is that the new College Football Playoff provides a bit more of an influx of funds even for the non-power schools, which means that at the very least, there's little incentive to drop FBS football now (and zero incentive to go from FBS to FCS). That's why for all of these alarmist headlines about football programs and athletic departments having red ink (which, to be sure, we can't completely take at face value since universities need to find ways to show little or no profit in accounting), we still see schools continue to try to move up to FBS while NO ONE is thinking of cutting or moving down for football. Other sports will be cut to the bone long before either football or basketball are touched at FBS schools. Just as there is a squeeze at the top of FBS with everyone trying to get one of the last precious spots in a power conference, there's also a squeeze at the bottom of FBS where FCS schools are trying to get one of the last spots in the Group of Five conferences. The College Football Playoff money makes it worth it to jump from FCS to FBS alone (just as the NCAA Tournament money is enough to justify a Division I basketball program).

 

[billybud]

Kristi Dosh spoke directly to that, Frank...sounds much like what you said:

Conference realignment has ushered quite a few teams into the FBS from FCS, a trend that will continue as schools like Georgia Southern and Appalachian State move to the Sun Belt in 2014.

Those schools are likely chasing the dream -- the $40.6 million median revenue in FBS, as compared to just $3.8 million in the FCS -- but a recent study by the NCAA suggests it could be a nightmare.

Kathleen McNeeley, the NCAA's chief financial officer, discussed the findings of an NCAA study on reclassification from FCS to FBS at the College Athletic Business Management Association's annual convention this week.

From 1978 to 2010, 19 teams have made the move up. Few of those have seen increased success on the field, and the additional cost of doing business has many relying more heavily on student fees.

According to the NCAA's study, the average winning percentage of those 19 teams when they were in FCS was 55.7 percent. In the FBS, that fell to 44.8 percent. They've also seen far fewer winning seasons, from 64.4 percent in the FCS to 37.2 after moving up a classification.

Some teams have bucked the trend. Boise State, which reclassified in 1996, has gone from an average of 7.44 wins per season in the FCS to 10 per year in the FBS. Five other schools out of the 19 have seen an improvement, but UConn is the only other school to have seen an improvement of more than one game per year.

Tom Kleinlein, the athletic director at Georgia Southern, says it doesn't matter.

"Go ask someone 100 miles from Statesboro how many national championships we won at the FCS level," he said. "No one knows."

Kleinlein pointed out that the lowest-rated bowl games still routinely garner higher ratings than the FCS national championship game.

Last season, only one bowl game was watched by fewer viewers than the FCS national championship game: the 2013 Heart of Dallas Bowl featuring Purdue against Oklahoma State. That game averaged 943,000 viewers, while the FCS championship game averaged 1.1 million.

Although numerous studies have found revenue increases with a move to FBS, they've also found expenses generally increase at an even greater rate. There's some evidence to suggest being at the top of FCS is better -- both from a financial and student-athlete experience standpoint -- than being at the bottom of FBS. The average revenue for an FBS program in the bottom quartile is $22.5 million, compared to $25.6 million in the top quartile of FCS.

Remember that median revenue of $40.6 million in the FBS? Drill down a little further and you find out the median for AQs is $69.9 million, while it's a mere $9.7 million for non-AQs.

Among other drawbacks:

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• Less opportunity at a title: McNeeley said more FCS teams have won national championships in the past 10 years than teams from FBS conferences that are not automatic qualifiers, which would be where a reclassifying team would land. The NCAA says almost 90 percent of national champions in all NCAA sports hail from FBS automatic qualifying conferences.
  
  
  
  
• Fewer athletes get a chance: NCAA data shows an FCS school in the top quartile sponsors 23.6 sports, compared to just 16.8 sponsored by the bottom quartile FBS schools. The total number of student-athletes also drops from 639 in the top quartile of FCS to 458 in the bottom quartile of the FBS.
  
  
  
  
• Higher student fees: McNeeley's presentation said schools reclassifying increase student fees by an average of $1.2 million annually to keep up with the added expenses.

So why reclassify?

"For me, at the end of the day, it's the exposure for our university and growing our university," said Kleinlein, referencing the increased opportunities to play other FBS schools and garner more television coverage.

Kleinlein said it's also not a decision rooted solely in football.

"For us, we're pretty good in some of our other sports. These other sports are constantly having to fight the battle of whether they're a Division I school because of the labeling and association of FBS football."

There's also the concern that schools from the power conferences may no longer schedule FCS schools, a practice disappearing already in the Big Ten, eliminating hundreds of thousands (and sometimes more than a million) in revenue annually earned through guarantees. In addition, guarantees are generally larger for FBS schools than FCS.

Jeff Schemmel, a former athletic director and currently managing director of the college division at JMI Sports, thinks with the playoff on the horizon, now is the time to make the move up, because every conference in FBS will be making more money.

"The money is getting so big from the playoffs now it's clearly -- especially for a school with a budget of $7-8 million -- it's going to be a pretty nice little bump for those guys," Schemmel said.

With the added expenses, however, Schemmel says it's generally a wash, but the exposure is better.

"That's where the prestige factor comes in," he says.

There's also the future to consider amid the growing discussion around the power conferences forming a new subdivision one day, Kleinlein said.

"When I looked at what was going on, my concern became: Eventually, if the big split happens, are we now at the third level as opposed to the second level?"

 

[upstater]

The reality is that if you already have an FBS program, you're essentially "pot committed" (using poker terminology) at this point. Dropping down to FCS or even football completely is essentially not an option when it comes to finances, branding and other factors. Now, the good news is that the new College Football Playoff provides a bit more of an influx of funds even for the non-power schools, which means that at the very least, there's little incentive to drop FBS football now (and zero incentive to go from FBS to FCS). That's why for all of these alarmist headlines about football programs and athletic departments having red ink (which, to be sure, we can't completely take at face value since universities need to find ways to show little or no profit in accounting), we still see schools continue to try to move up to FBS while NO ONE is thinking of cutting or moving down for football. Other sports will be cut to the bone long before either football or basketball are touched at FBS schools. Just as there is a squeeze at the top of FBS with everyone trying to get one of the last precious spots in a power conference, there's also a squeeze at the bottom of FBS where FCS schools are trying to get one of the last spots in the Group of Five conferences. The College Football Playoff money makes it worth it to jump from FCS to FBS alone (just as the NCAA Tournament money is enough to justify a Division I basketball program).

You've got the dynamic reversed. It's not the academic side that is engaged in creative accounting, it's the athletic side. Who bonds out stadium costs? The academic side. Michigan right now owes $250m +. That takes about $17m a year to service ($12m-13m principal at current rates). Granted, most programs aren't dealing with massive revenues like UM, but they are subsidizing athletics with direct institutional support and student fees.

No one is thinking of cutting? You're wrong. There are active discussions going on.

The backdrop that you are missing is the defunding of public higher education in the USA coupled with cuts to research.

 

[upstater]

With the added expenses, however, Schemmel says it's generally a wash, but the exposure is better.

"That's where the prestige factor comes in," he says.

There's also the future to consider amid the growing discussion around the power conferences forming a new subdivision one day, Kleinlein said.

"When I looked at what was going on, my concern became: Eventually, if the big split happens, are we now at the third level as opposed to the second level?"

This is a guy you wouldn't want running anything more than a toy store.

Andrew Zimbalist who is a sports economist at Amherst did a study that showed the added exposure was beneficial for under 10% of the schools he studied. He noted that for several schools, the added exposure was a negative, because it drew attention to the school's losing programs. He correlated drops in applications and test scores with drops in academic rankings and lackluster football results, and found that some schools were developing reputation's as athletic losers. Mind you, Zimbalist couches all his correlations by saying none of this is scientific, and that as at BC (where applications shot up after Flutie) there's no definitive way to show that a lot of losing makes students less enthusiastic about applying to your university. After all, Boston U. has shot up in applications and in student test scores and in academic status in an almost identical fashion to BC since the mid 1980s, and BU dropped football. It could just be the allure of Boston that has propelled these two schools to better academics. Rutgers, on the other hand, is dropping in reputation, dropping in applications and test scores, but that could easily have more to do with state finances, the closure of programs, than it does with losses in athletics.

 

[frankthetank]

You've got the dynamic reversed. It's not the academic side that is engaged in creative accounting, it's the athletic side. Who bonds out stadium costs? The academic side. Michigan right now owes $250m +. That takes about $17m a year to service ($12m-13m principal at current rates). Granted, most programs aren't dealing with massive revenues like UM, but they are subsidizing athletics with direct institutional support and student fees.

No one is thinking of cutting? You're wrong. There are active discussions going on.

The backdrop that you are missing is the defunding of public higher education in the USA coupled with cuts to research.

Not to doubt you, but who is thinking of cutting FBS football? Sure, plenty of schools are thinking of cutting non-revenue sports or football at the FCS/D-II/D-III levels, but I've yet to hear of anything about an FBS football program thinking about throwing in the towel. The only one that I can even think of that might consider it is the nascent UMass program. That's not to say that we won't eventually get to a point in a few years where FBS programs have to think differently, but the CFP is a powerful incentive right now (even if you're not in a power conference).

 

[upstater]

Not to doubt you, but who is thinking of cutting FBS football? Sure, plenty of schools are thinking of cutting non-revenue sports or football at the FCS/D-II/D-III levels, but I've yet to hear of anything about an FBS football program thinking about throwing in the towel. The only one that I can even think of that might consider it is the nascent UMass program. That's not to say that we won't eventually get to a point in a few years where FBS programs have to think differently, but the CFP is a powerful incentive right now (even if you're not in a power conference).

Schools are losing $20m+ a year. CFP is not going to make that up. I can't go into detail about the rest.

 

[pj]

Lower-tier group of five schools like MAC schools have to be thinking about it. They would undoubtedly save money by cutting football. With money tight, money losing activities will get a lot of pushback from competing constituencies that would have to donate subsidies or are looking for subsidies themselves.

 

[nelsonmuntz]

Lower-tier group of five schools like MAC schools have to be thinking about it. They would undoubtedly save money by cutting football. With money tight, money losing activities will get a lot of pushback from competing constituencies that would have to donate subsidies or are looking for subsidies themselves.

What is the difference now between UConn and the MAC? About $1.5MM a year in TV revenue? Do you think that will save us?

 

[upstater]

What is the difference now between UConn and the MAC? About $1.5MM a year in TV revenue? Do you think that will save us?

You're looking at conference TV revenue and totally ignoring other TV revenue.

 

[nelsonmuntz]

You're looking at conference TV revenue and totally ignoring other TV revenue.

Does UConn still own Tier 3 rights? I thought ESPN bought everything for the $2MM a year. I hope I am wrong.

 

[upstater]

Does UConn still own Tier 3 rights? I thought ESPN bought everything for the $2MM a year. I hope I am wrong.

They bought women's bball, but the licensing and the coaches shows and advertising, etc., is still bringing in $25m - $1.4m (women's bball) a year. ESPN owned tier 3 rights under the BE as well.

SNY can cut side deals any way it likes with UConn. It can pay for programming. And ESPN gets to decide how much to charge SNY. If ESPN is playing hardball in that regard, someone from the state should give them a call. I expect they will still earn what they have been getting from licensing.

 

[btstimpy]

I work with a lot of Temple grads. Pretty much across the board they have told me that the student body wears it as a badge of honor that they don't go to games.

If they are doing this, it's sad. Maybe if they showed some support, the community would also.