Profitability and Sustainability: A Financial Overview of Division 1-A College Football Programs
It can be said with certainty that money talks and rules. While the statement may hold true in a vast majority of situations, one would expect that in the world of college sports – where the student-athletes are encouraged to compete with amateur spirit for the love of the game and sportsmanship – this would not necessarily hold true. The casual football fan would probably also suspect that even if a particular BCS program is profitable, it would be marginal. However, upon a closer inspection of the data available through the Equity in Athletics data released by the US Department of Education, it can be quickly determined that the financial health of most Division 1-A Programs is “A-OK”; furthermore, the collegiate football program of any given school is extremely profitable and there are enough evidence to suggest that the profitability is sustainable for the near future.
The Bottom Line
Every year, the US Department of Education website (http://ope.ed.gov/athletics/) publishes financial data for every single NCAA school in the country. From this dataset, one is able to get an idea of how profitable some of the top athletic programs can be. Here is the gross profit from football operations from the top 5 football schools in 2008:
1. University of Texas - $65.0mil
2. University of Georgia - $45.4mil
3. University of Florida - $43.3mil
4. Penn State - $42.6mil
5. LSU - $39.1mil
· It must be noted here that of the 119 Div.1A programs, only 19 turned a negative profit in 2008.
To put these numbers in perspective, here are some of the profits from several Fortune 500 companies:
- Warner Music Group - $60.0mil
- Universal - $7.9mil
- Bon-Ton Stores - $46.9mil
- Barnes & Noble - $150.8mil
- Toys “R” Us - $28.0mil
- US Airways Group - $304.0mil
(Source: http://money.cnn.com/magazines/fortune/fortune500/2007/full_list/201_300.html)
As evidenced by the data, some of the biggest Division-1A programs bring in enough cash to rival some of the biggest corporations in America. Remember that this is not a discussion of the gross profit of the entire athletic department of each given school; it is a discussion of ONLY gross profit generated from the football program.
If the football program of a school is capable of earning revenues that rival one of the largest retail franchises in the country, then clearly, the health of the major teams must not be in jeopardy even in these tough economic times.
Also, a perusal of the data for the other years are very similar to the 2008 dataset presented above. This analysis indicates that college football as a whole is a rich enterprise (even if it is classified as a non-profit entity) that has a humongous impact on the economy from its sheer size alone. This not-so-well-known topic is definitely worth exploring, so keep your eyes open for the upcoming entries.
Next Week: Money Not Only Talks, But Money Also Recruits, And Puts W’s on the Board
It is true that there may not be a direct relationship between W’s and the revenues that the teams can bring in. However, according to the same US Department of Education spreadsheet, high total football-related revenues were strongly correlated with high recruitment expenses. Stay tuned for the next entry on the relationship between “profitability, revenue, recruitment and wins.”
