Mon, June 24, 2024

Changes in College Football Will Continue to be Driven by Dollars (and Sense?)

During my three-week hiatus from writing this column earlier this month, Augusta Business Daily’s publisher (Neil Gordon) and editor (Mitzi Oxford) chose to fill my usual space with what they considered “Best of” columns of mine from the past year. One of those columns was one which I wrote in December in which I made business-related predictions for 2024. (Note:  Toward the end of June, I will write a column that will evaluate how accurate all of those predictions have been at the halfway point of the year.) One of those predictions, under the category of “Business of Sports” was as follows: “College football will begin its separation from other college sports. Given the financial behemoth that college football has become, 2024 will initiate a plan for a new structure for the top 40-70 programs separate from the NCAA and its current conferences. Early in 2024, I will provide a column on what that might look like.” While I am not sure that late May is “early in 2024,” it is fortuitous that I forgot my promise until rereading that “Best of” column, as a recent landmark legal settlement involving the paying of college athletes will probably enhance the likelihood of the accuracy of this prediction.

The landscape of college sports, and particularly that of college football, has changed significantly in recent years due to several factors. First, we’ve seen an almost constant realignment of collegiate athletic conferences, resulting in a few major mega-conferences: i.e., the Southeastern Conference (SEC), Atlantic Coast Conference (ACC), Big 10, and Big 12 (the latter two demonstrating their names have nothing to do with their number of members); and the disintegration of a former major conference, the PAC 12 (I guess it was disbanded for actually have a name that accurately identified its number of members). Most of the other changes related to the athletes, such as the ease with which athletes could transfer from one school to another and the ability for athletes to be paid for their Name, Image, and Likeness (NIL). These issues were potentially pointing to new business models in college sports, but within the last week, that landscape was shaken even further.

Last week, the NCAA and its five major conferences settled multiple lawsuits to pay past and current athletes a total of $2.8 billion. The settlement also laid the foundation for the payment of college athletes starting in Fall 2025. The major unresolved questions are who will get paid and how much. If we “follow the money,” we see that football and basketball (particularly men’s) generate almost all the revenues, and most of the revenues come from the major conferences. Therefore, most of the player payments are going to go to football and basketball, and given the size of the relative rosters, football teams will be much more costly. This settlement will further exasperate the revenue and cost differences between major conferences and their smaller counterparts and between football and all the so-called “Olympic Sports” (which generate little if any revenue).

Prior to this settlement, it was clear that both from a revenue and cost perspective, college football is very different from other sports. Revenues are much higher for the major conference schools in football, as there is not the same extent of revenue-sharing as there is in basketball due to the NCAA basketball tournament. On the cost side, the new mega-conferences are significantly increasing the travel costs of the Olympic Sports. While those expanded conferences were mainly driven by football revenues, they are also making all other sports more costly. Therefore, the time has come to separate football from the other sports.

A solution was first proposed by Chip Kelly, former Oregon and UCLA head football coach, and now Ohio State offensive coordinator. He proposed a single, 64-school football conference in which the members would share all revenues, including television, which would more easily cover the NIL and player pay costs. In recent months, similar proposals have been made for a college football “Super League” which would include up to 80 schools.

This makes too much sense not to happen. It allows the bigger football schools to share the plentiful available revenues while being able to pay the players what they will demand. At the same time, the other college sports would be able to revert to their traditional, geographical conferences, reducing the travel costs driven up by the realigned mega-conferences. However, the “devil will be in the details” and the two conferences (SEC and Big Ten) most successful under the current alignment could delay implementation.

However, I stand by my prediction that an agreement taking the first steps toward such a structure will be reached in 2024. While it made a lot of sense to go in this direction prior to the player payment settlement, it makes even more (dollars and) sense now, given the settlement.  While the SEC and Big Ten currently net more money than the other conferences, I think they will see the light for what is best for the future of college football. Keep on the lookout for such a development!

I look forward to reviewing with you the status of my other predictions in the coming weeks!

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