While college athletic departments scramble to manage the health and well-being of their newly scattered athletes, and at the same time try to sort through finances thrown into disarray, the coronavirus pandemic has set in motion forces that could fundamentally change everything we know as college sports today.
The shutdown of sports to prevent the spread of COVID-19 not only has implications for the near and medium term but far into the future, as schools wrestle with what college athletics might look like if there’s considerably less money coming in. For decades, the biggest universities in Division I have been engaged in an economic arms race, fueled by rapid growth in television rights, pouring money into coaching salaries, administrative costs and facility construction.
To some degree, this global economic crisis has brought that to an abrupt end. To what degree, remains to be seen.
But it’s a far bigger macro issue than, say, the micro question of whether there’s football this fall. In a world where college sports no longer command the same price, schools will have difficult decisions to make about what sports and what athletes they want to support — and whether they even can.
“It does give you an opportunity to step back and evaluate,” North Carolina athletic director Bubba Cunningham said. “We’re always going to have sport. It’s just a question of how we organize ourselves. We’re always going to run, jump, swim and play and there’s going to be people who want to watch that activity. We’re organized right now with an NCAA structure, a college football structure, the basketball tournament, conference affiliations, the Olympics.
“Is there a different organizational structure? Is 16 sports the right number? Is 85 (football) scholarships? Those are going to be conversations we’re going to have more now.”
Changing financial fundamentals
It’s easy for bigger issues like that, fundamental questions about the nature of college sports, to get lost in the month-to-month financial scrambling that’s going on in college athletics now. A survey of more than 100 Division I athletic directors by LEAD1, a group that lobbies on behalf of athletic departments, found that more than half expected at least a 10 percent drop in revenue in 2019-20 and at least 30 percent in 2020-21.
[LINK: Lead1’s survey of athletic directors]
The NCAA’s overall April distribution to schools was cut from $600 million to $225 million. For the 2019-20 school year, ACC schools are dealing with a $2.3 million hit from the loss of the NCAA men’s and women’s tournaments — a relatively small amount for a school with a $90 million athletics budget like N.C. State or $110 million like North Carolina, but a large absolute amount that isn’t easily made up.
Providing scholarships for spring-sport seniors who may choose to return after being given an extra year of eligibility could cost another $1 million at North Carolina or $875,000 at N.C. State. There are changing dynamics like this everywhere, and they all add up.
If the football season is canceled or abbreviated, which certainly appears to be a possibility at this point, then the numbers change drastically. Football revenue alone accounted for almost $40 million of North Carolina’s budget and $47 million of N.C. State’s budget in 2018-19 — and that number will end up higher in Chapel Hill for this fiscal year given the attendance gains made under coach Mack Brown.
“If in fall 2020, everyone’s able to come back to campus, there will be plenty of time to look at football,” N.C. State athletic director Boo Corrigan said. “We can worry about it then, what if it happens, what if it doesn’t.”
Football could just be the beginning. Will donors have the financial capability to continue to support athletic departments at current levels? What will happen to media rights fees the longer games go without being played?
The basic fundamentals of college sports, the foundation on which the college-athletic industrial complex has been built, could be entirely dismantled in the space of a few months.
“Right now, it’s just forecasting,” Cunningham said. “I’m assuming we’re going to play football and we’re building everything based upon that. Now, should that change, then we’ll have to revise our economic outlook and that will change behaviors as well.”
New NCAA fault lines
Part of the problem college sports now face is that it has never been run with an eye to the future. It operates as a year-to-year desire to keep the budget balanced as close to zero as possible. Few athletic departments have used excess revenue during these boom times to build emergency funds or endowments; they are structured to spend what they take in (more, at schools that heavily subsidize athletics) and, in some cases, have no choice if they want to keep up competitively.
The era of accelerating television revenue has propelled an arms race in facilities, coach and administrator salaries and amenities. There’s a straight line from the launch of conference-owned networks to $500,000 strength coaches. When the labor is free, the money has to go somewhere.
But what if the money dries up?
Schools may now face difficult decisions about their commitment to athletics. The criteria by which those decisions are made could divide public and private schools, fracture conferences and further divide big from small — the latter a process that took its biggest step when the NCAA granted greater autonomy to the five power conferences.
Even the non-sports assumptions may need to be thrown out. After months of social distancing, how long will it be before fans are comfortable sitting shoulder-to-shoulder with tens of thousands of strangers in arenas and stadiums? Even schools that have been able to ink sold-out football and basketball games into their budgets may have to reassess those figures. Ticket sales and donations were the two biggest areas of financial concern among athletic directors in the LEAD1 survey.
All of this represents the kinds of divisions that could finally cleave the NCAA apart. New fault lines could be drawn between schools that generate enough money on their own to support big-time athletics and those that don’t. Schools that use athletics to drive enrollment may find themselves prioritizing sports over those that don’t.
“What are the economic underpinnings to support the ambition that you have?” Cunningham said. “There are great things about the Ivy League model, with lots of kids playing lots of sports with no athletic aid, per se. I really like that, but if you want to be competitive, you certainly have to pour money where you want to be excellent. And if you want to have resources to drive those opportunities, you have to be really good in football and basketball.
“Those are the tension points. And given all the reflection everyone’s doing about family and isolating yourselves, maybe it is a time to think about it and recalibrate. It’s not as if you can flip a switch overnight and everyone’s going to agree. Creating more choices, for individuals, for institutions, for the sports, I think would be healthy for all of us.”