The Dire Financial Future of College Football
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- เผยแพร่เมื่อ 29 ส.ค. 2024
- #collegefootballrealignment #collegefootball #uscfootball
With USC and UCLA joining the Big Ten, sports fans assume the next round of college football realignment is a sign of the sport's success. What if I told you the consolidation was actually foreshadowing the decline of college football? I go into why I think this may be the case.
Citations:
NIL deals University of Miami: www.washington...
Harvard Business Review Consolidation Curve: hbr.org/2002/1...
College Football Attendance Stats: www.cbssports....
College Football Playoff Ratings: www.sportsmedi...
Auto Industry Consolidation 1920's: americanhistor...
ESPN Overpaid for Media Rights Contracts: www.sportingne...
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This is good stuff, Nick. Unfortunately (as someone who loves the sport), I fear you are dead on here.
I think you're correct. I've been thinking this for a while. I also think ESPN wants to own college sports but doesn't have the money to do so.
I have shared this video out with every college football fan I know and they all agree with your analysis.
Thanks. Bad governance is ruining an otherwise great sport.
One thing I notice in America is that since all the big pro leagues there are closed cabals designed from the start to be businesses returning profit to owners and not in true competition with each other, a lot of American business people just see full stadiums and TV broadcasting and assume there's just a huge amount of money to be made. When in reality the normal model for sport is for communities to support as many teams as possible and have them act like institutions (As the college teams in the US still do) whose prerogative is to compete and reinvest profits to enhance competitiveness. The system isn't designed for them to act like profit making businesses and succeed.
They can have this explained to them but emotionally they don't accept it. In the US everyone seems to just assume college football and basketball players are being exploited without considering what exploitation is. Exploitation is when somebody is making money off your efforts and taking that profit with them while giving you none. In college football the profit making programmes have their profits reinvested in the universities, other athletic programmes or the football programme itself. (And, of course, nobody seems to accept that only a tiny number turn any profit or very much to afford paying the players much) I noticed the same when the LIV gold controversy emerged, a prominent US golf TH-cam channel had the hosts laughing with one confused saying he had to look up 'what a non-profit corporation was'. The idea that the PGA wasn't run by Mr. PGA who took all the profit for himself rather than reinvesting it in the sport of golf was incomprehensible to them. They also get a scholarship, free food and board in most schools and the best training and shot at becoming instant millionaires in the NFL in their early 20s.
This is most prominently seen with US investments into foreign sports they don't understand like soccer or rugby. Silver Lake convinced the New Zealand rugby board to give them 8.6% of all commercial revenue from the All Blacks in perpetuity in exchange for $134 million due to New Zealand rugby being a PGA style organisation who wanted to shore up the finances of small clubs and pro-teams after covid. How does Silver Lake intend to make their operations vastly more profitable to make this work? They seem convinced they know how but it seems impossible since the All Blacks already play a heavy load of matches. The real way is by paywalling their matches for viewers in New Zealand, this would a doomsday scenario for rugby in New Zealand and would hurt the sport hugely long term but once the Americans realise their lofty suggestions for how to generate a big revenue increase without paywalling matches make no sense there will be nowhere to go.
A similar situation is occurring in the annual 6 Nations tournament where they insanely gave CVC capital, another American firm a 1/7 stake (As if they were a new nation or team) this can only lead to a pressure both from CVC and the existing members who have lost 1/7 of the normal revenue to put the famous tournament behind a paywall or do something to alter the character of the tournament in a way which ruins it's purpose and tradition like inviting South Africa to play and possibly kick Italy out to make room. This will do massive damage to rugby in Europe long term.
Additionally as was expected with the European Super League but never tested since it failed before it started, having the big teams play each other over and over will kill the event and novelty of it. They won't be the 'big teams' anymore, just 'the teams'. And will they have a salary cap to stop competition making it all unprofitable?
American businessmen just can't accept that the NFL, NBA, NHL are a racket because they're literally a racket not just because they're big time pro sports.
Thanks for the perspective. If it were a truly free market there would likely be double the amount of teams in each of the US pro sports leagues, a promotion relegation system and 5-6 teams each in Greater NY/LA.
I forgot to mention the impact of these top teams beating up each other up in the same league lowers the value of the games. Does Michigan vs. USC matter as much of both teams are 7-4 going into it?
I suspect that the format of the new CFP will have guaranteed spots for the new B1G and SEC conferences instead of only their champions. This will offset the fact that the football teams will have more losses.
20:43 Really cool economics lesson! Sam Bankmen-fried is trying to do the same thing by consolidating as much as he can in the crypto industry
Thanks! I'm glad you liked the video
College sports will never minor leagues as play colors of a university will always draw supporters of the schools. The only one fanbases who won’t care about their university are the 80 schools who may be left out. Too bad for those universities. The 40-48 who make it will do just fine. In fact they’ll probably do better without having to financially support your 80 others! Basically the 80 were leeching off the 40.
Oh and that UCF team you are crying about, got trounced by a depleted LSU team in the Fiesta Bowl!
Appreciate the different perspective, thanks for watching.