Financial implications of 2020 College football season cancellation
Assuming the 2020 NCAA football season is cancelled what are the financial implications?
*Broadcasters like ESPN, FOX, etc have contracts with the conferences. Are these written with no payment clauses for acts of God like pandemics? Assuming they have a weasel clause various articles cite a figure of about $4 billion in revenue the conferences & universities won't see.
*Football is near the top, if not the top, generator of revenue for University athletic departments that funds much of the non-football athletic programs. What will happen to the various related college sports and staff without this revenue? Can most University programs weather a year with no sports revenue?
*Broadcasters have contracts with advertisers and money will have to be either returned or contracts renegotiated to cover some sort of content. While their payouts to conferences will potentially be eliminated their loss of ad revenue will likely result in staff cuts.
*Cable providers charge $15 or so for sports related content. Since they won't deduct broadcast fees (ESPN/FOX/etc) from their monthly rates it seems logical they will see a surge in cancellations as many sports fans keep cable or streaming subscriptions for sports.
*Sports industry itself will see an impact and this ranges from people who make/provide hot dogs, soda, concessions, sports apparel, equipment, training camps, parking lots and a whole host of things we never think about including city revenues derived from sports fans paying parking fees, visiting local restaurants, paying taxes, etc. Prime example: City of Detroit
If the NFL follows suit the negative financial impact to the nation, as a whole, will probably surprise most of us as no one has ever seen anything like this.
The sports industry is facing a crushing 2020 and what 2021 looks like is anyone's guess.
August 10th, 2020 at 2:16 PM ^
P5 schools will all weather it
G5 will likely have some casualties
but the ripple effects will be catastrophic. Smaller sports programs that were previously subsidized by football will be cancelled (as happened at stanford). Administrative positions will be cut.
I feel most for the athletic department staff, the journalists and company who rely on a season for their livelihoods
August 10th, 2020 at 2:23 PM ^
Many P5 programs' AD runs in the red. I expect a massive wave of cost-cutting. Most coaches will see their salaries scaled way back and any facilities improvement projects in planning phases will be postponed indefinitely. Probably some layoffs too.
August 10th, 2020 at 2:49 PM ^
Isn’t this the type of Scenario that endowments are for? I’m not an expert on this subject but what good is all that money institutions have other than to brag about if they don’t use it when it is needed? Seems like all of Higher Ed is gonna need to use it now.
August 10th, 2020 at 2:52 PM ^
Endowments often have specified uses and can't typically be moved to fill a shortfall.
August 10th, 2020 at 3:08 PM ^
Wouldn't people that want to donate money for sports donate it directly to the athletic department? I would be surprised if anything more than a token amount gets taken out of endowments to prop them up. Schools are going to be taking some big financial hits unrelated to sports. There's a question of how much endowments can be tapped to cover those losses.
August 10th, 2020 at 3:14 PM ^
I don’t mean for sports specifically, but if the hole is going to be as big as Scott Frost and his mom say it is at NU I’m sure it’ll be big elsewhere. If people lose their jobs and programs are cut would’ve/couldn’t endowments be used to fill those holes and prevent that?
August 10th, 2020 at 5:10 PM ^
Most of the small to medium sized donations can probably be re-routed. Obviously the big donors have more control over how their money is used though. I'm sure there's enough money in most endowments that can be used as a rainy day fund. It's just a matter if the university presidents want to spend political capital on making it happen.
August 10th, 2020 at 2:28 PM ^
The reports of your ban are greatly exaggerated.
August 10th, 2020 at 2:33 PM ^
No worries, evenyoubrutus will be all over it.
August 10th, 2020 at 2:37 PM ^
While I pointed it out, I'm sort of 'meh' about this entire site at the moment.
August 10th, 2020 at 3:02 PM ^
I get it. Fact checking is a thankless job.
August 10th, 2020 at 2:34 PM ^
Hi Ace.
August 10th, 2020 at 2:48 PM ^
The truth shall set you free, I suppose
August 10th, 2020 at 2:32 PM ^
I hate to say it this but this needed to happen. Universities and their athletic departments have become far too bloated with administrative staff.
August 10th, 2020 at 2:36 PM ^
Agreed. Time to dial back the hyper inflated cost of college.
August 10th, 2020 at 7:54 PM ^
The problem is I've heard about faculty being cut at some schools but not admin staff. Certainly possible it's been happening, but given the trends of universities the last couple decades, why would that be reversed instead of continuing but even more drastically?
August 10th, 2020 at 2:54 PM ^
The world could use a few less loudmouth CFB "journalist".
August 10th, 2020 at 3:22 PM ^
This is where the major college business model comes back to bite them. In stead of revenue sharing with their players, they spend their money on extravagant facilities which they own, bloated staffs and inflated salaries with guaranteed contracts. There isn't much room to cut expenses. There would be if player salaries were their biggest expense.
August 10th, 2020 at 2:30 PM ^
All this talk about money. It really shines a light on how this nation's priorities are so far out of line compared to the rest of the world. They focused on health, America focused on money. America has lost hundreds of thousands of people and still lost a ton of jobs and money.
America needs to get things under control. The best things that could come out of a potential cancellation of CFB would be:
(1) intercollegiate sports return to club status, as this could have a positive trickle down effect to reduce the insanity of youth competitive sports;
(2) the NFL fully funds a minor league system. I know why they don't, it'd be great if they did;
(3) universities focus on the true reason they exist.
August 10th, 2020 at 2:34 PM ^
They could lessen practice time to allow the kids more time for their studies and allow them to work in the offseason. It seems that if they would have done this years ago, there wouldn't be all this union talk.
August 10th, 2020 at 2:35 PM ^
And yours is the best comment anywhere on MGoBlog today. The NFL could take the cancellation of the college football season and run with a minor league. They'd find a way to make money on it, maybe with spring football.
August 10th, 2020 at 2:52 PM ^
Very good take, however, Columbus just called and said you can suck it. This is a model they don't wan't to see.
August 10th, 2020 at 3:01 PM ^
Points 1 and 3 are great. Imagine returning to CFB as it was in the 1970s and earlier decades. Maybe the quality pf play and execution won't be as great but, hey, it was fun watching guys like Rob Lytle run at tailback.
College BB is now going in your point 2 direction. Good luck to Sparty getting all those 5 star recruits in 2021.
August 10th, 2020 at 6:49 PM ^
It wasn’t a club sport in the 70’s. It hasn’t been a club sport in well over a century.
August 10th, 2020 at 3:41 PM ^
These are good points generally but I'd push back a bit that youth competitive sports would functionally change without big-time college sports. If the NFL and NBA create feeder leagues as suggested then kids will just be crazy about getting into those instead. The end goal is still the same - being a professional athlete.
Also, for a lot of kids getting athletic scholarships is a way to attend a high-quality college or university. Turning everything into a club sport will likely just exacerbate already-deep racial and socio-economic barriers erected around higher eduction OR the creation of a shadow system that works around these limitations to get certain students into certain schools, only with less oversight and regulation.
Universities exist for a lot of reasons. Athletics can be one of them. The notion that there was halcyon days when everyone said their prayers and ate their vitamins and all was good in the world is mostly a by-product of a white-washing of history by sports writers, movies, and time.
August 10th, 2020 at 6:48 PM ^
College football hasn’t been in club status since the 19th century. College football has been integral part of universities for 100 years. It is adhesive for the university and regional community in a time when we need as many as we can get. Your suggestion is not only unrealistic it is transgressive.
You write this while being a follower of a blog dedicated primarily to the sport. Being anti-college football while belonging to such a blog is...bizarre.
I cannot believe 17 people liked this bullshit
August 10th, 2020 at 10:44 PM ^
I have no clue what you mean by #1...please explain. I think #2 would suck balls. Keep the NFL's dirty fingers out of college football. I like college football as it currently is, but with NIL payouts. On that point, the NBA has already begun to ruin college basketball with the G league which has robbed Michigan of at least one high profile recruit thus far. And #3 sounds wholesome yet vague.
August 10th, 2020 at 2:30 PM ^
They're ummmm bad. Anything other than that is going to have to play out.
My guess is that I imagine about 10% of FBS football programs will get cut and about 20% of all sports programs will cut down. Along with a market correction in coaches salaries. And that is if we only lose the 2020 season. I imagine the 2021 season will be gone as well if people are waiting for a n effective vaccine for the all clear.
August 10th, 2020 at 2:50 PM ^
Big schools will survive. Small ones will struggle. Some will go bust.
That sucks mostly for the people who will lose their jobs. And people will lose jobs.
Beyond that, the country has bigger fish to fry. Colleges will continue, and college is about education, not sports. We’re basically the only country that makes a huge deal about sports in college. Sports are great, don’t get me wrong. But 99 percent of students don’t play varsity sports. They’re just an add-on. Great athletes will be able to play next year, presumably. So their pro careers won’t be dashed. They’ll just have to wait a year, like most everyone else is doing. It sucks. But there are so many other more important things to worry about.
August 10th, 2020 at 2:56 PM ^
You make several good points but this is a big gut punch to both the very big and smaller universities. The smaller may have an extremely difficult time recovering financially and it will take more than one year.
August 10th, 2020 at 3:59 PM ^
I think people are underestimating just how bad this is going to be by focusing only on the schools and athletic departments. Things are going to be really bad on that front for all but the top schools that bring in a ton of cash every year. They can weather this storm by spreading the $100M loss out over several seasons. Smaller schools aren't going to have that option.
But beyond that, there are thousands and thousands of jobs and hundreds of businesses built off college football in towns all over the country. A very large portion of those are going to go away and it may be years before they return.
August 10th, 2020 at 2:53 PM ^
Sports are a luxury. We'll miss them, but if they are not a necessity. Maybe they need a market correction or a change in their models. Heck, maybe they'll realize how much money they make from supposed amateur sports and change the model to reflect what it really is.
August 10th, 2020 at 4:29 PM ^
Sports aren't a luxury anymore than the auto industry or pants are a luxury. CFB alone is a multi-billion dollar industry. Sports in the US as a whole is a $75B industry. Globally its around $500B. You can't just aww shucks and heck that away. Not having it has far reaching consequences beyond not having a few hours of your Saturday TV filled with a game.
August 10th, 2020 at 8:00 PM ^
Sports are definitely more of a luxury than transportation for one thing. The auto industry is also much bigger, the US alone is 545 billion. Compared to schools, public health, the service industry, it's much smaller and less essential.
August 10th, 2020 at 2:53 PM ^
Bottom line: Everyone losses.. Yep, a ton of money will be lost. All the ad revenues, broadcaster salaries wrt to the networks, universities revenue loss, fans not spending money at host cities.
How about Ann Arbor restaurants, hotels, Ann Arbor Pioneer parking and the RV parking.
It is a very sad deal.
August 10th, 2020 at 2:58 PM ^
Since we probably don't have the robots needed yet, broadcast a computer-simulated version
And jazz up the schedule. Make an SEC team 'travel' north, just for the novelty
Hell, I'd watch it, I got nothin else goin on
August 10th, 2020 at 3:06 PM ^
And the SEC picks Rutger for each of their 'travel' north games.
August 10th, 2020 at 4:58 PM ^
OMG This is gold Jerry!
August 10th, 2020 at 3:00 PM ^
I'm gonna be brutally honest, I don't care about schools that will be forced to shutter programs. They made their own beds by signing these ghastly contracts for coaches, spending every dime to build palatial locker rooms and ridiculous luxuries like laser tag and indoor waterfalls, and creating layer after layer of unnecessary administrative/consulting/whatnot staffs full of coaches who failed elsewhere. All to show that net revenue is as close to zero as possible. Sorry, if you're going to treat college athletics like a business, let it fail like a business when they can't manage the finances appropriately.
August 10th, 2020 at 8:03 PM ^
Have to agree. This should force a lot of changes that should have already happened. Hopefully the system as a whole works better next year than it does now.
August 10th, 2020 at 8:27 PM ^
Exact-a-mundo
August 10th, 2020 at 8:27 PM ^
Exact-a-mundo
August 10th, 2020 at 3:07 PM ^
So if a 5* recruit took a payday to commit to some school and there isn't a football season, can he decommit without returning the deposit and get paid to commit elsewhere next season?
the pandemic double dip
August 10th, 2020 at 3:12 PM ^
Most likely it will be their money/graft to keep...what, the bagman is going to take them to court to demand their bribe/leased Cadillac/etc back?
August 10th, 2020 at 3:53 PM ^
That's when Guido the knee buster is deployed.
August 11th, 2020 at 9:37 AM ^
What school are you with again and when do classes start?
August 10th, 2020 at 4:06 PM ^
Whatever happens, I'm sure Jeff Bezos and Mark Zuckerberg will make another $20 billion each month while small businesses close for good by the thousands.
August 10th, 2020 at 4:12 PM ^
Everybody's going to have less money except for all the lawyers needed to figure out how the TV deals / advertising payments / coaches' contracts / etc are going to shake out. The lawyers are going to be billing overtime.