John U. Bacon on seat licenses, Athletic Department profits, and fan loyalty.

Submitted by Wave83 on December 14th, 2012 at 9:23 AM

Here is the latest blog post from John Bacon, discussing the new seat licenses, the "business" of sports, and fan loyalty.  I have to say I agree with him completely.  I also remember the very same "old days" he describes at the Stadium.

http://johnubacon.com/2012/12/tradition-for-fun-but-mostly-profit/

Comments

mGrowOld

December 14th, 2012 at 9:35 AM ^

I love John U. Bacon but on his conclusion as to why & when college football became a "business" I have to disagree.  It became a business, IMO, the day Title 9 was signed into law forcing schools to offer the same programs - regardless of expense, participation and attendance - to both men and women.  That meant University's like Michigan, who desired a widespread athletic program had to look to their revenue generating sports (like football) to pay the expenses incurred by the non-revenue generating sports.  And by non-revenue generating I mean they cost the University a bucket of money every year to pay for them.  

 

 

Two Hearted Ale

December 14th, 2012 at 10:11 AM ^

All of the facility upgrades are financed and the debt has to be serviced. The athletic department has done a good job of paying down debt before the term of the loan. If revenues aren't increased the department would eventually be saddled by debt and future projects would have to be canceled. I don't know what the current debt service payment is but I'm guessing it makes Brady Hoke's salary pale in comparison.

In college athletics you are either growing or fading to irrelavence. Harvard and Yale respect tradition but I doubt anyone here wants to go were they are in the name of tradition.

profitgoblue

December 14th, 2012 at 10:25 AM ^

You're right from a lender/borrower standpoint (are you a banker?), but college football tradition is supposed to elevate above all that noise.  The premise of the argument is that college football is not a "for profit" business.  I agree that upgrades to all facilities are in order.  And the changes made to Crisler and Michigan Stadium are beautiful, no doubt about it.  But the real question is whether the majority of regular season ticket holders would have agreed to the improvements if they knew how it would affect them personally.  Did we really need luxury boxes or were we okay with the 101,701 capacity? 

I agree that Crisler desperately needed help.  But I'm not so sure the multi-million loan agreement that the AD signed saddling the department with debt that needs to be serviced was necessarily a good decision or not.  As far as running a corporation goes, it probably was a good business decision - I'm sure the terms are good (Brandon definitely never saw terms that good in his outside days).  But college sports are inherently not a business (read: should not be treated as a business), in my opinion.  Those loan agreement likely have all kinds of covenants that require the AD to have excess cash reserves, all that crap.  And those covenants likely lead to the decision to increase PSL prices.

M-Wolverine

December 14th, 2012 at 12:12 PM ^

Related to the better recruiting, and better product on the field? The problem with not treating it like a business is that everyone else is, and you fall behind, and then you can't attract talent to the programs.  And then instead of you having people complaining about how much they have to pay, you have people complaining about how bad the teams are and NOT paying to go see the teams. It seems like an easy choice as an AD which way to go.

profitgoblue

December 14th, 2012 at 2:25 PM ^

Agreed.  Its really a silly discussion to have because everyone knows it is what it is - to field a good, entertaining product most of this stuff has to be done.  I think nostalgia and thoughts of "what it should be like" are what you're seeing here (me included).  College football just doesn't "feel" as good as it used to and that is a huge bummer.

#GETOFFMYLAWN!
 

GoBlueInNYC

December 14th, 2012 at 9:55 AM ^

A few years ago, Texas Monthly had a great feature on this exact point. Basically, they said that athletic departments were very loose with their budgets and book keeping because they could be. They made a bunch of money off of a couple of sports, paid for the sports they wanted, and generally the AD didn't have to worry about balancing the books because there was enough to go around. Title IX passed and all of the suddden athletic departments everywhere freaked out because they had a bunch of extra costs to pay for, and running the department, by necessity, had to be more business like to pay for everything.

Here's a link to the story: LINK (it's for "registered members only," but registration is free)

James Burrill Angell

December 14th, 2012 at 9:55 AM ^

I agree with you on the why and when BUT we could always cut sports to lessen the burden on the football program and that would include mens and women's sports evenly, instead we're expanding and adding sports.

 

Where I agree with Bacon is that David Brandon has definitely taken it too far. I will never disagree that college sports is a business, but its not a for-profit corporation. I'm not even a proponent of "breaking even" as the article mentioned, we need to run some surplus to keep the proverbial rainy day fund. What I object to is the fact that the athletic department has been running a MASSIVE surplus since they instituted the seat licenses yet they still squeeze the fans for more. We're on extremely solid footing. When asked about some of the business practices John Bacon talks about, his answer is always "Well stadium renovations don't pay for themselves". That's B.S. Further, in the 90's did we not win national championships in football, hockey and a few in other non-rev sports. Other than the men's gymnastics team have all these new facilities generated us results. Most of us have seen Brandon's grand view of Athletic Campus and while I think all of the programs are deserving of the best, it needs to be gradual and done in a way that doesn't bleed the fans dry.

 

Brandon has to realize this on some level. One of the criticisms is that Michigan Stadium was beginning to eliminate the Michigan grads and go to the proverbial highest bidders. As many commenters noted, the tailgaters, former athletes and long time alums got kicked out of places like the Blue Lot and Gray Lot for the corporations and big money non-alums who buy Suites and large blocks of tickets yet nearly eliminated all the tailgating and left both lots near empty. Brandon had to have seen that when he changed the priority points system this month and increased the value of being an alum and a former letterwinner. The guy clearly has to see that there is some alienation going on with his business practices. I just hope he's smart enough to back off before he spooks off too many.

 

 

 

maizenbluenc

December 14th, 2012 at 12:30 PM ^

They had 105 or something before Title IV. So the University has to offer 85 scholarships to female atheletes as well. So for example, women's rowing is a schlarship sport, and men's is a club sport.

Therefore, even if we eliminated other sports programs, many women's programs would remain to balance out against the football scholarships.

What is more concerning to me: while many facilities need updating, it appears to me that the department is building the Tajmahal of sports on South Campus. I am not sure if they are required to build "equal" facilities, but the South Campus plans look pretty extravagant for however few student-atheletes there really are versus the general student population.

Then again, if Title IV stated that an equal number of female academic scholarships had to be added, how many more scholarships could Michigan offer without the cost of associated sports programs? If you were paying higher seat fees, etc. to increase the number of general academic scholarships to the Unversity, would you feel better about paying more for your ticket?

In the end, I see many more girls in sports these days, and that is made possible in part by all of us paying more for football tickets. Maybe in the end that in itself is worthwhile.

 

 

M-Wolverine

December 14th, 2012 at 12:15 PM ^

Now what sports do you want to cut? Can't say "cut them" without telling the fans of it what needs to go.

We added Lacrosse, but you listen to the Lacrosse fan around here and they'll tell you it was a big part of Big Ten expansion consideration. Explain to them how you no longer think their sport is worthy.

ak47

December 14th, 2012 at 12:29 PM ^

In your paragraph you said that Michigan desired a widespread athletic program. If that is the case then they would need to be paying for these sports regardless of title IX so I'm not really sure what your point was unless you are saying we wouldn't be funding any womens sports, or very few if given the choice.  The fact of the matter is that we just had a 150 plus comment thread on womens volleyball, get regular updates on softball and I am pretty sure all of our most recent big ten titles our in women's sports.  Personally I am ok with the department as a business model if it can keep funding these programs because I think its important.  If you are only a football or basketball or hockey fan I can understand why this might not seem worth it to you but for me it is, title IX or not.

Erik_in_Dayton

December 14th, 2012 at 9:43 AM ^

Few consumers get screwed over like sports fans, because our attachment to our teams is in many ways irrational.  That said, I think the downsides of the business-ization (no, that is not a word) of college sports are tempered by the fact that the money goes to pay for good things.  People can say that Dave Brandon only cares about money, but he's not lining his own pockets with that money so that he can buy himself a Rolls Royce.  He puts said money toward Michigan sports. 

Wave83

December 14th, 2012 at 9:53 AM ^

What you say is true, and it could be worse, but the fact is that you can pay too much for good things.  I think Title IX and the pressure to raise money for more sports programs does have a lot to do with the increase of money in college sports -- and women's sports is a great and important thing.  However, there is quite a bit of empire building going on that is unnecessary. 

An as for the Rolls Royce business, Brandon is being paid a boatload of money.  People will say he is "worth it," but you can't say he isn't being made wealthy -- except for the fact that his previously acquired wealth already outstrips what he is being paid as UM AD.

BeatOSU52

December 14th, 2012 at 12:27 PM ^

As it mentions in the article with it being one of the first times in UofM history that the AD will be paid more than the President, that will mean that the heirarchy of pay will go Hoke-Brandon-MSC, yet the heirarchy is the opposite in terms of who reports to who.  Obviously, this is not that uncommon at other schools, especially as coaches at big time programs will almost always get paid more than the President will.

 

EDIT: Although below that seems to be untrue regarding Bacon's statements about pay?

M-Wolverine

December 14th, 2012 at 12:33 PM ^

Because at base salary it's very different than what you actually earn. Head Football coach is a perfect example. At base they don't earn that much, but get cuts of Adidas contracts and such that build it up to that high amount.

 

Ten highest-paid university officials

  1. Ora Pescovitz — executive VP for medical affairs — $739,025
  2. Douglas Strong — CEO of U-M hospitals and health centers — $612,000
  3. David Brandon — athletic director — $600,454
  4. Mary Sue Coleman — president — $585,783
  5. Erik Lundberg — chief investment officer — $575,000
  6. Timothy P. Slottow — executive VP and chief financial officer— $551,668
  7. Alison Davis-Blake - Stephen M. Ross School of Business dean-  $550,000
  8. James Woolliscroft - Medical School dean - $524,509
  9. Philip Hanlon — provost and executive VP of academic affairs
  10. http://www.annarbor.com/news/michigan-athletic-director-david-brandon-g…

 

But Hoke's base was $300k. And we all know he made more than that.

 

http://hr.umich.edu/hrris/reports/Salary_Record2012A-1a.pdf

UMmasotta

December 14th, 2012 at 12:59 PM ^

This is not to make a point one way or the other- I haven't actually read the J.U.B. piece yet- but I was curious after I saw Brandon's extension this morning. The typical SEC coordinator salary is around $800,000 per year. 

 http://espn.go.com/blog/sec/post/_/id/40017/defensive-coordinator-salaries-going-up

Whic is up ~100% from 2009.

 http://espn.go.com/blog/sec/post/_/id/7336/what-are-the-sec-coordinators-making

 

M-Wolverine

December 14th, 2012 at 12:20 PM ^

In 2011 Brandon earned $865k in pay and compensation

http://www.annarbor.com/news/michigan-athletic-director-david-brandon-g…

2011 for Coleman was $933k

http://www.annarbor.com/news/university-of-michigan-president-mary-sue-…

Coleman is in the top 5 of public University Presidents. She indirectly manages a lot more money (though the hospital as the main money earner has leadership that earns more than she does), so maybe in proportion it's too close. But people pay a lot more attention to what happens on a Saturday than what the U does Monday through Friday.

Njia

December 14th, 2012 at 10:03 AM ^

If you go all the way back to Knute Rockne and even Fielding Yost, college football has been about attracting the public interest. In the days when "media" was really "newspapers" and perhaps radio, having a winning program was enough. How many of the historical references to Michigan Football from the 1920s and later are sourced from the NY Times archives? Many of them. Winning could attract attention even from the Old Gray Lady. 

Not anymore. "Entertainment value" isn't just about winning. Brandon is probably right that it's about the "wow!" factor in every facet of the Michigan Athletics Product. Providing those same wow factors requires money - lots of it. And, MGrowOld is probably correct that Title 9 drives somewhat higher budgets for facilities, coaching, etc., among non-revenue sports, but that pales in comparison to the budgets for the sports bringing home the bacon.

What I really don't understand - with all of the BTN/cable revenue coming in - is why ticket prices keep climbing far in excess of inflation. It would seem that TV money would offset the need for increases to ticket prices ... I'm sorry, perhaps I should have used "seat license fees""charitable donations".

StephenRKass

December 14th, 2012 at 10:04 AM ^

I tend to agree with Bacon. I'm a fan, but going to many games is too rich for my blood. The world has changed, and I've gotten off of this merry-go-round. Mostly, it just leaves me disheartened. Thankfully, the local high school team went all the way to the finals, and they're a cheap and simple way to enjoy the game.

UM Indy

December 14th, 2012 at 10:12 AM ^

if/when I'll get to this point.  I'm a season ticket holder and try to get to four games a year.  Live in Indianapolis so it's a 4 hour drive one way, which results in either a very long day or an overnight.  With the PSD going up, it's starting to be a question mark in my mind as to whether it's worth the money, time and energy.  Like so many have said above, it's the irrational emotional connection that's taken advantage of in this situation. 

MadMonkey

December 14th, 2012 at 11:20 AM ^

I am 50 something, and I have been going to games since Bo's second season.   I am also an alumni who managed to make every game --on time -- while was a student.  Now, I attend games in Ann Arbor and around the B1G! from my home in the Chicago area.

This was the first year that I my zeal for the in person Ann Arbor experience was lagging.  I don't have anything specific about the experience to point to, other than it just seems like a more "artificial" experience to me.   I think Brian or some other commentator pointed out how absurd the AD's statement was about WOW experiences coming to the Big House in 2013. I have had WOW experiences at the Michigan Stadium for more than 40 years.  If I want synthetic thrills I will go to a pro game.  Earlier this year I attended Stanford v Washington, and if that is where Brandon is taking Michigan football, I will enjoy Michigan games on BTN or a live stream from now on.    

My son enjoys the live experience, however, I wonder how much football he is enjoying versus the excitement and stimulation of the other experiences being introduced to the stadium.  It's likely too late to save six or seven sacred Saturdays in Autumn from the philistines.

The Wagon

December 14th, 2012 at 10:22 AM ^

Until the Big House stops filling up there is no incentive for Brandon to behave otherwise. While some of us on the board are upset, there are 110K+ every Saturday who still fill the stadium. We might say that we don't like the price increases, commercialization, etc., but our behavior shows otherwise.

It's hard to separate correlation for causation-or even the direction of the causation-but methinks it is no coincidence that the list of most profitable programs posted on the board yesterday mirrors the best teams. I suspect it works both ways in that winning makes money and money creates wins.

profitgoblue

December 14th, 2012 at 10:34 AM ^

That is true, for now.  But the AD should be very worried about what is happening in the student section.  These are the people that grow up to pay for PSLs.  And if you find apathy among the students and don't do anything about it, your base slowly erodes.  In other words, if the seeds don't germinate there is no fruit on the back end.  Brandon appears to be a somewhat shrewd businessman.  I hope he recognizes this and does something about it (other than taking seats away from the students and giving it to people who will pay MOAR money).

 

LSAClassOf2000

December 14th, 2012 at 10:27 AM ^

"I might not be alone. For the first time since Bo got here in 1969, when attendance started growing every year, you’re starting to see the trend go the other way. Some games this year you could see thousands of empty seats, most of them in the student section, and I have a theory as to why." - John U. Bacon, in his blog

A small nitpick - average game attendance at home games has taken year-to-year dips several times since Bo Schembechler arrived. That being said, however, what is true is that the dips have been typically very small and are usually followed by significant increases, but in the past several years, if the data in the Bentley Archives is correct, the curve is becoming a flat line. Actually, this year, average attendance increased by 73 people, down from 354 the year before, and over a thousand the year before that. If that is the trend, then we may not be far from seeing "too far", if you will, although external factors certainly play a role in these spending decisions. It has been said here several times that the demand for seats at Michigan Stadium is pretty inelastic, but I wonder if this increase and those after that seriously test that.

UMxWolverines

December 14th, 2012 at 12:54 PM ^

That's why I'm worried about the expansion Brandon has planned. Based on what I've seen, our attendance is basically going to plateau for now if not drop for the early season mac games. Casual fans just aren't going to go to those games anymore now that there are high def tvs and such. I feel like during the Rich Rod years there was always that sense of the next game being the turning point and the excitement about that. Now it's just kind of...whatever.

Buck Killer

December 14th, 2012 at 10:33 AM ^

It killed his credibility for me. Letting Rich Rod's failure go on other shoulders. He was the captain of the ship and ran it aground. He does seem like a great guy, but that is how I feel.

Zoltanrules

December 14th, 2012 at 10:34 AM ^

The answer to how we got here is "values". We as a society have made choices to value sports with our time and money more than education, health, and the general wefare of our citizens. The insane desire to "win vicariously", accelerated by the economics of title ix, has paved the way to this craziness.

I LOVE my university (two degrees), played sports, know current and past players and coaches, live comfortably and still cant justify the time and cost that 110,000 seem to  religiously pay every single week.

The whole Brandonization of UM is a sign of the times and until we stop paying stupid amounts ( I doubt that will happen) UM will continue to prostitute itself in the name of keeping up with the likes of SEC powers and OSU.

 

Wolverine Devotee

December 14th, 2012 at 10:43 AM ^

While I don't like the prices rising, I have to deal with it. Comparing now to times when tickets were under $10 is a little ridiculous. 

It's just how things are now. Like it or not, college athletics is a business. If people don't want to show up to games, give the tickets to me and I'll gladly go. The mentality of "why should I go freeze when I have an HD TV?" pisses me off. 

The people who question why can't it just be pure need to get real. It's not like it was before. As with anything, things change over time. I wish tickets were $2 like they were back in 1927, but that isn't the case.

As long as Michigan is suiting up in the winged helmets, on a fall Saturday with a sell out crowd, that's fine with me. That's being pure to me. 

 

 

profitgoblue

December 14th, 2012 at 10:51 AM ^

I understand your sentiment and I definitely do not begrudge you for it.  But I will say that it is exactly this attitude that makes it possible for Brandon et al. to continue along this path.  If you are okay with Michigan football more closely resembling a professional football organization then more power to you.  I, for one, would like to take my kids to their first game and have them see the "pure" college football I knew growing up - one where the cheerleaders and the fans around were the entertainment away from the game (as opposed to advertising and gimmics), etc.  The Big House is definitely a much more impressive sight to see now than when I started attending games.  But as a kid, simply seeing 100,000 people in one place was mind-blowing enough.  At some point, like Bacon says, the AD has to get the focus back on the "experience" of attending and not the importance of generating revenue.

(FWIW, I was once an out-of-state season ticket holder but I will never be again.  My plan was to get tickets every year so I could pass them down to my son in 20 years.  He would have amazing seats!  But it just doesn't make any sense now.  At this rate, I'll be handing him PSLs that will cost him $5000/year/seat to maintain!)

Wolverine Devotee

December 14th, 2012 at 10:59 AM ^

I don't want Michigan to resemble a pro football organization and it never will. The cheerleaders, MMB, M Club Banner and everything else will always be there that make the games pure.

But going to games, costs money. Lots. It still fills up even though ticket prices have been rising. The student section needs to be trimmed a little bit, so then when they want to go to games and can't because someone got their seats that actually shows up, they'll learn to be early. 

I don't see what kind of advertising gimmicks have taken place at games. If you mean advertising on the cups and pom poms they give out to fans, that has been going on long before Brandon got here. 

 

 

profitgoblue

December 14th, 2012 at 11:18 AM ^

Advertising gimmics are coming.  I think we can at least all sense it.  Maybe they won't but we can sense it.  Ads around the scoreboards, etc.  But what I really meant to reference was "gimmics" like the luxury boxes, for one.  They are damn impressive but clearly unnecessary.  An update to the pressbox was apparently long overdue but luxury boxes are excess.  Corporate excess.  And they're costing season ticket holders more per seat license and per ticket.

 

The Wolf

December 14th, 2012 at 2:53 PM ^

What you said about being a kid and just being amazed at the sight of 100,000+ people defintitely took me back to my first experience at the Big House.  I am in my 20's, so this experience wasn't so long ago (little under 20 years).  I had been to Central, MSU, and even the Silverdome, but I will never forget the first time I set foot inside Michigan Stadium.  It was, as you describe it, a jaw-dropping and mind-blowing experience to see and hear all of the people.  I remember watching the wave, watching the band, and thinking how the players on the field must have felt like deity's.  I've always felt that that moment had plenty of "WOW" for me.

M-Wolverine

December 14th, 2012 at 12:27 PM ^

What was he paying for a movie ticket? Not the $10 plus we're paying now.  Or for a gallon of gas? Certainly under a buck. 

The truth is most things are going up faster than the rate of inflation; we just don't shake our fist in the air at it like we do something near and dear to our heart. Not sure picking out the one makes it looks anything more than you're a get off my lawn old man unless you have some ideas on how to make things like they were in yesteryear.

Schembo

December 14th, 2012 at 10:38 AM ^

What's disheartening about college football today is that being a fan means you need to understand the business side of college football.   Commissioners and AD's are blatantly telling people that this is all about the money.  The pageantry and tradition of the game has been replaced by "footprints" and talk of regional cable package deals.   You used to feel like you were part of something special when you walked into the stadium on Saturdays, but that's slowly being replaced by the feeling that you're just a pawn in this new college game and that you have dollar signs hanging over your head.  I hate that it's starting to feel like the NFL.  The game used to be pure and that's why college games could draw 100,000+ fans to a game while the NFL can't.   The current generation of leadership in college athletics is unraveling everything that was built up over the past 100 years.