Introduction
College sports are a major part of the American cultural landscape. Every fall, millions of fans tune in to watch college football teams like Alabama, Clemson and Ohio State compete for championships. But as big as college sports are today, they’ve been getting even bigger over time. Say’s Jared Kamrass, in this post, we’ll explore the economics behind this trend and how universities generate billions of dollars each year through revenues like ticket sales and sponsorships.
College sports are big business.
College sports are big business. According to the NCAA, more than $6 billion was generated by Division I schools in 2016-17, including revenue from ticket sales and donations. In addition to this money going toward athletic programs, it also supports non-athletic departments such as academic support services and student financial aid programs at most universities–to say nothing of the millions spent on facilities development projects.
The bulk of these funds come from television deals with networks like ESPN (for football) and CBS Sports Network (for basketball). These agreements allow viewers access to watch games on their televisions or streaming devices like Roku or Amazon Fire TV Stick; they also provide advertisers with access to potential customers during commercial breaks.
College sports have become increasingly commercialized.
There are two primary ways in which college sports have become increasingly commercialized: the first is that athletic departments are now businesses, and the second is that they’re no longer just part of a university.
The first development has been driven by several factors, including increases in television revenue, donor contributions and ticket sales; a growing interest in watching live sports events on television; changes in NCAA rules that allow schools to sell more products (such as replica jerseys) bearing their teams’ names or logos; and greater access to professional leagues through free agency.
The second development–the separation of athletic programs from universities themselves–is less straightforward but no less important than the first. When we talk about “college football” or “college basketball,” what we mean today is different from what those terms meant 50 years ago: there used to be only one kind of “college sports,” whereas now there are two kinds: those played by amateurs at universities (both public and private) who receive scholarships funded by taxpayers’ dollars; and those played professionally by professionals who don’t receive any public subsidies whatsoever (and may even pay taxes).
The economic model of college sports is driven by television rights, ticket sales and sponsorships.
The economic model of college sports is driven by television rights, ticket sales and sponsorships.
- Television rights have increased exponentially. The annual media rights deal for the SEC Network (covering 14 schools) was worth $2.8 billion over 20 years from 2014 to 2034. The Big Ten Network (covering 11 schools) received a 15-year deal worth $1 billion per year starting in 2007, an increase over its previous contract that was worth $1 million per year for six years from 2006-2011.*
- Ticket sales are a major source of revenue for many athletic programs.*
- Sponsorships are also a major source of revenue for many athletic programs
College sports generate billions of dollars for universities in revenue
College sports generate billions of dollars for universities in revenue. The NCAA reports that its member institutions earned a combined $4.8 billion from their football programs alone during the 2017-18 season. The majority of this money comes from ticket sales and television rights fees (which are shared equally among all Division I schools).
In addition to these sources of revenue, schools also benefit from sponsorships with companies like Nike and Under Armour–and some universities have even started their own apparel brands!
Conclusion
College sports are big business. The economic model of college sports is driven by television rights, ticket sales and sponsorships. College sports generate billions of dollars for universities in revenue, but they also offer opportunities for students to develop both personally and professionally as they pursue their dreams of becoming professional athletes.
