The Big Business of College Sports and Why Football Reigns Supreme
Like many of us, we tend to have a favorite college team we cheer for. Here in the Quad Cities, alliances are often split between the University of Iowa Hawkeyes, the Iowa State University Cyclones and the University of Illinois Fighting Illini. For others, our loyalty and fanfare may lie with one of the hundreds of other colleges and universities spread across the country.
Regardless of who you follow, the commonality amongst most schools is that their sports programs generate a substantial amount of money. That revenue comes in the form of ticket sales, media rights, merchandising, licensing, concessions and donors, among many other sources. But some schools’ athletic departments collect a lot more money than others.
According to sports information company Sportico, for fiscal year 2023, the Buckeyes of The Ohio State University collected a staggering $279.6 million in athletic revenues across its 38 men’s and women’s varsity sports teams. This was the most among the 134 schools in the NCAA’s Football Bowl Subdivision (FBS). The FBS consists of the 134 largest schools in the U.S. Ohio State has been ranked No. 1 the last two years and has finished in the Top 3 in five of the last six years.
Joining Ohio State among the top revenue earners is fellow blue blood program the University of Texas, which generated $271.1 million in athletic revenues last year, the second most in the nation. $86 million of this was received through private donations. Yes, the Texas oil industry has created a lot of wealthy donors! Rounding out the Top 5 are No. 3 Texas A&M University ($267.2 million) followed by the University of Michigan ($229.4 million) and the University of Georgia ($206.5 million). Locally, the University of Iowa ranks No. 18 ($166.8 million), the University of Illinois ranks No. 27 ($137.8 million) while Iowa State University ranks No. 48 ($115.5 million). Sportico collected the data from financial reports submitted by each university to the NCAA.
But within the individual sports teams, there’s a big difference between generating revenue versus generating profits (revenues less expenses). Each team incurs significant expenses such as the salaries of coaches and support staff, facilities fees, travel, medical costs and insurance, equipment, supplies and marketing to name just a few.
Outside of football, and in some cases men’s basketball, the majority of college sports teams don’t generate a profit – they actually lose money. At Ohio State, of its 18 men’s teams and 20 women’s teams, only football and men’s basketball posted a profit. Last year, their football team generated a net profit of $55 million while its men’s basketball team generated a profit of $9.7 million. The other 36 sports teams generated a combined net loss of $55.7 million. Like many schools, the profits from Ohio State’s football team were used to cover the losses of nearly all other sports teams at the university.
At the University of Texas, the football program generated a massive $122 million profit last year while its men’s basketball team posted a profit of $6.5 million. The university’s other 15 varsity sports teams all lost money, reporting a cumulative loss of $30.1 million.
Given its influence, it’s of little surprise why college football is such a dominating force. For the titans like Ohio State, Michigan, Texas, Georgia and Alabama, their football teams are the cornerstone of funding for their massive stadiums, high-tech training centers and state-of-the-art sports facilities. Last year, the University of Michigan spent $16.5 million on travel expenses for their men’s and women’s sports teams. At Ohio State, the tally was $14.2 million. That’s more money than the $10.4 million Northern Illinois University generated in total revenues last year from all 16 of its men’s and women’s sports teams.
So, the next time you go to a college football game or watch one on TV, understand there’s a rationale to all the pomp and circumstance that goes along with it. For most universities, football has become their own personal money tree.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Quad Cities Investment Group unless a client service agreement is in place
