Prior to the pandemic, South Carolina was one of the nation’s top colleges in terms of athletics revenues and profitability. A USA Today Report rated the Gamecocks No. 17 in revenue generated for 2018-2019, with a take at nearly $140.7 million compared to nearly $137 million in expenses. Photography courtesy of South Carolina Athletics
Nobody loves reminiscing about glory days more than a college sports fan. That visceral connection between a school and its supporters is the impetus for an industry in which billions of dollars change hands. Regardless of the results on the scoreboard, the cash registers were busy for many college programs until the COVID-19 pandemic brought the games — and much of the revenues — to a halt.
Eighteen months after the shock of a March with no Madness, schools are preparing for a football season with few health-related restrictions for fans or competitors. The hope is for a safe return to physical and fiscal fitness as the college sports money machine tries to replenish its coronavirus-depleted coffers.
“They need to get people back into the tailgating and the excitement as opposed to staying at home,” says Dr. Tom Regan, an associate professor and director of graduate studies in the University of South Carolina Department of Sport and Entertainment Management. “The future in the short term is going to be significant. People want to get out and enjoy the outdoors, be around their friends, and be at live events. In North America, being at live events is a big deal; it’s part of our culture. It’s going to be really interesting to see the excitement level there.”
Prior to the pandemic, South Carolina was one of the nation’s top colleges in terms of athletics revenue and profitability. A USA Today report ranked the Gamecocks No. 17 in revenue generated for 2018-19, with a take estimated at nearly $140.7 million compared to nearly $137 million in expenses. The University of Texas was No. 1 in revenue at $223.9 million, which was $19 million ahead of expenses.
Where does the money come from? Generating revenue are ticket sales, corporate sponsorships, booster donations, merchandise sales, and other revenue streams, but television dollars have become a huge factor at South Carolina and other “Power Five” programs. Those schools, which include the University of Notre Dame and members of the Atlantic Coast, Big Ten, Big 12, Pac-12, and Southeastern conferences, have signed lucrative, long-term broadcast (and now streaming) rights deals.
“The networks spend millions and billions of dollars to broadcast these games,” says Dr. Kevin Hull, an associate professor in South Carolina’s School of Journalism and Mass Communications. “They pay a bunch of money to be the exclusive home of these various sports. If you’re South Carolina, you get a lot of money from a partnership with ESPN.”
The Gamecocks are a member of the Southeastern Conference, which has deals with ESPN and CBS for football and other sports. ESPN also partnered with the conference to create an exclusive cable and streaming channel, the SEC Network. The current ESPN-SEC deal is estimated at $2.25 billion over 15 years.
Clemson University is an Atlantic Coast Conference member. In 2012, the conference signed a 15-year, $3.6 billion deal with ESPN. In 2016, the deal was extended through 2035-36 and included the creation of the ACC Network.
“Our multimedia rights and conference distributions are crucial to our budgets,” says Jeff Kallin, Clemson’s associate athletic director for communications and strategic initiatives. “Each year, those items make up 25 to 30 percent of our revenues. The ACC, like all conferences, negotiates those terms, and it has made a big difference not only in revenue but also in our ability to provide exposure for our programs.”
Despite all the money, profits aren’t a given. The University of Alabama, which was No. 7 in the USA Today ranking, had estimated expenses of $185.3 million compared to $164.1 million in revenue. Examining 2010-2019, the NCAA found that of its more than 1,000 member institutions, fewer than 30 schools per year had positive net generated revenue.
“College athletics almost has a life of its own; it’s hard to take your foot off the accelerator,” says Eric Hyman. Currently a consultant, Eric is a former athletic director at South Carolina as well as Texas A&M and Texas Christian universities. “So many people’s perception is based on the school they support and how successful they are athletically. There’s passion, but you have to pay for it.”
Schools pay for it by spending on facilities and coaches to keep up with their most successful rivals. When Eric became South Carolina’s AD in 2005, he inherited a money-losing athletic department. By the time he left in 2012, the Gamecocks had built a $14.5 million reserve fund.
But he also mentions non-financial impacts of a successful athletic department, like the boom in student applications at TCU following its victory in the 2011 Rose Bowl. South Carolina saw a jump in applications when its men’s and women’s basketball teams both made the Final Four in 2017.
“In our society, a viable sports program has a value to it,” Eric says. “It depends on how you define profitable — is it revenue versus expenses? When you define profitability as branding and image, that brings a lot more to the table.”
Between scholarships, salaries, and facilities, much of a university’s annual athletic expenses are committed in advance. The pandemic brought this into focus, as schools, conferences, and the NCAA sought to keep students and fans safe while solving a rapidly evolving financial riddle.
By cancelling its men’s basketball tournament, the NCAA lost its main source of revenue. Even with $270 million in insurance payments, the organization generated only $519 million for the year ending Aug. 31, 2020, compared to $1.118 billion for the period ending Aug. 31, 2019.
The University of Michigan eliminated 21 athletic department jobs. Furman University dropped its baseball and men’s lacrosse programs. Stanford and Clemson planned to eliminate some teams but had a change of heart. Clemson, in fact, ended up announcing it would add women’s lacrosse and women’s gymnastics in future years.
Tom says college merchandise royalties were 20 percent of normal. Concession revenues shrank due to smaller crowds in socially distanced arenas. Fewer games also meant less exposure for corporate sponsors.
LEARFIELD handles multimedia rights — which can cover everything from radio networks to sponsor signage — for roughly 200 college properties across the country. The Texas-based company says it had to get creative on behalf of its schools. It expanded beyond game days and outside the stadium walls by increasing its social media content to reach fans anytime, anywhere. It also expanded into college esports, including an initiative with the Big 12, connecting sponsors with a young and growing market.
Amidst increased costs from coronavirus testing and a drop in football ticket revenue due to a shorter schedule and reduced seating capacity, the Gamecocks scrambled to juggle its budget. Included in the cuts were hiring freezes, furloughs, and voluntary salary reductions by some coaches and administrators.
Still, the athletic department ended the 2020-21 academic year with a $27 million deficit. It would have been larger if not for a $23 million supplemental payment from the SEC on top of what it typically gets in a year.
“Revenue shortfalls varied across SEC members but averaged approximately $45 million per SEC athletics program,” according to a conference statement. “The SEC is using future increases in media rights revenue to facilitate this supplemental distribution to its 14 member schools. Beginning in 2025, the SEC will allocate a portion of the media rights fees to be received by the conference to fund the supplemental distribution. The SEC projects that its annual distribution to each school will still increase in 2025 and beyond, even after a portion of the new revenue is reallocated.”
In past years, the Gamecocks would share $4 to $5 million of its athletic profits with the university’s general fund. For now, the university will cover the athletic department’s budget shortfalls.
“We are planning for 100 percent capacity at Williams-Brice Stadium (football) and Colonial Life Arena (basketball) in the coming year and hopeful that we will be at our normal attendance numbers,” says Charles Bloom, executive associate athletics director. “We anticipate a shortage of revenues for 2021-22 compared to a non-COVID year. We do think that we’ll be back to full strength for the 2022-23 academic year.”
Clemson will use a combination of reserves and a loan to cover the cost of a nearly $18 million revenue shortfall. In the 2019 fiscal year, the Tigers’ total athletic revenues had been $133.8 million and total expenses were $131.9 million. Ticket sales, which were $28.7 million in 2019, shrank to $5.6 million in fiscal 2021.
“Clemson did reduce expenses by nearly $25 million in FY21 from a combination of efforts, including pay reductions, reduced recruiting travel due to the NCAA dead period, reduced competitions, reduced team travel, and other mitigating factors,” Jeff says. “Clemson is projecting full football capacity in the fall, and therefore we expect revenues to return to close to FY18-19 levels.”
The Gamecocks hope to resume making payments to the university’s general fund by 2024-25. By then, many of the student-athletes who dealt with cancelled seasons, coronavirus testing, “bubbles,” and other challenges will have graduated. Some, including several football players, left their teams early to prepare for the pros, while others took a year off from competition in hopes of returning post-pandemic.
In 2020, the Gamecocks counted 281 male athletes and 293 female athletes across their various teams. Some received full scholarships, some received partial scholarships, and others paid their own way. Athletically related student aid came out to $12.6 million. All of those numbers could run higher for the next couple of years.
“The NCAA gave the schools the ability to give any athlete an extra year of eligibility due to COVID, and a lot of our student-athletes took that option,” Charles says. “You could have more scholarships than what you’re typically offering, and there’s a dollar figure tied to that, including the operational costs — the housing, the travel, and the meals. That was an expense that had to be accounted for.”
It’s no secret football revenues help schools pay for other sports. Business Insider studied U.S. Department of Education data and found football generated more revenue per school than the next 35 sports combined. Still, the Power Five conferences were in total disagreement over conducting the 2020 football season.
The Big Ten and Pac-12 were on the side of cancelling the schedule and/or moving it to spring 2021. The SEC pushed ahead with a 10-game season ending in December, preserving the conference’s television contracts. The ACC and Big 12 also announced coronavirus-adjusted autumn seasons, and the Big Ten and Pac-12 eventually played truncated fall schedules in order to participate in bowls and playoffs.
“It was essential that TV got started, even without crowds or with limited crowds,” Tom says. One overlooked expense is debt payments incurred when schools borrow money in the millions to make athletics facility improvements. These debt payments are then part of their annual budgets. “They couldn’t cancel the season. The media deals were essential for them to have cash flow to pay those bonds. That was going to keep them whole.”
Television also brought one conference a Christmas present. The SEC made a deal with ABC and ESPN, both of which are owned by The Walt Disney Co., securing broadcast rights for 10 years beginning in 2024-25. The agreement, announced in December 2020, is reportedly worth $3 billion.
“SEC country has die-hard fans; that’s not a big secret,” Kevin says. “ESPN is banking a lot of money — $300 million a year. They want to be the home for the SEC, and they did it without reservation in the middle of a global pandemic.”
What’s next? South Carolina’s name, image, and likeness legislation (NIL) went into effect on July 1, 2021. While NIL guidelines allow athletes to pitch products and sign autographs for cash, it explicitly prohibits institutions from making direct payments to student-athletes. The funds that they earn must be provided by a third party, not the institution. It grants student-athletes the ability to earn compensation, whether cash, services, or products, for use of his or her name, image, or likeness from third parties. This development very well may create a new avenue to infuse college sports with corporate dollars.
