Lucrative US college sports industry faces uncertain future

Coronavirus has upended sporting competitions around the globe, but for the multibillion-dollar US college sports industry, efforts to resume play are uneven, unwieldy, and as of this week, ever more uncertain.

The danger facing college sports programmes — which together rival the English Premier League in revenue — was demonstrated as dozens of athletes at several schools tested positive for, or were exposed to, Covid-19 as summer training began for the fall American football season.

“We are at a pivotal point in our athletics department history now,” Ray Tanner, sports director at the University of South Carolina, wrote in an open letter on Friday that raised questions about whether a normal football season could take place. He called the current moment “agonising”.

Among American football programmes with significant coronavirus outbreaks are the University of Texas, Kansas State, and Clemson in South Carolina. A quarter of the football team at Louisiana State University, the reigning national champions, was recently quarantined due to the virus, according to Sports Illustrated. Morehouse, a prestigious historically black college in Georgia, said Friday it was cancelling all fall sports.

More than $8bn in annual revenue is at risk as top-flight sports programmes with varying financial structures — and different levels of coronavirus contagion — seek to resume activities without endangering their athletes or their supporters.

Compounding the difficulties facing the industry is its organisation. Unlike professional sports leagues, in which a centralised leadership typically manages a few dozen teams, US college sports are regulated along byzantine lines.

At the top is the rulemaking National Collegiate Athletic Association, comprising hundreds of member universities in all 50 states, tiered by size of their sports programmes. Under the NCAA, there are dozens of regional conferences, which often set schedules and manage lucrative media rights negotiations.

“College [sports] has a difficult row to hoe because of the decentralisation of its administration,” said Tyrone Thomas, a lawyer who advises university presidents and athletic directors. “There are a lot of moving parts. You’ll see different implementations by sport, and across conferences.” 

Michelle Hosick, a spokeswoman for the NCAA, said members are regularly discussing updates on pandemic practices, but so far the organisation is proceeding with its fall sports schedule.

“We are planning to have fall championships, but we still don’t know the full scope as individual schools make decisions about what’s best for them,” she said. “Nothing is off the table.”

Chart showing the athletics revenues of US colleges, organised by Football Bowl Subdivision. Combined, annual revenues for 2017-2018 were over $8bn, but the sources of revenue varied by the type of division. Over 75% of revenues from the 'Power 5' conferences — Southeastern, Big Ten, Pacific-12, Big 12 and Atlantic Coast — are from the NCAA (including media rights), ticket sales and donors. However, the 'Group of Five' conferences — Mountain West, Conference USA, American Athletic, Mid-American and Sun Belt — are much more reliant on mandatory student fees and direct institutional support.

The financial stakes for US universities are enormous. The sports department at LSU, for example, reported $158m in operating revenues for the 2018-2019 school year, according to financial records.

Combined revenues among the Power Five conferences — representing the most competitive schools — totalled $6.58bn during the 2017-2018 academic year, according to the Knight Commission on Intercollegiate Athletics. The vast majority of those revenues came from media rights, championship games, and ticket sales.

By comparison, the EPL made $7.3bn (£5.8bn) the same year.

A quirk in NCAA governance is that top-level collegiate American football is organised somewhat separately from other sports. While still subject to association competition and eligibility rules, a unit known as the Football Bowl Subdivision schedules football games and championships among the most competitive conferences, and also negotiates media rights and sponsorship of those games on behalf of its members. 

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Payouts from college football bowls — large, end-of-season games between top-ranked teams — totalled $549m in the 2018-2019 season, according to USA Today.

The bowl system means that some college sports programmes, like that of LSU, are football powerhouses whose finances are strongly correlated to the sport, while other programmes rely on a more diverse mix of income and are especially vulnerable to pandemic effects on overall university operations. 

“I’d be lying if I said this next year or two won’t be incredibly challenging for our institutions, not only for sports but for every department and every type of activity within these institutions,” said Jennifer Heppel, commissioner of the Patriot League, which is not part of the Football Bowl Subdivision, and includes private universities like Boston University, as well as the US Naval Academy and the US Military Academy.

Underscoring the pressure for college sports departments which rely on NCAA revenue, like the Patriot League, is the fact that the association already slashed its distribution budget by more than 60 per cent for 2020, owing to the cancellation of its men’s basketball championship this spring. 

The annual three-week, single-elimination tournament known as March Madness is by far the largest revenue driver for the NCAA, typically bringing in upwards of $800m. With the Covid-19 crisis shutting the event, the board of governors announced it would reduce planned payments to universities from $600m to $225m this year.

Though sports programmes generate billions for universities and conferences, student athletes are bound by amateurism rules and are primarily compensated through scholarships. Concerned about the effects of the “prolonged financial state of emergency” on resources for college athletes, executives of the Knight Commission cautioned the NCAA against reducing scholarships during the crisis, saying it should be a “last resort”.

Meanwhile, the Patriot League this week laid out its guidelines for fall sports among member universities: athletes can only return to campus at the same time as all students, flying between competitions is prohibited, and non-league competitions are permissible only if those schools adhere to comparable health and safety regulations. 

“Look, our institutions are shut down right now. There’s a whole lot of people who want to try to come back to normal, not only athletes but faculty, staff, students, presidents, coaches, everyone,” said Ms Heppel, the Patriot League commissioner. “It’s not about whether we can play a football game in August. It’s about ensuring safety for the long term.”