The business of college sports in 2010 is to find money
WEDNESDAY, 28 JULY 2010 07:10
BY EVAN WEINER
The Pacific 10 – soon to be the Pacific 12 – college sports conference is a rather interesting study in the politics of sports business, There are a number of elements that have a striking resemble to professional sports in that the Pac 10 depends on government support, cable TV and corporate underwriting just like any other major pro sports league in the United States. The conference also has global ambitions, just like all other major sports leagues in the United States.
There is a question that needs to be asked about what appears to be an endless need for more and more money for big time college sports. Why are college presidents and chancellors hiring people like Larry Scott, the Commissioner of the Pac 10, and turning every stone they find to see if there is money underneath the rocks to fund sports programs?
The answer is rooted in the economy and shrinking revenues for public schools like Arizona, Arizona State (Arizona is selling off state office buildings in an effort to control costs), Cal and UCLA (both part of the University of California school system), Oregon and Oregon State, Washington and Washington State, all public schools and all members of the Pac 10. Two other PAC 10 schools, USC and Stanford are private institutions.
Two more universities will join the Pac 10 in the next two years. Utah joins the conference in 2011 and Colorado enters the fold in 2012, both are public schools and both schools will increase the Pac 10, or Pac 12's television footprint as the conference will be represented in two time zones, the Mountain and Pacific. That is an important move for television coverage and should bring the Pac 10 or Pac 12 a sizeable amount of additional TV income.
"Well, I think the answer is pretty straightforward in college sports, at least in the Pac 10," said Scott. "With the economy, state funding for higher education is shrinking and that is putting a lot more pressure on athletic departments. They have to be more entrepreneurial, more creative, more aggressive and conferences to generate more revenue because what is at stake if they don't, sports are going to get cut.
"Student athletes are going to lose opportunities, student athlete support programs are going to get dropped and schools will find it more and more difficult to stay competitive nationally in terms of facilities, in terms of coaches and so there is an awful lot at stake right now.
"It all starts with the soft economy, decreased state funding and universities and their stakeholders like faculty not willing to subsidize athletics. It all trickles down to less money from the government and that is forcing all kinds of cuts. Faculty going on furloughs, salary freezes, programs getting cut. There is tremendous financial pressure and that is the underlying story that often doesn't get told. People focus on, money, money, money but you got to dig a little deeper and you realize the focus on money and entrepreneurialism and creative and seat license is that if you don't come up with these inventive ways to generate more money, kids are going to lose opportunities."
Big-time college sports are not immune to the 2008 economic breakdown and hustling for a buck is now the job of people like Scott.
"There is a lot of discussion about it (the soft economy and state cutbacks), it is no secret, I don't know about other parts of the country," Scott said.
Larry Scott has been on the job for a little more than a year. He is a New York City native who played tennis at Harvard and left Cambridge with a B. A. in European history. Scott was former professional tennis player and served as Chairman and CEO of the Women's Tennis Association and as President and COO of ATP Properties, a division of the Association of Tennis Professionals. He is an unusual choice for a college conference commissioner in that he was not involved with college athletics. Perhaps because his background is not the college ranks, he is able to move in "non-traditional" directions. He has hired the Creative Artists Agency of Los Angeles to handle a lot of what Scott sees as the entertainment business. CAA is a high-powered agency whose clients include Oprah Winfrey, Steven Spielberg, Brad Pitt, George Clooney, Sandra Bullock, Julia Roberts, Meryl Streep, Will Smith, David Letterman and Derek Jeter.
"It is not unusual for a conference to hire media advisers," said Scott. "That was something we were looking to do but CAA will basically play three roles for us. One is they got a group of people who are very seasoned in terms of the media industry and they will do the kind of analysis, research and advisory work one would expect before what would will be a major TV negotiations we got coming up. As part of that, they are helping us building a business plan for a potential Pac 10 branded TV network. CAA keeps their finger on the pulse of what is happening in the industry and makes sense of it for us.
"Secondly, they played a critical role in us analyzing and evaluating expansion possibilities. So there was a lot of behind the scenes granular analysis and work about what their value would be if different scenarios – they played a critical function for us there.
"Thirdly, being in LA and in our territory and being the largest and most prolific entertainment agency in the world, they are very much going to help us with our new marketing and our promotional endeavors. We hope to steal a few pages from the worlds of entertainment and media in terms how best we promote our conference in its own unique way and being in LA, being on the west coast and being in the entertainment capital of the world, we thought they would be a great fit for our conference."
CAA has been brought in to get more money from TV both in the United States and possibly on the global stage. No college conference has really looked into expanding beyond the United States. The Pac 10 or Pac 12 may become the Pac 16 eventually and all of the colleges will be in the United States but the college sports teams will be traveling to other locales. Just how many will that be 12? 14? 16? Scott isn't sure.
"I know for our conference, we are done with that evaluation at the moment," said Scott. "My sense is that our conferences probably are for now. We are moving forward as the Pac 12 going forward and I expect that we are going to lock in long term media deals on that basis. Having said that, I think there was a lot of interest and excitement around our vision for a 16-team super conference. We figured out a way to get the economies of scale but still have the smallness of divisional structures that did not create an undue burden for schools and student athletes. So my sense, based on the excitement our concept generated and the reaction I got from people is that it is an idea whose time will come. I just can't say when."
Scott contended that the Pac 10 didn't rush into any conference expansion and wasn't pushed by the Big Ten's desires to increase the conference's geographical footprint for television purposes.
"For us, there wasn't the rush. I got hired in July of 2009 and as I assessed the Pac 10 situation, was we were going to start negotiations for a new broadcast deal in early 2011. We had about an 18-month runway to decide any significant changes we were going to make," Scott said. "We brought in a new (management) team; we branded the conference, new marketing initiatives. A part of that in my view, if we are going to expand we ought to do so before we going out and monetize our value to me it was kind of a common sense, logical business approach. I cannot really comment on other conferences and what the motivation was with them. But that is what it was for us. Now we are locked in and building plans around it. But we also are prepared if there is movement and interest in other scenarios going forward we will certainly be looking at that time."
There is only so much money that can be squeezed in the United States and at the Pac 10 schools, so Scott and CAA are looking elsewhere and might seek out pesos, yen and Yuan's.
"I think we got tremendous opportunity particularly in the Asian-Pacific region, maybe Latin America, The west coast is the gateway to the Pacific Rim. We get big Asian-American populations where we are and a lot of our schools are held up on an aspirational platform by the Asian-American communities and schools. I have spent a lot of my life marketing pro tennis internationally with a major focus on the Asia-Pacific region, China and particularly and I am convinced that we have – particularly with our Olympic sports – maybe football not as much interestingly. But you think of sports like basketball, golf and tennis and volleyball and swimming. I think we have a tremendous opportunity to play competitions over there and invite teams to come play at Pac 10s schools, to have information sharing, knowledge transfer and ultimately get some of our games broadcast in Asia and develop commercial opportunities around that. That would be great for Pac 10 athletics but it also would open up opportunities for our schools more broadly to tell their story.
"We are looking at the moment at golf, basketball, baseball but it could be a variety of sports but those are the sports that have expressed a real interest."
The Pac 10 has had very little exposure on the United States east coast. The schools are far away although UCLA was once the gold standard of college basketball and USC, tarnished or not by scandal, had a great run under Pete Carroll. The Pac 10 is in two major media markets, LA and San Francisco but there is a push for national recognition, which, of course, might mean more funding through cable TV dollars and marketing partners.
"Before we structure new media agreements, we were somewhat limited in what we can do," Scott explained. "I am looking for the conference to get more national exposure. We are very strong in our region. But we are looking for national exposure and there really are two things we are focused on there -- showing a little flexibility with our broadcast partners (Rupert Murdoch's FOX and Disney's ESPN) trying to get us windows to get us more national exposure. Secondly, marketing the conference more aggressively, being more proactive. Getting out here (New York) telling our story a little bit different. Doing things for the first time that have not been done before. Getting people to open their eyes and minds a little bit to the to the Pac 10 and just get more in the national narrative."
The rush to get more money has changed the playing field in college sports. The recent multi-billion dollar deal between Sumner Redstone's CBS and Turner Sports for the NCAA's March Madness Men's Basketball Tournament will fund a lot of sports programs but football is driving the conference realignments. There is a copious amount of money that conferences get from football, particularly cable TV if the conferences land packages on ESPN or form their own networks on basic-expanded where all cable subscribers pay for what a fraction of subscribers watch.
College sports used to be thought of as an amateur endeavor. Big time college football and basketball are professional businesses. The athletic director of a school runs a multi-million dollar business and depends on the same formula for success as pro leagues --government support, cable TV and corporate dollars. The difference between the pros and the colleges is that big-time college sports don't pay the athletes although they will argue that a scholarship is enough. Football and men's college basketball coaches get paid handsomely, in the multi-million dollar range. Colleges get big money deals from TV networks, boosters, alums, marketing partners and they all have a say in what happens in the industry. There is nothing amateur about big time college sports except maybe the players.
Evan Weiner is an author, radio and TV commentator and speaker on "The Politics of Sports Business" and can be reached at email@example.com