Sports economist Dan Rascher took the stand for the O’Bannon plaintiffs on Friday in an effort to prove that college sports are run like a business, and that players profiting off their athletic ability would not stop people from watching. The latter is the most relevant point to the outcome of the trial.
15 big facts about the NCAA’s wealth and competitive imbalance
A sports economist from the University of San Francisco rattled off some interesting (and perhaps surprising) nuggets about the way big-time college sports works.
Remember: revenue and expense numbers are variable, depending on who you ask. And as far as the trial goes, it matters if “amateurism” is the key to the NCAA business model more than it matters how much money is in college sports.
However, Rascher’s analysis shows that the NCAA’s member institutions are often doing better financially than they like to let on.
1. Some athletic departments are as rich as pro teams.
Rascher analysis: Texas, Alabama, Mich, Fla, Ga, Auburn, N. Dame & LSU had more FB & BB revenue in '12-13 than avg. NHL team.
— Jon Solomon (@JonSolomonCBS) June 13, 2014 2. Revenue sports are very profitable.
Rascher data from US Dept of Ed figures reported by schools: FBS programs produce $2.7B revenue, $1.4 expenses, $1.3B surplus.
— Tom Farrey (@TomFarrey) June 13, 2014 Remember, there are ambiguous ways that athletic departments are required to report their financials, so it’s going to be hard for either side to prove exact numbers. Plus, Rascher’s numbers have been disputed before. Still, the point remains: revenue sports are profitable on their own.
3. Schools fudge how they allocate money.
Rascher disputes Ohio St NCAA report in which school listed FB & BB teams reporting $200K in donations and $27M not credited to any team.
— Jon Solomon (@JonSolomonCBS) June 13, 2014 It might be impossible to know exactly how schools allocate their money, but as Rascher pointed out at trial, it’s “unfathomable” that just 7 percent of Ohio State’s donations went to revenue sports.
4. Schools benefit from sports.
Economist Daniel Rascher testifies at O’Bannon trial that 87% of BCS schools’ media coverage comes from its sports teams
— darren rovell (@darrenrovell) June 13, 2014 5. College sports holds its own with pro leagues.
CLC estimated total retail sales in 2003: NFL $1.3B, NCAA $2.35B, NBA $750M.
— Jon Solomon (@JonSolomonCBS) June 13, 2014 6. The business is growing ...
Rascher: College football coach salaries gone up 59% since 2007 vs 25% in NFL. #NCAAtrial
— Tom Farrey (@TomFarrey) June 13, 2014 7. ... but it’s pretty inefficient in doing so.
Rascher: What looks like schools aren't making money on sports is actually schools spending $$ because there’s nothing else to do with it.
— Jon Solomon (@JonSolomonCBS) June 13, 2014 8. Being in Division I is financially worthwhile for most.
Rasher: 87 schools entered D1 since 1984, only 12 exits. "Schools are clamoring to get to get into D1." Evidence D1 is profitable, healthy.
— Tom Farrey (@TomFarrey) June 13, 2014 If this were really a money-losing industry, schools wouldn’t be lining up to join. That’s basic economics.
9. Competitive balance is a farce.
Rascher: Of the 277 basketball prospects who had scholarship offers from the Pac 12 and Sun Belt confs, 269 chose Pac 12.
— Tom Farrey (@TomFarrey) June 13, 2014 10. Really, it is.
Rascher: In football, numbers similar -- 1,024 of the 1,044 went to Pac 10 between 2007-2011. So allowing pay would not change anything.
— Tom Farrey (@TomFarrey) June 13, 2014 The NCAA claims that if players get money, the rich schools will have an advantage in recruiting. However, that advantage already exists.
11. Athletes at big schools would get more money than athletes at small schools.
Rascher damages model with 50% broadcast TV sharing: Memphis FB player would get $14K over 5 years, Vandy player $325K over 5 years.
— Jon Solomon (@JonSolomonCBS) June 13, 2014 It’s important to note that this is not the model that would be used if O’Bannon wins. Or at least, probably not. Neither side will decide that model. The most likely model if O’Bannon wins is one in which each conference sets payment values for athletes. However, athletes in the richer conferences would still get more money than athletes in the smaller conferences.
12. Athletics trump all else.
Rascher: When U of SF had budget problem, the school stopped collecting trash in faculty office, not cut athletic scholarships.
— Jon Solomon (@JonSolomonCBS) June 13, 2014 Basically, schools will do whatever they can to not cut money from football and men’s basketball, even when they’re in the midst of extreme budget crises. That’s evidence that football and men’s basketball are profitable.
13. Football and men’s basketball are the priorities.
Rascher notes that Maryland, when faced with athletic financial probs, did not cut FB and MBB scholarships
— Steve Berkowitz (@ByBerkowitz) June 13, 2014 BUT NON-REVENUE SPORTS!
Funding non-revenue sports might be a relevant issue for schools and the people who watch them (though that’s probably a bit overblown), but the market in question here only includes football and men’s basketball. Judge Claudia Wilken ruled that the NCAA cannot use the funding of non-revenue sports as an excuse to not pay players, because the organization has not said why it couldn’t enforce stricter revenue-sharing rules (i.e. funding those sports over paying their football coaches absurd amounts and building palaces as facilities).
The revenue sports, as a market by themselves, are profitable, and that’s all that matters.
14. You won’t stop watching if athletes are paid ...
Rascher: winning and losing in college football drives attendance up or down more than in NFL
— Steve Berkowitz (@ByBerkowitz) June 13, 2014 The NCAA contends people watch their teams just because of the name on the front of the jersey, and not the ones on the back. However, people don’t go to games just because. They’re far more likely to go if their teams are winning, which shows the athletes have value.
15. ... because you already do it.
Rascher: Fan demand wasn't hurt when Ohio State 2010 football team used players who committed NCAA violations.
— Jon Solomon (@JonSolomonCBS) June 13, 2014 Also, people who don’t like change will inevitably argue that if players are paid, they’ll stop watching games. However, the plaintiffs have previously pointed to similar sentiments about the Olympics being untrue when the IOC changed its amateur model. And in a more relevant example, Rascher pointed out that people still watched the Sugar Bowl in 2011 even though they knew star players had accepted money.
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