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    College Athletics is Facing Unprecedented Change

    College-Athletics---Unprecedented-Change_Line-Drive-Sports-Marketing

    Maximizing revenue generation is not a new thing in sports. Next to winning, it’s always at the forefront of a team’s short-term and long-term goals. 

     

    Revenue in sports is generated by ticket sales, media rights, concessions, licensing, and sponsorship (not necessarily in that order). In professional sports, the list of expenses is significant with player contracts, coaches’ salaries, venue maintenance, and employee costs being a partial list of expenses that teams must offset to generate some level of profit. 

     

    Make no mistake about it, professional teams are a business and just like the company you work for, their goal is to make money.

    College Athletics Needs to Adjust to Being a Pro Sports Entity

    The importance of making money has now become way more pronounced for college teams who, through poor stewardship from the NCAA and court rulings whose intentions were good but whose effects were not, face an unprecedented financial challenge that has them looking to solve problems by maximizing revenue in any way possible. 

     

    Even the biggest, most successful universities in the largest of conferences are now scrambling for ways to pay their athletes and meet other expenses in what has become an unregulated and unfettered business environment. There is more pressure than ever on all facets of revenue generation.

    The Uphill Battle That is College Athletics in 2024

    Here are just some of the issues as I see them from the outside. As with most challenges, what you see is typically just the tip of the iceberg.

    1. Every school with an athletic department beating the drum for donations louder than ever. In general, fans aren’t receiving the ask well and collectives are not earning a high grade from their constituents. Donations are, in a sense, the lowest hanging fruit on the revenue tree but it’s also one that’s historically limited to people with big money.
    2. Some schools are shopping their sponsorship rights deals or bringing them in-house with the hope that they’ll make more money that way. Uofa just did this last year after bringing in a new AD. Did it work? The jury is out and their football team (and coach) aren’t helping. Whether it’s a 3rd party entity or an in-house team, success comes to those with good leadership and talented, well-connected sellers. 
      Sponsorship can only generate what the market bares and that varies by market. The good news is that sponsorship assets are not maximized at most schools.
    3. Football stadiums and basketball arenas are being reimagined to include more premium seating assets for business hospitality purposes and to get more fans off their couches and into their seats. Let’s face it, it’s easier for a business to write off tickets as a business expense than it is for a hard-working family of four to budget for season tickets, mini plans, or even one-off games. Premium seating makes sense for schools seeking more revenue.
    4. On a related note, teams are more sensitive to the experience you have on game day to better retain your interest in attending games. You’re seeing less price gauging on parking, enhanced concessions, and better communication to make for a better gameday experience. ASU has been all over this since Rossini took the reigns.
    5. All this madness with conference realignment suddenly makes sense when you factor in the impact of TV money. The fact is that most schools are making more money now due to conference realignment by virtue of their TV deal. Unfortunately, the windfall is not enough to offset the increase in expense you see with player salaries and other expenses.
    6. Title IX is going to give athletic directors headaches … period. When you have to pay football and basketball players in order to attract better athletes to win, you put additional strain on non-revenue-generating sports.
    7. NIL is not NIL … it’s pay-for-play and the transfer portal puts all the power in the hands of a 19-year-old student-athlete. AD’s must figure out a way to both support and control collectives that sometimes (most SEC schools and Ohio State … yes, pointing fingers) engage in nefarious behavior (most SEC schools and Ohio State … yes, pointing fingers) to attract student-athletes to play for them. The current model isn’t sustainable.
    8. The House Settlement is in one sense a step in the right direction but it still compounds financial issues relevant to the NCAA by settling back pay to athletes who played in the past. This makes zero sense to anyone except the lawyers who benefit from it.

    As with any problem, you must look at solutions from a multitude of perspectives. This is especially true in the college athletics space where everything is fluid … which now includes your student-athletes who can transfer at the drop of a hat, er helmet.

    What Does The Immediate Future Look Like For College Athletics?

    I couldn’t imagine the day-to-day life of a major college athletic director as these are just some of the mitigating issues they face each day. Many of these issues are alleviated (but not solved) by winning at football and basketball. That being said, even the most successful teams will still be facing major revenue issues very soon. 

     

    For sponsors, you’ll need to sharpen your pencil as the ask is coming and I’m 100% OK with that. Engagement of college sports products is increasing so it’s only right that the investment corresponds to increase. Sponsors should be cautious, however, that their investment comes with a discernable ROI that positively impacts their bottom line. 

     

    If you’re buying sponsorship with any college athletic team you need to be hyper-aware of the lack of stability in the ground in which you stand. In my opinion, it’s still the best space in all of sports. The passion, pageantry, and tribal nature of college athletics is a great place to have your brand represented. As this landscape continues to shift to more of a pro model, you’ll need to change with it.

    Ed has decades of experience in the sports space. If you’re looking for some assistance with your sponsorship efforts, contact me at ed.olsen@linedrivesportsmarketing.com or call my cell at 602.284.6722

    About the author: Ed Olsen is the CEO of Line Drive Sports Marketing. He is a former adjunct professor at Arizona State University and has lots of opinions on all things sports.

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