As the NBA continues in talks of revenue sharing and salary caps, some fans may be wondering how much money college sports really generate. With huge fan bases and millions of Americans watching their favorite teams and alma maters, one can only imagine what the average school makes during the school year. To help breakdown the revenue, here's a look at the two most followed college sports, football and basketball, and a look at how they affect college sports as a whole.
TUTORIAL: Economics Basics Football
The Football Bowl Subdivision (FBS), also known as Division I in men's basketball, is the highest level of college where the best amateur football players, in the country, are scouted and recruited. This division houses five of the biggest bowl games in the country, including the Fiesta Bowl, Orange Bowl, Sugar Bowl, Rose Bowl and the BCS National Championship Game.
The National Champion is determined by taking an average ranking, from a number of polls from around the country, and determining which top two teams play for the National Championship. According to the "NCAA Revenue/Expense Division I report," the median net revenue for college football in 2010 was $3.15 million per school. ESPN reports that 27.3 million viewers watch The BCS National Championship game alone. Even with so many viewers nationwide, 43% of schools in this division generated negative median net revenue of $2.87 million in losses. Many schools that play in college bowl games, end up spending more money, to play the games, than they receive in revenue from their respective conferences. (For a look at the "fantastic" side of professional and college sport, read Fantasy Football: A Two-Billion Dollar Market.)
Compared to football, basketball has a few advantages. The NCAA Division 1 National Men's Basketball Championship, is a month long tournament, commonly known as March Madness, which concludes in April. More games results in more ticket and merchandise sales, and more television revenue for the league in general. However, this also means more expenses. While smaller schools are given a chance to win the national title, they are also forced to spend in order for their school to compete. Looking at the same Football Bowl Subdivision schools, the "NCAA Revenue/Expense Division I report" states the median net generated revenue for the 2010 men's basketball season was $788,000 per school. According to Turner Sports and CBS, there were about 100 million viewers watching the Men's NCAA semi-final (also known as the Final Four), and national title games in 2011, exclusively. Similar to those in football, 44% of schools in the Football Bowl Subdivision generated negative net revenue of $975,000. (For more on how NCAA basketball produces revenue, read 5 Ways March Madness Makes Money.)
The Bottom Line
Both NCAA basketball and football tend to average modest gains, compared to their professional sport brothers. In general, college sports are a losing cause when it comes to business. Almost every other college sports program, other than football and basketball, generates losses. This, in turn, creates an overall loss for many schools. Why do schools choose to promote sports if, from a financial aspect, they are incurring nothing but losses? According to the NCAA, these programs allow student athletes to develop career-oriented skills, and are a form of tangible learning. It also provides the community and school with intrinsic value.
In the end, college sports fans will always have a team to cheer for. With consistent losses for most schools, they have found a way to, year over year, put an entertaining product on the playing field. While the NBA owners and players fight over millions of dollars, fans will have the option to turn their attention to players who play sports for the love of the game.