Lax Can't Hack It
By Dan
Of collegiate schools with football programs, the median revenue for Lacrosse is -$640,000 according to the NCAA. I was surprised, though not entirely shocked, when I saw the rest of the figures: almost all sports - other than basketball and football - are in the red, as reported by the NCAA and the Wall Street Journal article titled One Bowl Game Buys Many Lacrosse Sticks. In fact, baseball - which generates tremendous revenue in the majors: $5.5B in 2007 - is losing the most money at -$709,000.
At Overtime Media we're well aware that basketball and football are often the big ticket items for colleges. We've also seen, at the other end of the spectrum, how absolutely dedicated club teams can be (I'm looking at you MCLA). Why is it that some sports are able to generate so much revenue while others, with arguably equal passion and dedication from the athletes, have to be subsidized by the money making programs? More intriguing in my mind though: why do the sports burning through cash and not generating profits survive?
Passion. It's the passion of the athletes that keeps the machine running. Today's student athletes (those folks who manage a full time career in sports on top of their class work) become the coaches and administrators of tomorrow, with a clear commitment to keeping their athletic departments going. They are the engine of the machine now, and provide the support (in time and money) for it later.
With so many athletes going on to lead very successful business careers, I posit that those graduates who remain involved in college sports should be able to generate profits. And they do, for athletic programs as a whole. This leads me to conclude that schools intentionally have big ticket teams subsidizing the rest. Basketball and football pull in enough cash to allow the other sports to act as loss leaders, maintaining interest in their school and parity within the leagues.
But I think we can do better.
Of collegiate schools with football programs, the median revenue for Lacrosse is -$640,000 according to the NCAA. I was surprised, though not entirely shocked, when I saw the rest of the figures: almost all sports - other than basketball and football - are in the red, as reported by the NCAA and the Wall Street Journal article titled One Bowl Game Buys Many Lacrosse Sticks. In fact, baseball - which generates tremendous revenue in the majors: $5.5B in 2007 - is losing the most money at -$709,000.
At Overtime Media we're well aware that basketball and football are often the big ticket items for colleges. We've also seen, at the other end of the spectrum, how absolutely dedicated club teams can be (I'm looking at you MCLA). Why is it that some sports are able to generate so much revenue while others, with arguably equal passion and dedication from the athletes, have to be subsidized by the money making programs? More intriguing in my mind though: why do the sports burning through cash and not generating profits survive?
Passion. It's the passion of the athletes that keeps the machine running. Today's student athletes (those folks who manage a full time career in sports on top of their class work) become the coaches and administrators of tomorrow, with a clear commitment to keeping their athletic departments going. They are the engine of the machine now, and provide the support (in time and money) for it later.
With so many athletes going on to lead very successful business careers, I posit that those graduates who remain involved in college sports should be able to generate profits. And they do, for athletic programs as a whole. This leads me to conclude that schools intentionally have big ticket teams subsidizing the rest. Basketball and football pull in enough cash to allow the other sports to act as loss leaders, maintaining interest in their school and parity within the leagues.
But I think we can do better.
3 Comments:
"Why is it that some sports are able to generate so much revenue while others, with arguably equal passion and dedication from the athletes, have to be subsidized by the money making programs?"
Probably because the sports that pull in the revenue have the crowd...the public's attention and interest...the problem with most sports is that they really only appeal to the people who have played them, and even then it's not always converted into a 'spectator' sport.
For whatever reason, the crowd enjoys watching football and basketball (at all levels)...while baseball has historically gone in and out of favor with the crowd and most other sports haven't even really hit the crowd's consciousness.
I wonder if you looked into the revenue soccer makes at the 'collegiate' level oversees where it would rate (I suspect high)...
Kevin, you're absolutely right. A sport that has a large crowd coming to games and/or watching them on TV has many direct paths to revenue. But is that an excuse to keep around the teams that lose money? If not, do you get rid of them, or can you find a way to turn a profit?
I think the point is that the model is broken and the status quo continues whether it's really working or not. It's good, but it's not great.
We don't think it necessarily should be this way, AD's are just content to continue operating with loss leaders (other sports) for the sake of having sports. I think the best coaches are not only good with X's and O's, but they find a way to run their program effectively financially as well.
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