College football’s popularity probably has a lot to do with how personal it is: Few other sports combine the camaraderie of Saturday afternoon tailgates, the rush of a victory in a decades-long rivalry, and, for some, the tradition of wearing the same school colors as one’s parents or grandparents. The sport also gets by on its perceived amateurism. Its players may look like fully-grown men, but they are in the earliest stages of adulthood. And they aren’t getting paid, which lends a sense of passion and scrappiness that are less evident in the NFL and other sports leagues.
But, as Gilbert M. Gaul, who has won Pulitzer Prizes for his coverage of blood banks and the American coal industry, explains in his new book Billion Dollar Ball: A Journey Through the Big-Money Culture of College Football, there’s nothing scrappy or amateurish about the sport’s business side. As Gaul explains, most college-football programs have come to operate more or less independently from the universities that chartered them, and money has become their raison d’etre. TV contracts, corporate sponsors, and “seat donations”—in which elite teams charge their fans above and beyond the price of a season ticket for the privilege of securing a seat—are just three reasons why a program such as the University of Texas’s could go from making $18.7 million in 1999 to $104 million in 2012.
I recently talked to Gaul about the intricacies and implications of the college-football business model, which can be problematic because there is a lack of incentive for big schools to reel in their spending, and the example that sends to smaller, less-accomplished programs to try to overspend their way to success. We talked about what a football team can—and can’t—do for a university, as well as how a number of schools are spending massively in order to keep up with the programs, such as Michigan and Texas, that comprise college football’s 1 percent. The interview that follows has been edited and condensed for clarity.
Adrienne Green: In your book, you talk about the elite football programs working off of a “new financial model” that has changed how universities interact with their football programs. Could you explain this new model?
Gilbert M. Gaul: College presidents are uncomfortable with what's happening, particularly with their football programs, and to an extent with their men's basketball programs. So they came up with this idea. They would tell their athletic departments, ‘Okay, if you want to grow bigger and richer, fine, but we don't want to use university money. We don't want to use general revenues. We want you to go off and raise this money on your own.’ Basically, setting them up as stand-alone businesses in a corner of the campus. And the schools I'm talking about are the 65 members of the five so-called “super conferences.” And then you have these 60 other schools trying to play Division I football, like Akron and Eastern Michigan and New Mexico State, where the model doesn't work for them. They're really not making money.
One of the things they came up with was this whole notion that you can charge your best fans a mandatory fee or payment—call it a “seat donation”—so in order to get a seat at the stadium, you have to pay above and beyond the face value of the tickets. You can charge them thousands of dollars—in some cases it's $10,000 or $20,000. There's a waiting list at Alabama of 26,000 fans waiting to get a seat. And then you have the television contracts. The cable companies and particularly ESPN have been willing to pay more and more over the years because they get live content.
The third piece of this business model is the corporate money—the money from Nike, Under Armour, Adidas that comes into the programs, the apparel deals and the licensing and marketing arrangements. And then the fourth prong is season tickets, which have been escalating in price.
Just the top 10 football teams had revenues of about $229 million in 1999 and by 2012 it had gone up to nearly $800 million. And they've just continued to go up in the last two years. The amount of money coming in is extraordinary, and that explains why you see the salaries for football coaches go through the roof; it helps to explains why you see the schools building these gigantic new stadiums; it helps explain why the schools invest all this money in these academic support programs to keep the players eligible and on the field; it helps explain why you see the side of the athletic department explode during this time, going from 100 employees to maybe 400 employees. All of this stuff is tied together.
Green: If football is a business, as you suggest, and not an extension of college academics, what do you think that does to football's relationship with its fans?
Gaul: Everyone is aware of what's going on inside the stadium. The most concrete impact is the availability on television. There's such an over saturation of college football right now. You have games running almost the entire week now, especially on ESPN. There are so many games now on Saturdays.
This means that football becomes an entertainment product for the university. The presidents—they're conflicted. Because on the one hand they are expected to be cheerleaders and to attend the games, and entertain people in their luxury skyboxes, and on the other hand they are supposed to be in charge of making sure that it doesn't distort the university brand, and that education is still the key focus. When you speak with them, the few that will speak with you, they're clearly embarrassed by what's going on and yet they feel powerless to do anything about it. But there is nobody else to help them. The NCAA is not going to do it. Congress isn't going to do it.
Green: The whole model seems to be built on constant spending. It doesn’t seem sustainable.
Gaul: Yeah, I mean some of the schools have some reserves, but they're not gigantic reserves. It's what economists call a revenue theory of cost, where basically you spend every nickel you take in. A few of the schools do give a few million dollars to academics. But it's not like athletics is supporting academics in any significant way.
You go to Oregon and look at the academic support center that Phil Knight built for them, the $42 million sports center. Baylor just build a new $266 million stadium on the Brazos River; Texas A&M they called it a renovation of Kyle field, and spent what $420 million. Alabama built a new 37,000 square foot weight room and a $9 million locker room with a waterfall in it. When I looked at all of this I kept wondering: Is there a model where someone is successful at building a program, but doing it with not much money? And the answer is, I couldn't find a single one.
Green: Is there a chance that there’s a college-football bubble? What if the revenue streams run out?
Gaul: That's a really tricky question. I don’t see an immediate bubble. I asked a couple of athletic directors and they laughed at me when I asked that. For the moment—because they are still in contracts where they are getting gobs of money from television and where you haven’t seen a huge downturn in the fanbase—I don’t see any evidence of a bubble within the next 5 years.
Once you get outside of that time period I see a number of factors that if I were an athletic director, I would worry a little bit about. One of those factors is the kids who are in school now don't seem quite as loyal to the team as their parents and grandparents are or were. For example at Alabama, Nick Saban, the coach, actually screamed at them for leaving the games at halftime. Will this be revealed to be a bubble? I don't know. There's an awful lot of debt exposed because there's an awful lot of debt involved in this stadium building that you see.
Green: Is anyone interested in limiting spending?
Gaul: Once you take it outside of the university, and you take it outside of the normal university budget, where is the discipline going to come from? When you have a model that can bring in all this money, where is the incentive to be disciplined about how you spend it? If you run it through the university budget, then you at least have the normal restraints going on—in theory. If you’re doing layoffs and you’re cutting classes, then you’d be forced to apply some of that same discipline to your athletic department. In fact, schools that run it through the normal budget, you do see that happening. But, when you have this model outside of it and you have all this money coming in, there’s very little incentive to say no to building a new 37,000 square foot weight room.
Green: Then who's responsible? You mention that outside fundraisers—executives who want to support the program—don’t worry about the entertainment dimension, fans just want to enjoy their favorite team, and universities feel like their hands are tied.
Gaul: It lies in several places. It starts with the presidents. I'm tough on the presidents in my book, but deservedly so. It's a bit shameful that they haven't been more aggressive at taking this on, but a lot of them are just afraid to. You don't win any votes with your Board of Trustees by challenging the notion that your athletic department is now an entertainment division, that your football team is now involved more in entertainment than it is in education.
It certainly lies at the feet of the Congress, because they're the ones who have allowed all of this to be protected as tax-exempt revenue. That has evolved over time and stuck around even though college football has become clearly a huge commercialized industry that pays no taxes. The idea that all this TV money is untaxed goes back to Congress. And they're not going to take it on, because they don't win any votes by taking on the state university.
One athletic director at a huge football school actually told me that they would send a coach or an athletic director or two up to Congress once a year to make the rounds. He said the members would "slobber over the football coaches." They lose any sense of their actual role and they're just fawning over them, because they are celebrities and it's college football. If you try to take these things on you often get beaten back.
Green: You mentioned earlier that some of the smaller schools—the ones that are not the big football programs—are running their football costs through their university budgets. What do you think is the difference in philosophies between these big football schools that believe they're crafting the next NFL superstars and those whose students who will go on to do other things?
Gaul: When you look at the Akrons of the world, they're trying to play Division I football. They want to be Alabama. They want to be Oregon. But they're never going to get there because the model doesn't work for them. If you look at their financial statements—now admittedly, the accounting on the financial statements is problematic—they're losing millions of dollars.They do it because they buy into the magical thinking that if they don't have a big football team, they're not a real university.
Green: You mention frequently in the book that football is kind of an insurance policy for non-revenue sports. When people hear ‘non-revenue sports’ oftentimes they think of women's sports. So, when I was reading what you wrote about Title IX and the athletic department's mentality towards women's sports, it looked to me like they could give time, attention, and money to female sports only if it balances—but doesn't take that time, attention, and money away from—male ones.
Gaul: Well, I don't think the attitude is quite that bad anymore. I do think the athletic directors are serious about supporting women's sports, some of them more than others.
The narrative of Title IX is that it's been this huge success, and that it’s a good thing, whether men came to it reluctantly or not. But then there's still numbers game that's clearly being played with Title IX, and I don't hear too much about that in the narrative.
I wrote about this through the prism of women's rowing—a sport that I absolutely fell in love with, by the way. In the mid-90's the athletic directors are looking around and they notice that they have football squads of 130 athletes, and they have no women's sport that's remotely close to that. So they needed a sport that they could pack women into, so they could offset those football numbers. They came up with this brilliant idea: women's rowing. It's relatively cheap. You need some water, some boats, you need a coach and maybe an assistant or two. And it costs, even today, a good women's rowing program, one of the very elite programs, might cost $2 million or less. Whereas an elite football program is going to run somewhere around $42 million, so you see the difference right there.
A woman's rowing coach at a place like Wisconsin is responsible for anywhere between, during tryout 200 athletes, to during the regular season 130. It's clearly as big a sport as football, and in some ways the responsibilities are very similar coaching wise. But, a woman's rowing coach gets paid probably $120,000 at a top program like Wisconsin. At an elite football school, it’s about $3 million for the head coach. So the head football coach is making more in one month than the rowing coaches are earning combined for an entire year.
If their responsibilities are similar and they are responsible for similar number of athletes, how could thereby this much of a gap in pay? It makes absolutely no sense—unless you say as the athletic director, “Well, the football coach is responsible for filling up this giant stadium and putting out a winning team that continues to bring in all the money.” And if you say that, then it’s a business, and that salary is fair. But that gets you back to all those questions about tax exemptions.