Go, Team!

How does a university athletic department spell success? C-A-S-H.

According to Cornell University economist Robert Frank, national championship college football and basketball teams — often considered the elite sports thanks to the gate admissions and television revenue they command — sometimes enjoy a two- to three-year spike in increased applications and donations after a winning season. They also generate numerous real benefits to the institutions that sponsor them: sports unite diverse groups of fans and supporters by offering them a shared experience; give college athletes a“‘phenomenal training ground in teamwork, leadership, discipline and goal setting;’” and, he notes, help colleges achieve their admissions diversity goals by attracting athlete applicants with diverse backgrounds.

“It is nothing but a plus to have competitive athletic teams and teams that can win their conference championships from time to time,” says Jon Wefald, president of Kansas State University (KSU), which belongs to the Big 12 conference. In 2003 KSU won its conference championships in three sports: football, women’s basketball and volleyball.“That is unbelievable. We’re still rolling from that,” he adds.

But campus unification doesn’t show up on the bottom line. Merchandise sales do, and in the past 12 years, the KSU Wildcats’ wins on the gridiron have translated into soaring jersey sales. “Heck,” says Wefald, “any item with the university logo flies off the shelf in good times,” putting this Midwest school in the top 20 in merchandise sales.

Victory also means a university can more easily sell media rights (i.e., advertising) in terms of stadium signage, scoreboard messages, radio spots and print ads. The typical contract Gordon Whitener, chairman and CEO of Action Sports Media in Alcoa, Tenn., negotiates allots a revenue share to the university. “The reception is a lot more exciting, more warm when the teams win,” he says. “And conversely, when an athletic department is plagued by scandal, it’s much more difficult to sell that inventory. You hear feedback that ‘I don’t want my brand associated with that.’”

Then there’s what many swear is the largest moneymaker of all: television rights. As a Big 12 member, broadcasts of KSU’s football and basketball games meant enough revenue to cover a large part of his total athletic budget, says Wefald, including building a new baseball field.

The Catch

Some institutions, of course, choose not to treat their sports as a revenue-generating machine says Ron Turner, vice president of architectural firm RTKL in Los Angeles. His focus is to grow the company’s stadium and arena portfolio, which already includes Xavier University’s Cintas Center and Marquette University’s Al McGuire Center. “When you look at who’s putting the pressure on, the university has to reach consensus on its mission,” he explains.

It’s a polite way of pointing out that big bucks come at a price. For instance, today’s athletes and their families are increasingly interested not so much in a school’s main arena, but its practice facilities. So study rooms tricked out with sophisticated technology and computer equipment as part of the practice arena, where athletes can relax and study between training commitments, are becoming a big recruiting tool for many schools. Many schools can use existing space — these rooms don’t require high ceilings or anything similarly difficult to build — Turner assures, but not every campus can pull this off. Marquette, for example, had to start from scratch.

“I’ve seen in college athletics a much more focused approach to catering to the fan than ever before,” Whitener adds. “It’s the result of two things: a recognition that they’re competing for the entertainment dollar and a significant rise in the sophistication of marketing athletes in general.” So today’s sports heavyweights are figuring out how to bring in more suite or club seat opportunities, upgrade their concessions and develop more promotions to drive fan experience. It even includes cutting deals that push content to cell phone subscribers and upgrading the team’s Website.

And don’t forget technology. Today’s advertisers prefer to buy space on an LED ribbon signage, Whitener reports, the kind predominant in the National Basketball Association’s professional arenas.

Even Wefald admits he feels some pressure. When his former conference merged with Texas universities to form the Big 12, suddenly this campus of 23,000 students found itself scheduling games with Texas A & M, Texas Tech, Baylor, “and the bar went up not just one notch but three because of the intensity and love for the games,” he says. “Every school in the Big 12 had to rebuild their facilities or construct new ones — or they’d be left behind. It just became a building frenzy.” KSU enlarged the football stadium, upgraded the basketball arena and built a new track and field facility and baseball field as part of its quest to stay in step.

Researchers like Cornell’s Frank frown on such competition, citing the fact that in 2004, big-time college athletics programs were approaching $50 million a year at some schools, with expenditures continuing to escalate yearly. Even now they exceed sports revenues at most institutions, he adds. Frank warns that major college athletic programs need to reverse their “costly positional arms race.” He advocates policies by such groups as the NCAA that curtail the race by offering large benefits to those colleges that do cut back.

“If all institutions cut back in tandem, competitive balance would be maintained,” Frank writes in his report. Doing so won’t harm the expectations of fans because “it is much less the absolute performance of teams that matter than the fact of there being spirited contests. If absolute performance were of primary concern to spectators, they would have long since deserted college athletic contests in favor of their professional counterparts.”

He’s half right, in other experts’ estimation. Turner, for instance, agrees that universities can’t simply build a shiny new arena and suddenly have great, revenue-pumping teams. Take Duke University’s Cameron Indoor Stadium, seating a mere 9,314 fans, or Kansas University’s Allen Fieldhouse. “Do they have all the goodies that some of the new arenas have? Probably not. But they’re hallowed places,” he says. Trading them for new buildings would mean adhering to current codes, which require the fans to sit farther from the action and change the atmosphere of the game. “If a university says, ‘We need to build a new arena to ratchet up our program,’ it’s usually because they don’t have a tradition or they have a building that’s really falling apart,” Turner adds. Nor is it an easy equation, since a majority of institutions need to rely on alumni donations to fund the vast chunk of these sporting facilities, and teams that aren’t winning don’t tend to motivate open wallets.

Nor does Wefald offer any apologies for his sports program’s building schedule. “It is just like America itself. Our private enterprise system is grossly competitive as well. You either keep up or you fall behind and off the road,” he says. “It’s a challenge we all love and you can’t imagine how much fun it is.”