The income from all of its TV contracts plus other sources of revenue such as bowl games and the NCAA basketball tournament will result in about 76 percent distributed equally.
Previously, about 57 percent was shared equally and the rest went to schools based on television appearances. The more a team was on TV, the more money it received.
This won't necessarily improve competitive balance, but it should improve the political climate within the conference. Nebraska didn't leave because didn't leave the conference because of economic inequalities. NU left because it didn't like the Texas-centricity of the Big XII.
Yesterday I posted about the Wisconsin Badger Herald editorial written by "staff" (affectionately known as "Herald Staff" to those of us employed at MP) who named the names of UW-Madison students who scalped their Rose Bowl tickets. Herald Staff was especially vitriolic towards the fellow students, saying there was a special place in Hell for them.
But this vitriol is nothing new as a New York Times letter to the editor from 1910 (via Craig Depken) shows.
From a letter to the editor in the Dec. 7, 1910 NYT:
A year or more ago there developed in this "Greatest City of a Great Country" a violent agitation looking to the prohibition by law of speculation in theatre tickets, but our city fathers were evidently unable to find a way out of the difficulty. I am informed that the City of Chicago has recently passed an ordinance compelling all theatre tickets to have the price printed on them, and making it a punishable offense to sell any tickets above this figure. This would seem to be an effectual remedy for the evil.
Why do some consider arbitrage in tickets to be evil? When I was a student at Mizzou, it was not uncommon to hear stories of students who had won the men's basketball ticket lottery selling their tickets for a few thousand dollars. I don't recall hearing anyone saying that was evil. Personally, I thought to myself "lucky bastards."
The basic scarcity problem holds: resources (and thus goods and services) are scarce relative to the infinity of human wants. How are goods divied up and who does the divying?
In a market, it is the people who define the market - buyers and sellers - evaluating prices and other opportunities that do the divying. The same is true in a market for tickets. People who buy tickets value the tickets more than the money they give up. Ticket sellers value the money more than the ticket. This holds true in all voluntary market exchanges.
But why is the secondary market for tickets to events viewed differently? Comments are open.
Because score differential is a component in the BCS rankings, there is an incentive for teams to run up the score. Larger score differentials can improve a team's ranking.
The other side of the coin is that there is also an incentive to not let the score get out of hand when you are trailing. OU's Bob Stoops knows this very well because he effectively conceded a game to Mizzou so OU would not be beaten by an otherwise larger margin.
With his team facing a 36-27 deficit in the final minutes against Missouri this year, Oklahoma coach Bob Stoops elected to punt from his own 7-yard line, rather than risk turning the ball over on downs and giving Missouri a chance to add to its lead. The decision was made, he said later, with pollsters in mind.
"I've never done it before, but I thought, 'You know what? There's still a bunch of games to be played. Who knows what can happen?' Heck, LSU got in it a few years ago with two losses, right?" Stoops said days after the loss. "Some people don't see the game, only look at the score, as they vote. Right or wrong, that's what I did."
While those schools spend in the neighborhood of $25.1 to $32 million, schools like Louisiana-Monroe spend just over $2.9 million on their programs. None of this is surprising to me. Spending imbalance derives from revenue imbalance which derives from demand imbalance. Ohio State has a bigger fanbase than Louisiana-Monroe and that drives the spending differential between those two schools.
But Brad correctly notes this is an apples to oranges comparison because schools like Ohio State and Texas spend a lot on everything else. So he recalculates spending on football on a per-dollar-spent-on-student-services basis using data available from the IPEDS data base. Here's Brad:
Here’s how the Top 5, and cellar dweller Louisiana-Monroe compare by the ratio of student services spending to football spending
Ohio State 2.6
Notre Dame 1.0
Louisiana-Monroe spent $8 million on student services and 43 million on football, or roughly $2.7 dollars of student service spending for every dollar of football spending. Auburn spent seventy cents on student services for every dollar spent on football. Ohio State’s football spending is actually not that big when compared to student service spending. I hope that students at Alabama and Auburn get a lot of benefit out of football, because they are not getting nearly the student services that students at, say, Louisiana-Monroe are getting.
When I saw Brad's post, I wondered how the Big XII schools (circa 2010) measured up against each other. So I gathered student service spending, instructional spending, and enrollment data for each Big XII school for the 08-09 school year from IPEDS and their football spending for the 09-10 school year from EADA. I calculated the spending per dollar spent on football for each expense category. Here's the data for student service spending.
Baylor leads the way with a whopping $5.36 dollars spent on student services for every dollar spent on its football program. This year's Baylor program is bowl-eligible for the first time as a Big XII school, so football success isn't something experienced on a regular basis for the Bears. But Baylor students get a lot spent on them in other areas of the school. A&M, CU, ISU, Mizzou, Tech, and Texas all have values over 2 while OSU, NU, and OU bring up the rear. Texas looks pretty good in comparison, but remember that Texas has a lot of undergraduates. Here is the dollar-for-dollar spending per 1000 students.
Baylor comes out on top with KSU in second. NU, UT, and OU - the historical powers - bring up the rear. Comparatively, Louisiana-Monroe spends 45 cents per 1000 undergraduates, postively Baylorish. So what Brad comments holds even more with the rest of the Big XII: "I hope that students at" every Big XII school save Baylor "get a lot of benefit out of football, because they are not getting nearly the student services that students at, say, Louisiana-Monroe are getting." Or Baylor.
I've gathered data on research and instruction spending as well as data on spending on men's basketball, but crunching that data is left for a future post.
That's the title to an AP article written by Rusty Miller. It describes a new contract addendum signed by Ohio State AD Gene Smith. Miller writes that Smith's base pay under the addendum is $800,000 with an additional $200,000 for his "media and public relation duties." Incentives bring the potential total to $1.2 million a year. Read the whole thing for more details.
This leads me to the rhetorical question: how much of this pay is rent earned from the football and basketball players?
Since the NCAA and state of North Carolina probes began in July, UNC also began its own investigation into potential academic fraud involving a tutor. Multiple Tar Heels football players have been suspended from games and practices this season, and Blake resigned on Sept. 5, less than one month after a Yahoo! Sports report revealed his former position as an employee of Pro Tect. In a statement, Blake stated that he decided to step down because his presence was becoming a distraction to the football team.
I've said it before and I'll say it again. The problem with corruption in the NCAA is not the fault of agents. It's the NCAA's own steadfast sticking to the "amateur" status of athletes in football and men's basketball while their member schools rake in millions of dollars. As long as player are not compensated by an amount less than they generate in terms of revenue and donations for NCAA member schools, we will continue to see these stories pop up in the press.
The demand for cupcakes - typically lower-level college football teams that will travel to an established program and offer up their hides in exchange for a big payday - has soared over the past few years, especially with the addition of the 12th game in the regular season schedule. The results are expected: the price of cupcakes has exploded.
On the other hand, SDSU officials say the revenue from such games is needed. Which is a big reason SDSU agreed to play another power-league team Saturday at Missouri. For playing the game, Missouri will pay SDSU $800,000. Same goes for next year, when SDSU has agreed to play at traditional powerhouse Michigan for $1,016,800.
I'm not convinced that SDSU is that much of a cupcake. But maybe that's just the pregame jitters for me.
There's a paper in here for an entrepreneurial person willing and able to dig around for cupcake prices. The prices of cupcake games should depend on the number of regular season games, the demand for the home team's games (which partly if not completely explains the $200,000 between the Michigan and Missouri payouts), and other factors.
Given the money they generate — most of USC's $82-million athletic budget comes from its football program — it's understandable that the stars of major college programs come to feel as if they deserve more compensation than the free education and exposure they're receiving. That's apowerfully corrupting force,and it will inevitably prove irresistible to some young athletes. Nor does it help that infractions usually are discovered after the cheaters are gone, leaving others to pay the penalty.
The link in the excerpt goes to a screed written by some hack. In any case, basic economics teaches us that when third parties bear the costs of an action, you get more of that action.
In my sports economics classes, I characterize college athletic departments as profit-seeking firms, despite their non-profit status. The non-profit status doesn't preclude profit-seeking as an objective,. Being non-profit means that a department can't disperse profits to "owners." Recently I ran across three articles that have done nothing to shake that assumption.
Harvey Araton in the New York Times has a similar story but with an east-coast flavor. But I'm not convinced that the search for revenues is cost driven. Rather, the costs are driven by the revenues. HT Wiz of Odds.