CHALLENGES AND BENEFITS OF COLLEGE SPORTS
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1 CHALLENGES AND BENEFITS OF COLLEGE SPORTS
2 Who Are We? Represent the athletic departments, the programs, and the student-athletes of the 130 universities that comprise the NCAA Division I Football Subdivision (FBS).
3 CHALLENGES
4 Future of Football (Key Cash Cow for College Sports) NCAA 43 concussion lawsuits $75 million in settlements to date Boston University study 202 donated football brains 111 NFL 110 with CTE 53 college 48 with CTE Youth participation falling Pop Warner 9.5% drop between Research/Helmet Technology/Rules Hitting, safety protocols, etc. Reduces risks, but also exposes risks Photo Credit: upr.org
5 Threats Against Football Football s Employment is on a Fade Pattern Washington Post, 9/1/17 The Football Industrial Complex is in Big Trouble Fortune.com, 9/7/17 The Uncertain Future of High School Football in America Wall Street Journal, 9/7/17 Playing Football Before 12 is Tied to Brain Problems Later New York Times, 9/19/17
6 Academics Good News Record-high 87 percent Graduation Success Rate for all Division I athletes 78% African-American Bad News Integrity issue UNC Case 3,100 students (47.6 percent of them athletes) enrolled and received credit in phantom/paper classes Helped them remain eligible NCAA no jurisdiction
7 Litigation (Pay for Play Jenkins v. NCAA) Challenges NCAA s current compensation limits Limits tethered to education (cost of attendance) Losing PR war 52% of American adults support current compensation limits 54% black Americans support paying college athletes (based on revenue) 80% of Americans believe big universities put money ahead of their athletes (Emmert) Difficult to defend high coaches salaries and facilities arms race Fundamentally change college sports Photo Credit: ncaa.org
8 Paying Student-Athletes The Issue 77,000 FBS student-athletes 20,000 basketball and football 280 annual basketball/football draftees Reclassify everyone as employees taxable income 2,200 Olympic sports many will be cut $2.5 billion investment Photo Credit: ncaa.org
9 Viewership Live football attendance (college and NFL) declining Millennials (largest U.S. population group declining interest in traditional sports) Many conference TV contracts come up in 2023 Cord cutting ESPN lost 10% of its subscribers (last three years) Will digital companies Amazon, Google, Facebook, Twitter pony up? Photo Credit: espn.com
10 State Regulations Preemption of NCAA CA/CN The College Athlete Protection Act PA/NY/TN Student Athlete Bill of Rights Commission funded by schools Full investigative power (subpoena) Sets college sports rules and regulations Health and welfare
11 Sports Betting Christie v. NCAA The Professional and Amateur Sports Protection Act (PAPSA) Three potential outcomes from the case: The Court does nothing and current law will stand The Court overturns PAPSA and allows each state to decide consequential for college sports The Court provides an exemption for New Jersey to permit sports betting Photo Credit: time.com
12 If PAPSA is overturned states will offer legal sports betting in 5-7 years* Generating $2-5.8 billion in state revenue* Size of current market Legal: $2.8 billion (Nevada**) Illegal: $380 billion (USA**) Regulatory structure and enforcement critical * Gambling Compliance, 2017 Photo Credit: washingtonpost.com **National Gambling Impact Study Commission (NGISC)
13 Tax Reform Four main proposals that would hurt college sports: 20% tax on compensation to any employee making > $1 million Eliminate the tax deduction for season ticket holders (the 80 Percent Rule ) Forbid tax-free bonds on state/local construction projects of athletic facilities Tax on royalties and unrelated business income Photo Credit: usatoday.com Potentially hundreds of millions of dollars in impact
14 Financial Unsustainability 24 FBS schools self sufficient no subsidies Subsidies (institutional, student fees, government): 56% of revenue for G5* schools ($1.1 billion) 4% for Power Five Athletics debt balance grows (see next slide) *Group of 5 (FBS smaller programs) Photo Credit: ukathletics.com
15 Total FBS Athletics Related Debt Developed from Knight Commission on Intercollegiate Athletics Athletic & Academic Spending Database
16 FBI Investigation College Basketball Black market payoffs to men s basketball assistant coaches, involving Adidas and money managers Potentially federally criminalizes NCAA violations (bribery) Expose weaknesses of non-government SRO model no subpoena power punish athletes Reforms One and Done Rule, AAU tournaments Photo Credit: npr.org
17 BENEFITS
18 Benefits Roughly $2.9 billion in scholarships annually NCAA.org Second only to G.I. Bill Debt-free education Other leadership skills, training, job placement, etc. U.S. Olympic Development: 2,200 Olympic sports $2.5 billion investment Photo Credit: temple.edu * NCAA.org
19 Regent Oversight Potential High Risks Ahead Special admits and admissions policies Tracking these student-athletes Academic majors of student-athletes Time demands for sports participation Highly compensated employees contracts and buyouts More than $60 million in FBS football college coaching buyouts Annual giving compared to projection Title IX and other federal regulations Capital spending Risk assessment sensitivity analysis
20 QUESTIONS?
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