Opinion Piece: ESPN & Fox Can't Kill College Football

[Knight Shift]

Interesting writeup (looks like the beginning of a longer writeup) on Substack from someone with substantial actual and teaching experience in public finance and public policy and is experienced in knowing how local and state governments distribute the financial benefits of taxes collected from tourism, sports, and entertainment projects.


Biggest takeaway from the writeup:

"From my research and experience, I can confidently state that 1) States and cities with FBS division universities are deriving significant economic and tax benefits from the athletic events held on those campuses, 2) Those economic and tax benefits, for the most part, come with minimal public funding support (free-riding), and 3) States and cities that host FBS division universities use tax dollars to support competing sports, entertainment, and tourism activities that provide far less economic value than college sports."

"The tourism revenue comes in the form of taxes and surcharges on hotel and rental car charges or ticket surcharges. This revenue source alone dwarfs the media revenue distributed to CFB. According to the 2022 US Economic Census, the accommodation industry earned $301 billion in revenue in 2022, up from $260 billion in 2017. Using a hotel tax rate of 10% for estimating purposes, state and local governments are collecting as much as $30.1 billion in revenue from hotel occupancy."


The point of the writeup is that most football programs in the ACC, Big 12, and Pac 2/MWC will not suffer significant damage from changes in media revenue distribution and student-athlete compensation requirements, using framework with a more useful “big market vs. small market” dichotomy.

ESPN & Fox Can't Kill College Football

Neither can the Big 10 or SEC Commissioners

billfarley.substack.com

 

[Brisket and Bourbon]

Killing college football is relative and not just tied to financials…

 

[retired711]

Maybe it's just that it's late, but your summary makes this piece sound like a giant non sequitur, Let's assume he's right that college sports have large-scale economic benefits for their locales. How does that prove that ESPN and Fox won't kill many programs? After all, the benefits go to the communities, not the schools. If the schools aren't making money, they will cut back their programs no matter what the impact on the communities. Does he think the locales will suddenly start subsidizing the schools?? Will, for instance, the hotels in Evanston that make money when Northwestern plays football start paying Northwestern to maintain its program?? Again, maybe it's just that it's late!

 

[Knight Shift]

Maybe it's just that it's late, but your summary makes this piece sound like a giant non sequitur, Let's assume he's right that college sports have large-scale economic benefits for their locales. How does that prove that ESPN and Fox won't kill many programs? After all, the benefits go to the communities, not the schools. If the schools aren't making money, they will cut back their programs no matter what the impact on the communities. Does he think the locales will suddenly start subsidizing the schools?? Will, for instance, the hotels in Evanston that make money when Northwestern plays football start paying Northwestern to maintain its program?? Again, maybe it's just that it's late!

This felt like a work project for me where I was given and incomplete set of facts and tried my best to summarize what the piece said. I did the best I could.

I think the main takeaway is smaller market programs will be fine. He has an extensive background with public/private sports projects, he taught at USC and earned a PhD in a related subject late in life. All of that maybe qualifies him to only speculate on matters, or maybe he is right. The landscape is shifting.

What is interesting is that according to this thread (perhaps) and the other thread showing that Rutgers is actually not in the red on athletics is that college athletics brings value to the university ecosystem and the surrounding communities.

 

[retired711]

This felt like a work project for me where I was given and incomplete set of facts and tried my best to summarize what the piece said. I did the best I could.

I think the main takeaway is smaller market programs will be fine. He has an extensive background with public/private sports projects, he taught at USC and earned a PhD in a related subject late in life. All of that maybe qualifies him to only speculate on matters, or maybe he is right. The landscape is shifting.

What is interesting is that according to this thread (perhaps) and the other thread showing that Rutgers is actually not in the red on athletics is that college athletics brings value to the university ecosystem and the surrounding communities.

He may be a Ph.D, but, judging by your description, he doesn't seem to understand the concept of externalities. Suppose air pollution from Behemoth imposes five units of costs on the town nearby. if Behemoth is making seven units of revenue and incurs six units of cost, Behemoth will continue to operate even though, from an overall standpoint, Behemoth's activity results in more costs (five plus six) than benefits (seven units). The damage to the town is an example of an externality -- an effect that falls on other people that the actor has no reason to take into account in planning his conduct.

Externalities are usually negative, such as air pollution. But externalities can also be positive. Suppose a nearby country club is liked by its neighbors because it results in green space. Let's say the neighbors get five units of benefits. But if the country club is making six units of revenue and seven units of cost, it is going to close down. (This is a real situation in my neighborhood.) Again, the benefits to the neighbors will not be taken into account by the country club's owner.

The athletic programs are also examples of activities that cause positive externalities -- the benefits to the nearly town. But, like the country club owner, it will think only of its own costs and benefits in making its decision.

Lecture over!

 

[e5fdny]

Once it’s determined “bowls don’t matter” his whole premise goes out the window.