To educate students at Virginia Tech, the school this fall hired one particularly in-demand and highly-credentialed engineering professor for the handsome salary of $310,000 a year.
To entertain the young scholars at Virginia Tech and the alumni, new football coach James Franklin will be paid $8.2 million a year, the equivalent of about 26 star engineering professors.
You may think this an outrageous perversion of values, but we don’t see 66,000 people crowding into Lane Stadium to see an engineering professor lecture on digital circuit design.
As part of Franklin’s deal, the school is increasing the amount of money he has available to pay assistants to $15.5 million. For that amount of money, he could hire 172 assistant professors in sustainable biomaterials, 111 associate professors in civil and environmental engineering, or, if he were so inclined, almost 17 college presidents. (All these figures are based on actual appointments by the board of visitors.)
Economic reality: More people are interested in witnessing a physics demonstration involving an oblong bag of air than they are, well, just about anything. If a football coach fails to inspire his players to perform to the expected standard, he is eventually dismissed. If a professor has students who just don’t get the material, he or she might get a bad review on Rate My Professor or maybe a sympathetic citation in a report on how colleges must spend time on remedial classes because too many high school graduates aren’t capable of performing college-level work.
For the privilege of attending a school with a big-name football coach, Virginia Tech students now must pay a mandatory fee of $732 a year, which will gradually rise to $1,039 a year by 2029 — which is actually a bargain compared to other public schools. Students at Longwood University must pay $3,206 a year to support the school’s athletic programs. Those at James Madison pay $3,036 a year.
This weekend college football fans around the country will sit in front of television sets to watch the two of the highest-paid college football players in the land: wide receiver Jeremiah Smith of Ohio State and quarterback Arch Manning of Texas, whose name, image and likeness deal has plummeted in value from an estimated $6.8 million to a mere $3.4 million because he hasn’t been playing the way he was expected to. Manning is ostensibly at school to study communication and leadership, but he’s presently getting schooled in economics.
If you think Big Money has turned our leading academic institutions into sports entertainment centers, you’re right. But what if the problem isn’t that there’s too much money involved in college sports but that there’s not enough?
Colleges today hold onto the quaint notion that these are programs for student athletes, when in reality they’re running professional sports franchises — except that the residents of cities with pro teams aren’t being taxed to pay the teams and their coaches. Meanwhile, college students are essentially being taxed to help round out athletic budgets. If we had more money swirling around college sports, maybe we wouldn’t need to make students subsidize part of these programs.
The essential challenge here is trying to make an early-20th-century model of college sports as a pleasant weekend extracurricular adapt to 21st-century economics, where those extracurriculars are now big business — and to a changing legal landscape where players now get paid.
What if we dispensed with the outdated fiction surrounding college sports and embraced reality: Colleges are running professional teams. Once we do that, we can more easily move on to the next logical step: What if colleges could sell their teams? Or at least lease them long-term?
Hear me out because I’m not the first to suggest this. Mike Bianchi of the Orlando Sentinel wrote more than a year ago: “Private equity firms would run college football much better than school presidents and ADs.” (The latter being athletic directors, for those non-sports fans out there.) The Sports Business Journal published an interview last year with the head of one capital fund in which the CEO predicted, “I think what you’re gonna see is you’re gonna see a number of schools selling their teams.”
We’re already seeing private equity firms try to move into college football. Florida State spent several years exploring a deal to have the private firm Sixth Street invest in the school’s sports program. This deal, code-named Project Osceola, eventually fell apart over legal hurdles, but others are exploring similar arrangements. Boise State is “actively exploring” a private equity deal. The Big Ten conference has been entertaining private investment, a move that the University of Michigan recently opposed. The sports business consultancy Elevate has raised $500 million and is looking for college programs to invest in, according to Front Office Sports. Two capital funds, one of them run by former Florida State quarterback Drew Weatherford and his brothers, have jointly created a fund that could invest up to $2 billion into college sports programs.
All that’s a long way of saying we haven’t seen a deal yet, but it sure seems likely that sometime soon we will. “Private equity looks to buy into college sports,” CNBC reported nearly a year ago. The international law firm Loeb & Loeb published an article on its website this summer advising “Why private equity will soon be in college sports.”
The basic theory is the same as any other investment deal: The firm takes a stake in the operation and expects a profit. Along the way, the private equity firms would provide guidance as to how the college sports program could increase its revenue.
What if we took that one step further? Let private capital buy the teams — or, more accurately, enter into long-term contractual arrangements. Schools could sign licensing deals where they retain ownership of all the names, logos, mascots and traditions. Private ownership groups would pay for the right to use those and play in college-owned stadiums. In Virginia Tech’s case, the school would still own the Hokies’ name, the HokieBird mascot, the Chicago maroon and burnt orange color scheme, even the tradition of the team entering to Metallica’s “Enter Sandman.” Beyond that, private owners would then have free rein to maximize the team’s value however they see fit — and pay coaches and players whatever the market will bear (or future collective bargaining agreements require).
Schools would either need to demand enough payment to cover all the non-revenue sports they offer or require these private owners to maintain those as well. Perhaps private owners could find revenue potential in college golf that we haven’t previously seen. The capacity of the free market to innovate, in ways both good and bad, is almost infinite. Right now, athletic “boosters” donate money to college athletic programs simply for the glory of the ol’ alma mater. How much more money could schools raise if there were a profit motive involved?
In my fevered imagination, this should have bipartisan appeal.
Conservatives should like this because it’s a private-sector solution. No longer would our public institutions need to subsidize college sports. Do we think private investors could run things better than a branch of government? Conservative philosophy says it can. (Yes, every college sports program at a public university is essentially a government-run sports program. Every time you cheer for your team, you’re cheering for socialism.)
Liberals should like this because it would free up tax dollars for whatever else they’d like to spend those on. (Maybe tax dollars aren’t going directly to college sports, but they’re at least going indirectly.) If college sports, particularly college football, had more revenue flowing into it, that could be more revenue that could be taxed.
Students should like this because they wouldn’t have to pay these mandatory fees. (More on those to come.)
Players should like this because private owners might have more money available to pay them for their services.
Would fans care? Again, let’s be realistic. Nobody will watch Ohio State play Michigan this weekend because Jeremiah Smith is a sports industry major who had a 3.6 grade-point average in high school. They’re watching because he’s got an uncanny ability to catch the ball and streak down the field with it.
With the transfer portal, we’re already in an era when players move freely between schools. Shortly after Franklin signed on to coach at Virginia Tech, five of his recruits scheduled visits to Blacksburg. They didn’t just suddenly discover the academic benefits of Virginia Tech (which are, admittedly, many); they like the idea of playing for Coach Franklin. As comedian Jerry Seinfeld famously put it, we’re all just cheering for clothes.
Is all this a good idea? Man, I have no idea. For all I know, it may be a terrible idea. However, it’s clear there’s no turning back. If you want purity in your college sports, then you need to follow Division III sports, where there are no scholarships — and no big TV contracts. The marketplace, though, has made it clear that fans want big-time college sports, so the only real question is how we can make this work better.
Gordon Gee, recently retired as president of West Virginia University (and before that, president of Ohio State, Vanderbilt University, Brown University and the University of Colorado, which means he’s done stints in the Big 12, the Big 10, the SEC, the Ivy League and the Pac-12 back when the Pac-12 mattered), has a different idea. In a recent opinion piece in The Hill, he called on Congress to pass legislation granting college sports an exemption from antitrust law. That, he said, would allow college sports conferences to jointly negotiate TV deals and schedule the most attractive matchups.
His two main points: “College football, on the other hand, sells its rights through twelve separate negotiations (ten conferences, Notre Dame, and the playoff). When conferences compete for media dollars, the buyers pay less, leaving billions on the table.”
And this: “Today, 136 athletic departments independently schedule out-of-conference games, resulting in a highly inefficient schedule with too many lopsided contests and marquee games being played at the same time. By just centrally scheduling the out-of-conference slate (without compromising traditional rivalries) and coordinating when conference games are played (without changing conference matchups), we will have more thrilling games that fans can actually tune in to.”
What should really get your attention in Gee’s piece is this: “College football is America’s second-most popular sport by viewership, but it ranks only fifth in revenue. Its viewership is twice that of the NBA, but it brings in only half of the NBA’s media revenues. How can this be? It’s not due to a lack of passion or value. College football is stuck in an outdated, fragmented system that holds back its earning potential.”
If college football made more money, he says, schools would not be cutting back on non-revenue sports. Or, as I say, they wouldn’t have to subsidize their operations by shaking down students.
We may have a holiday weekend coming up, but the news doesn’t stop. Our West of the Capital political newsletter will go out as usual on Friday afternoon. If you’re not already signed up, you can do so now. At the very least, it’ll give you something to do while that obnoxious relative (you know which one) goes on and on and on . . .
