College Football Revenue: An Economic Juggernaut

College football has evolved into a multi-billion dollar industry, deeply interwoven with the financial fabric of universities and athletic conferences. Fueled by lucrative media rights deals, particularly television broadcast contracts, college football's financial landscape is complex, with revenue streams impacting everything from coaching salaries to student-athlete compensation and the overall academic enterprise.

The Rise of Television Money and its Impact

The symbiotic relationship between athletic conferences and television networks has become the primary financial artery in college sports. A pivotal Supreme Court decision in 1984, NCAA v. Board of Regents (of the University of Oklahoma), ushered in a free market system, allowing conferences to negotiate their own television rights. This landmark ruling dramatically shifted the financial landscape, leading to the dominance of television dollars and the emergence of "market winners and losers."

Power 5 Conference revenue has consistently grown by 10% per year between 2013-2022 with television rights generating nearly two-thirds of that revenue in 2022. The rest of the revenue was generated from postseason bowl games (21.2%), distributions from the NCAA (8.9%), and other sources (4.2%). The value of television dollars and the percentage of revenues it accounts for has grown significantly since the late 2000s. This has led to a massive financial gap between traditional power conferences, especially the new Power 2-the SEC and Big Ten-and everyone else.

Revenue Streams in College Football

The world of college sports is comprised of layers of entities that each generate revenue and trickle the leftover funds down to the school and then athlete level. A student athlete serves as the ground-level revenue-generating product, competing for a college or university under NCAA rules of amateurism. The schools generate direct revenues from ticket sales, merchandise, donations and other sources. Schools are organized into athletic conferences that generate their own direct revenues from TV broadcast contracts and tournaments, then distribute money to schools. The NCAA serves as a governing body, making and monitoring rules at the school level, and generating its own direct revenue from championship tournaments, distributing the surplus to schools. Bowl games and post-season tournaments are independent entities that generate direct revenue and distribute to conferences and schools.

In 2022, Division I public-school athletic departments (232 schools) generated $12.4 billion in revenue, with radio and television rights providing the largest revenue source, primarily distributed from conferences and the NCAA. We consolidated financial data for all of the layers of entities and found that of the $13.6 billion revenue earned in 2022, the entities spent $12.9 billion. School athletic departments spent $11.9 billion in 2022, spending the most on coaching and staff salaries as a single expense category at $4.3 billion. The schools spent $1.9 billion on facilities and overhead, $1.8 billion on athletic scholarships, and $3.9 billion on all other categories of expenses.

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The Knight Commission's Role in Monitoring Finances

The Knight Commission on Intercollegiate Athletics plays a crucial role in tracking financial trends in college sports. Partnering with Syracuse University’s S.I. Newhouse School of Public Communications, the Commission produces the Knight-Newhouse College Athletics Database. The Knight Commission began tracking football coaching severance pay when data showed the growth of these lucrative severance packages were far outpacing growth in other expenses. In 2023, data revealed that severance pay for football coaches tripled after the College Football Playoff began in 2015.

Valuing College Football Programs: A Hypothetical Exercise

While NCAA teams are not for sale, The Athletic explored a hypothetical scenario where college football programs could be bought and sold like professional sports franchises. This analysis considered factors like revenue, prestige, championships, facility renovations, population trends, and realignment scenarios. The valuations, while speculative, highlight the immense financial worth of these programs.

Here’s a look at the top programs and their projected prices:

Texas: $2.38 billion (Average football revenue: $183 million)
Georgia: $1.92 billion (Average football revenue: $147 million)
Ohio State: $1.90 billion (Average football revenue: $116 million)
Notre Dame: $1.85 billion (Average football revenue: $143 million)
Michigan: $1.83 billion (Average football revenue: $141 million)
Alabama: $1.74 billion (Average football revenue: $133 million)
Oklahoma: $1.49 billion (Average football revenue: $135 million)
USC: $1.40 billion (Average football revenue: $71.3 million)
Tennessee: $1.37 billion (Average football revenue: $124.9 million)
LSU: $1.23 billion (Average football revenue: $102.9 million)
Penn State: $1.20 billion (Average football revenue: $109.5 million)
Florida: $1.08 billion (Average football revenue: $98.5 million)
Auburn: $1.06 billion (Average football revenue: $118.2 million)
Oregon: $990 million (Average football revenue: $90.0 million)
Texas A&M: $973 million (Average football revenue: $97.3 million)
Washington: $970 million (Average football revenue: $107.8 million)
Nebraska: $930 million (Average football revenue: $116.3 million)
Florida State: $867 million (Average football revenue: $86.7 million)
Wisconsin: $801 million (Average football revenue: $100.1 million)
Iowa: $709 million (Average football revenue: $88.6 million)
Michigan State: $708 million (Average football revenue: $88.5 million)
Clemson: $665 million (Average football revenue: $78.2 million)
Arkansas: $646 million (Average football revenue: $80.8 million)
Miami: $604 million (Average football revenue: $75.5 million)
Ole Miss: $591 million (Average football revenue: $73.8 million)
North Carolina: $572 million (Average football revenue: $63.6 million)
South Carolina: $563 million (Average football revenue: $70.3 million)
Minnesota: $562 million (Average football revenue: $80.2 million)
Utah: $539 million (Average football revenue: $77.0 million)
TCU: $523 million (Average football revenue: $74.7 million)

The Growing Financial Disparity

Senator Maria Cantwell (D-Wash.) released an analysis highlighting the growing financial gap between the Power 2 conferences (SEC and Big Ten) and other schools. The report states that a Power 2 school gains an edge over other conferences by spending more on coaches and facilities and recruiting the most talented student athletes. The revenue gap between power conference school and other schools increased 584% from 2002-2023, and more than doubled (129%) from 2014-2023. In the NCAA men’s basketball tournament, power conferences-especially the Power 2-are monopolizing an increasing number of at-large bids.

Player Compensation: NIL and Revenue Sharing

In stark contrast to the 35% of total revenues spent on coach and staff salaries, and outsized individual coaching salaries, student athletes have historically received minimal benefit from the revenues generated from college sports due to the NCAA’s amateurism rules. According to our data, student scholarships totaled 15% of revenues in 2022. However, athletes generating television viewership, namely football and basketball athletes, receive a much smaller percentage than average because schools use profits from football and basketball to fund scholarships in other sports.

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The NCAA has responded to pressure to improve athlete benefits and introduced the concept of NIL, which allows college athletes to profit from their “name, image or likeness” - their personal brands, endorsements, and social media influence. In 2023, its second year of existence, NIL revenues are estimated to total $1.2 billion.

As part of the House v. NCAA settlement, schools are allowed to share athletic department revenues with their student athletes beginning on July 1, 2025. Under the NCAA revenue sharing model, schools can elect to make payments directly to athletes up to $ 20.5 million per year. If a school also commits to increased scholarships than the amount of revenue sharing is reduced dollar for dollar up to $ 2.5 million. The annual cap will increase to around $ 32 million over the next ten years.

The Impact of Recruit Quality on Revenue

Research indicates a strong correlation between the quality of recruited players and a program's financial success. Schools who recruit 5 or 4 star rated recruits can increase total revenue by over $500,000. Schools like USC, Ohio State and Alabama, who on average bring in several highly rated recruits per recruiting class, will bring in millions of dollars more in revenue per incoming class. Higher rated recruits also increase the probability of appearing in a BCS bowl by more than 4% with school fixed effects.

Potential Challenges and Future Directions

College Athletic Departments are already losing money and the cash needed to fund revenue sharing and related costs - close to $ 30 million annually at most power conference schools - has to come from somewhere. Boosters are being aggressively marketed for increased contributions to help cover these costs. However, revenue sharing will likely result in increased parity between Power Conference schools and as a result, potentially a lot of unhappy boosters. Revenue sharing may also result in booster fatigue at many schools. So at almost all schools, revenue sharing will likely require the infusion of either additional school support and/or increased student fees, and this is a sticky issue. Also, athletic directors are currently looking at a new reality where the costs of sponsoring a (competitive) non-revenue sport are likely to increase significantly, while the historical offsetting subsidy from sports such as football is being substantially decreased due to revenue sharing.

College Athletics as the "Front Porch" of a University

College presidents often state that athletics are the “front porch” of a university … it’s not the most important room in the house, but it’s the most visible. Televised college sports are in part immensely effective infomercials - positively highlighting college towns, students, campuses, academic and research programs. Athletics keep alumni and boosters engaged, and are a very effective tool to recruit applicants nationwide. A landmark study by Doug Chung of Harvard University determined that athletic success has a significant impact on a school’s enrollment demand. The University of Alabama hired Nick Saban as head football coach in 2007. The Crimson Tide won six National Championships, and its enrollment statistics were also widely successful.

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