The coming decline of big-time college sports

Posted by Dan Barkin on January 9, 2014 

There’s a lot of back and forth about college football players not being prepared for the rigors of the university. There’s a lot of concern in some quarters about big-time college athletics being out of control.

But I think we are at the high-water mark for big-time college sports. I think in 25 years, we will look back and say that this is when it started to decline in significance.

It will be another victim of the Internet. There are two major business models at risk - the way universities now operate and the way money now flows from TV to college sports programs.

First, the universities, where big-time college sports programs now live.

I believe that the current model of big, residential, full-service universities - such as UNC and N.C. State - is going to have to dramatically evolve or get overwhelmed. The marketplace for higher education is being flooded with online options. Increasingly, consumers of higher education are going to be looking at these options.

Rather than paying ever-higher tuition, room, board and fees for the residential undergraduate experience, they will look for cheaper alternatives.

The concept of disruptive innovation is that cheaper alternatives do come along. The entrenched universities - like most incumbents in a changing industry - don’t view them as real competitors, but it’s not really important what they think. What’s important is whether an 18-year-old thinks an online education is “good enough.” If an 18-year-old can live at home for free and get a college education without graduating with crushing debt, he or she may be willing to forego the extras - like Saturday afternoon football games.

So that’s part of the threat. Will residential universities in 2025 be able to fill their classrooms and their stadiums? It seems a little unthinkable now, but what’s the big difference between taking Sociology 101 online at home and taking it with 200 or 300 fellow students in a lecture hall? Except that the online course will be cheaper and more convenient and branded by consortiums marketed by networking giants like, for instance, Cisco Systems.

Perhaps in 2025, the majority of students in residence at major universities will be graduate students, which is not farfetched, because it will be harder for the Internet to compete with, say, a residential Ph.D. microbiology program. How many sleep-deprived, overstressed doctoral candidates do you think will care to leave their labs to catch a game at Carter-Finley Stadium?

And there will be relatively fewer undergraduate alums of these big universities to tailgate. More and more will take their undergraduate degrees from fairly generic digital colleges lacking in stadiums with luxury suites. We will be on our way to becoming a nation, essentially, of digital commuter students.

The other reason big-time college sports is going to start fading is that the Internet is a dagger aimed at sports programming on TV. A gusher of money from networks like ESPN has fueled the rise of big-time sports by fueling the rise of coaching pay.

Nick Saban, the football coach at the University of Alabama, makes $7 million a year or more, according to various reports.

The legendary Bear Bryant signed a 10-year contract in 1957 that paid him $17,500 annually, which in today’s dollars would be around $150,000. Oh, yeah, Coach Bryant was also given the job of athletic director at Alabama as part of that deal, so he had to make sure the towels got laundered. Why did Bama get Bear so cheap? That’s all they could afford, pre-pre-pre-Sports Center.

Not all college coaches are making Saban-like money today, but a lot of them are making $1 million or more. This has focused them powerfully on doing what it takes to keep their jobs, because it’s a long fall from making millions as a head coach to making a lot less selling real estate.

Or, as scout Grady Fuson warned Oakland A’s GM Billy Beane in the movie Moneyball, “...You’re gonna have to explain to your kid why you work at Dick’s Sporting Goods.”

So there’s a lot of pressure on these guys to avoid winding up at Dick’s by recruiting players whose ACTs and high school transcripts fall short of the student body profile but can really pancake defensive linemen for the brief interval that they are required to attend classes before declaring for the draft.

But increasingly, consumers are not interested in buying a cable package that forces them to pay for all the ESPN and other sports networks - and for Nick Saban. They will be fine getting a basic Internet connection and getting Netflix, Amazon Prime, Hulu and who knows what else in the future. We are at the dawn of the Great Unbundling.

In the future, the networks will not be able to pay as much for college sports. The cascading result will be significant. Universities will not be able to pay as much for head coaches and certainly not for the platoons of assistant coaches, trainers and whatnots.

This won’t happen overnight, but as the masses decline to pay a toll to ESPN et al., the current college sports business model is done.

There is much handwringing right now about the problems that an oversized sports presence is having on college campuses, and there are concerns that administrators and boards are virtually helpless to do anything about it. Concern that great centers of learning are being visited by scandal after scandal over recruiting violations and academic funny business to keep star players eligible.

I honestly doubt whether, left to their own means, that university leaders can do much about it in the short run.

But I don’t think that matters, long term, because the digital revolution in education and entertainment is going to bust up the current paradigm.

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