Magazine March 2019

Rights Fees Push Arkansas Athletics Revenues Into The Stratosphere

Rights

By Jim Harris

When college football coaching salaries were already ballooning to levels never before imagined just a generation ago, Frank Broyles, then retired from the University of Arkansas athletic director’s job but still making the occasional speaking appearance, mused to this writer that his first UA contract as head coach was for $15,000 a year. He earned that amount more than a half-century ago, but even in the 24 years from his debut at Arkansas to the raise he gave his successor Lou Holtz in 1982 to $55,000, making Holtz the third highest paid coach in the country, Broyles didn’t see the exponential growth we’ve witnessed in the past 15 years.

Arkansas was paying Houston Nutt around $1.5 million in 2007 when it sent the coach on his way to Ole Miss with a $3 million going-away gift. Eleven years and three coaches later, the U of A was bidding Bret Bielema bye-bye with an $11.5 million parting gift to pair with the $20 million or so he’d already bankrolled for five years of mostly mediocre coaching.

Universities, especially ones in the Southeastern Conference, can toss around these crazy amounts to head coaches and now to their assistants these days thanks to television money (read: rights fees paid by ESPN, CBS and the other networks).

Broyles smartly foresaw the changing landscape of college football and super conferences well before almost anyone when he directed the program he’d built, Arkansas athletics, away from the Texas-based Southwest Conference into the SEC in the summer of 1990. But there is no way he or anyone else in 1990 saw the kind of checks the SEC would be cashing from its television sponsors in 2018, or just how much schools would be willing to pay to make a failed coach just go away, much less what they’d be willing to obligate the university’s coffers to for year-to-year coaching of their many sports.

This all traces to 1981, when the universities of Oklahoma and Georgia sued to have their own television networks instead of college football being negotiated solely between the NCAA and ABC, the one network allowed to carry college football on Saturdays. OU and Georgia wouldn’t necessarily get their own networks – Notre Dame did, however – but it opened the doors for cable networks and the other competing over-the-air broadcast networks to also carry college football, enriching individual conferences in the process.

Broyles, the visionary of conference expansion, wasn’t so keen on TV growth of the game then. He was among a group that instead worried and said the game’s overexposure would destroy it. 

Of course, it did the complete opposite. The more college football that was available, the more the fans wanted it: all hours of the day, all days of the week, eventually leading to almost six months of it instead of the traditional three, with conference championship games and then holiday bowls at the end of the year. For the past five years, college football has selected four teams to play off for the national championship, boosting the value of a billion-dollar TV contract with ESPN. Add in the $1 billion contract CBS has for March Madness, the NCAA Tournament, and money now is flowing everywhere.

All of that trickles down to every major college athletic program, including Arkansas. Razorback athletics’ share of SEC revenues has soared to about $43.7 million in 2018. While the SEC has been considered the forerunner to huge conference payouts to its members, the Big Ten (which only had 12 of its 14 members receiving full shares in 2018) reportedly paid out $50 million per team in 2018.

Jeff Long, who was Broyles’ successor as UA athletic director and held the job until November 2018, made one of his first priorities the monetizing of the Razorbacks’ radio and marketing brand, signing a $70 million deal over several years (since extended) with the company that became IMG Sports. The money made from Arkansas’ football and radio broadcasts, once offered free to any radio station who would want to carry it (and, at one point, that roster would number over 100 radio stations), make up major part of the UA athletic budget. 

A study by USA Today last year reported that in 2016-17, Arkansas’ athletic department had revenues of $129,680,808, against expenses of $112,902,774. When Long first took the reins of the department in 2008, the total athletic budget was under $70 million. Today, Arkansas ranks 18th in all of college athletics in revenue.

The UA athletic budget always was dependent on the amount of money brought in by ticket sales from all sports. Total revenue from ticket sales (season tickets and single-game sales) was $40.8 million in 2017, according to information from the U of A. Contributions to the Razorback Foundation, the private fundraising arm of the athletic department, totaled $24.9 million that year. With the IMG contract, merchandising and SEC revenue sharing of its rights contracts, Arkansas earned $60.5 million in 2017. Arkansas was one of the few schools listed in all of college athletics that gain additional income through student fees for athletics.

Now, however, for the fears that lie ahead: Losing horribly in football in 2018 under first-year coach Chad Morris after the disastrous end to the Bielema era has seen Arkansas football ticket sales drop precipitously. The Razorbacks announced that more than 64,000 tickets were sold to the Alabama game during that 2018 season, the biggest one-game amount at Fayetteville, but the U of A in 2018 also began releasing details of “scanned” tickets, or fans that actually attended games. There were about 14,000 fewer people on hand than tickets sold. And that was a good day for Razorback football last year. Arkansas, with about 76,000 seats available, had only one “scanned ticket” attendance of 50,000 at home all season. Attendance was more in the line of 30,000 or more empty seats.

That becomes a worry for Arkansas only because Jeff Long committed $100 million of a $160-million plus expansion of the north end zone of Reynolds Razorback Stadium to bond financing, with future ticket sales over the next 20 years used against that borrowing. The new north end zone of the stadium, containing high-dollar skyboxes and other expensive seating, appeared only half-full at best throughout the 2-10 season under Morris.

It’s why so much attention was put on Morris’ first full recruiting class in December 2018, as something offering hope to the fan base that the Razorbacks could reverse the losing trend and begin drawing 70,000 crowds in the future.

This football issue blends with basketball’s problematic situation. Arkansas built a 19,200-seat area that opened in 1993 for a season that eventually became the university’s first and only “official” national championship in a revenue sport (Arkansas’ football program was awarded a couple of versions of the 1964 national title, but the wire services declare Alabama as the ’64 national champion). And for several years, Arkansas could regularly expect sellout crowds for many games each year. But since the program’s last appearance in the NCAA Tournament’s Sweet 16 in 1996, the fortunes of the program, and the attendance that goes with it, has sagged significantly. Arkansas now sells about 13,000 season tickets (Bud Walton Arena reportedly had a waiting list for years to obtain season tickets, but that hasn’t been the case for more than a decade), according to the U of A. And now, with eighth-year head basketball coach Mike Anderson struggling with an up-and-down, young team in 2019 and fan disenchantment, large numbers of those season-ticket buyers don’t appear to be showing up.

This doesn’t bother the big-money rights payers. ESPN does not care that fans are not actually in attendance in the stadiums and arenas; the cable giant only wants eyeballs at home. They can pipe in the crowd noise if need be. Hence, ESPN has gone out and bought many of the holiday bowl games to provide content, although actual attendance at those games can be minuscule. It’s about ad revenue.

Where Arkansas might suffer a little in coming years with the falling attendance is in its contract with its concessionaire, which is based on a set average attendance figure when the contracts are negotiated. If the current company feels like it’s overpaying when Arkansas is claiming 65,000-70,000 fans attending football games, the money the U of A brings in from that contract is sure to fall after these recent seasons.

But the fear that TV would kill the golden goose hasn’t happened. The late Frank Broyles worried about it in 1981, and it only made millionaires of all the higher administration at the U of A and the rest of the SEC and throughout the NCAA itself. People throw out fears like they might with climate change, that falling attendance will hurt the U of A’s bottom line. And, it will, a little: But when ticket sales revenue is less than two-thirds of the rights fees, it seems a little much to fret about. 

Arkansas’s fan base, while it pales in comparison to much of the SEC other than the Mississippi schools and Vanderbilt, has always shown that even with a competitive team, it will turn out in big numbers again. Basketball may NEVER fill Bud Walton Arena regularly, but fans will still clamor in front of the TV if and when they ever win again like they did a generation ago. They’ll still buy T-shirts and Hog Hats and car decals in record numbers.

And, while ESPN cuts back in some areas, causing many observers to wonder if the TV rights fees have peaked, nothing actually indicates those dollars are going to drop significantly anytime soon. Everyone wants to televise the college football and basketball championship tournaments and the most powerful leagues in the country, one of which Frank Broyles smartly negotiated with so Arkansas could get a piece of a massive pie.

Now, if Arkansas can just quit picking the wrong coaches and paying them millions not to coach after they fail. If Frank Broyles were still with us, that fact alone would have him banging his head against a wall.

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Jim Harris is the former editor of ArkansasSports260. He has covered Arkansas sports for decades at newspapers including the Pine Bluff Commercial and Arkansas Gazette. He’s a member of the Football Writers Association of America and the United States Basketball Writers Association. 

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