How much $ will the U lose due to Covid-19?

[2nd Degree Gopher]

Relax. I never claimed that revenues wouldn’t be much lower than in normal years.

I just don’t think it’s that big of a deal, for one year, when nothing fundamental underlining it is going away. The demand for it is still there, and will be, exactly the same.

No need to fret that college athletics might evaporate into thin air. Not that you were, just saying.

Compared to the U of Minn’s total budget (all campuses), even a $50M write off for one year is nothing.

Write it off of what? College sports are not going to evaporate, but it’s a mistake to think this is a one year problem. No one knows how long this pandemic will directly impact college athletics or how long after that it will be before the public will be fully comfortable returning to full stadiums and arenas, when the economy will permit giving to rise back to pre-pandemic levels or when companies will have the capability and inclination to invest in sponsorships to prior levels. The revenue will get back closer to pre-pandemic levels, but it could be many years before revenues get back to 2018 levels.

 

[howeda7]

Again, “making money” isn’t a thing in college athletics.

Not any more than Coffman Union is a “money making” venture.

It’s a nice to have thing, to enhance the student experience.

Being non-profit doesn't mean your financial condition doesn't matter. They don't just "write-off" things they can't pay for. If the state government doesn't fund their shortfall, they will have to cut programs/sports, etc.

 

[MplsGopher]

What programs can they realistically cut that will even make a dent?

No. That’s laughable.

They lose $75M of football revenue, because of a one year freak thing, and your answer is to cut the golf programs that cost $500k a year?

There is no such thing as an answer here. You eat the cost and it is what it is.


Businesses get to write off bad investments or losses, all the time. Why shouldn’t the biggest economic engine in the state, the U, get to do that on a freak one year blip?

 

[MplsGopher]

Write it off of what? College sports are not going to evaporate, but it’s a mistake to think this is a one year problem. No one knows how long this pandemic will directly impact college athletics or how long after that it will be before the public will be fully comfortable returning to full stadiums and arenas, when the economy will permit giving to rise back to pre-pandemic levels or when companies will have the capability and inclination to invest in sponsorships to prior levels. The revenue will get back closer to pre-pandemic levels, but it could be many years before revenues get back to 2018 levels.

Most revenue comes from TV. That will bounce back instantly. Ticket sales might not bounce back due to fear, but let’s see how well the vaccines work.

 

[2nd Degree Gopher]

Most revenue comes from TV. That will bounce back instantly. Ticket sales might not bounce back due to fear, but let’s see how well the vaccines work.

If by "most" you mean a little over 1/3, then yes "most" will bounce back. The structure of future TV/media contracts was already going to look different as people don't consume media today like they did even a few years ago. Whether advertisers will flock back in the same numbers and at the same level of financial commitment remains to be seen, but the athletic departments are far more concerned about replacing that revenue than you are.

Ticket sales might not bounce back due to fear, but let’s see how well the vaccines work.

We aren't going to "know" how well any vaccine will work for years. At the U, we don't just need ticket buyers (to get back to $20M in ticket revenue), but also people willing to pony up scholarship seating donations (which account for a sizeable portion of $18M in athletic department donations and fund about 85% of scholarship costs).

 

[2nd Degree Gopher]

Being non-profit doesn't mean your financial condition doesn't matter. They don't just "write-off" things they can't pay for. If the state government doesn't fund their shortfall, they will have to cut programs/sports, etc.

It isn't likely to be money from the State that plugs the hole. It also isn't going to be dollars from the academic side of the University. There are reserves and there could be loans, but I think the U views this as an athletic department issue to solve and recovering from that may take a long, long time. The source for hope is that, if we can get back to "normal" business, we have room to try to grow revenue in almost all sports.

What programs can they realistically cut that will even make a dent?

No. That’s laughable.

They lose $75M of football revenue, because of a one year freak thing, and your answer is to cut the golf programs that cost $500k a year?

There is no such thing as an answer here. You eat the cost and it is what it is.


Businesses get to write off bad investments or losses, all the time. Why shouldn’t the biggest economic engine in the state, the U, get to do that on a freak one year blip?

You are correct that the budget shortfall is far bigger than can be solved by cutting sports, although there may be some cuts there. There is no one to "eat the cost" and nowhere to "write it off." Employees still need to be paid, buildings still need to be maintained, student athletes still need tuition, housing, food, books, trainers, etc. All that still costs money that they don't have.

 

[MplsGopher]

If by "most" you mean a little over 1/3, then yes "most" will bounce back. The structure of future TV/media contracts was already going to look different as people don't consume media today like they did even a few years ago. Whether advertisers will flock back in the same numbers and at the same level of financial commitment remains to be seen, but the athletic departments are far more concerned about replacing that revenue than you are.

Vehemently disagree. Live sports is one of the only things getting people to tune into live TV anymore. It is the top, premium content that live TV providers have to offer. People are craving live sports on TV as much as they ever have, and probably moreso.

That demand then directly translates into dollar value of the TV contract. It won't be going down in this next round. And there's plenty of room for major college football TV contracts to increase, when you compare to the NFL's contracts.

I have no problem admitting that TV revenue collected by the Big Ten in the fiscal/athletic year 2020-21 will likely be down significantly from 2019-20. That's fine. But it will be right back up in 2021-22, probably the highest year on record.

We aren't going to "know" how well any vaccine will work for years. At the U, we don't just need ticket buyers (to get back to $20M in ticket revenue), but also people willing to pony up scholarship seating donations (which account for a sizeable portion of $18M in athletic department donations and fund about 85% of scholarship costs).

Again, disagree. Sure, there is a chance for some risk. But I think most people are so fatigued of quarantine, reduced openings, and wearing masks, and craving normal life, that they'll be willing to get stuck in the arm and hope for the best. I can certainly be wrong here, and we will see.

As to your comment about seat donations ... that to me isn't any different from ticket sales. If people were willing to pay it, as the cost of the season tickets, in 2019, then they'll be willing in 2021. Otherwise, all it means is they aren't coming to the stadium at all.

You are correct that the budget shortfall is far bigger than can be solved by cutting sports, although there may be some cuts there. There is no one to "eat the cost" and nowhere to "write it off." Employees still need to be paid, buildings still need to be maintained, student athletes still need tuition, housing, food, books, trainers, etc. All that still costs money that they don't have.

I agree there may be some cuts anyway. The most likely to me are the (men's) gymnastics teams. Those are the least sponsored in the conference. But other than that ... there really isn't much to cut, that's going to make much of a dent. You can't cut both swimming teams, as they just replaced the HVAC in the aquatic center. Probably same type of deal for tennis, they have a big indoor facility for that which is an investment you can't just mothball. At most, you can cut some of the men's teams, but for those sports you're probably talking hundreds of thousands per year in operating costs. Not even a dent.

https://en.wikipedia.org/wiki/Big_Ten_Conference#Men's_sponsored_sports_by_school
https://en.wikipedia.org/wiki/Big_Ten_Conference#Women's_sponsored_sports_by_school


Cutting women's hockey could save a bit of coin, but then you've got the whole Ridder going to waste, Title IX issues and poor optics, etc. Don't see it.

Similar issues for rowing. We need that big roster for Title IX, to offset football.

 

[A_Slab_of_Bacon]

No deadline, but you should give them a call, you sound like the kind of person they'd like to talk to ASAP.

OH gawd no... I don't want to talk to anyone... I just want to push a button.

 

[2nd Degree Gopher]

Vehemently disagree. Live sports is one of the only things getting people to tune into live TV anymore. It is the top, premium content that live TV providers have to offer. People are craving live sports on TV as much as they ever have, and probably moreso.

That demand then directly translates into dollar value of the TV contract. It won't be going down in this next round. And there's plenty of room for major college football TV contracts to increase, when you compare to the NFL's contracts.

I have no problem admitting that TV revenue collected by the Big Ten in the fiscal/athletic year 2020-21 will likely be down significantly from 2019-20. That's fine. But it will be right back up in 2021-22, probably the highest year on record.

Agree that the ratings will be good, disagree that will necessarily mean an increase in TV contracts. The network-cable paradigm is continuing to shift and the networks are losing viewers/subscribers. The sports are valuable programing for them, but if they don't have the money to pay for the content, they can't pay it. (I know, you'll claim they can just "write it off"). The future, at least in the near-term, is likely a more fractured market with a combination of network, cable and online providers. Can they cobble together contracts to equal or exceed the reach of the current deals? Probably. Will the conferences be able to successfully identify what will be the dominant sources of streaming college football in three years to most efficiently get their share of that revenue? No one knows.

Again, disagree. Sure, there is a chance for some risk. But I think most people are so fatigued of quarantine, reduced openings, and wearing masks, and craving normal life, that they'll be willing to get stuck in the arm and hope for the best. I can certainly be wrong here, and we will see.

As to your comment about seat donations ... that to me isn't any different from ticket sales. If people were willing to pay it, as the cost of the season tickets, in 2019, then they'll be willing in 2021. Otherwise, all it means is they aren't coming to the stadium at all.

Right now, we don't have enough fans to fill the seats at any of our revenue generating sports. There wasn't a waiting list of people hoping that existing ticket holders would drop season tickets to take their place and make the donations. Some of those existing ticket holders will not be back or not be in a position financially to continue the donations. Will they be able to replace them? No one knows.

 

[howeda7]

It isn't likely to be money from the State that plugs the hole. It also isn't going to be dollars from the academic side of the University. There are reserves and there could be loans, but I think the U views this as an athletic department issue to solve and recovering from that may take a long, long time. The source for hope is that, if we can get back to "normal" business, we have room to try to grow revenue in almost all sports.


You are correct that the budget shortfall is far bigger than can be solved by cutting sports, although there may be some cuts there. There is no one to "eat the cost" and nowhere to "write it off." Employees still need to be paid, buildings still need to be maintained, student athletes still need tuition, housing, food, books, trainers, etc. All that still costs money that they don't have.

Agreed. They can't cut their way out of this, but I would still expect 4-6 sports to be eliminated at the U and most other schools.

 

[MplsGopher]

By the way, since we're talking about money: the S&P 500 is now higher than where it was when the pandemic drop hit.

 

[PitinoFan]

By the way, since we're talking about money: the S&P 500 is now higher than where it was when the pandemic drop hit.

People are still spending plenty of money. They’re just spending it on different things.

 

[MplsGopher]

Agree that the ratings will be good, disagree that will necessarily mean an increase in TV contracts. The network-cable paradigm is continuing to shift and the networks are losing viewers/subscribers. The sports are valuable programing for them, but if they don't have the money to pay for the content, they can't pay it. (I know, you'll claim they can just "write it off"). The future, at least in the near-term, is likely a more fractured market with a combination of network, cable and online providers. Can they cobble together contracts to equal or exceed the reach of the current deals? Probably. Will the conferences be able to successfully identify what will be the dominant sources of streaming college football in three years to most efficiently get their share of that revenue? No one knows.

Well, I could maybe go that it won't be an increase, given harder times recently and perhaps ahead for the industry. But you sounded certain that it would be a decrease, so even staying flat would disprove what you were implying earlier.

No doubt that technology has been disruptive to TV the last 20 years. But to me, that has almost exclusively to do with distribution.

ESPN, FOX, CBS, NBC, aren't distribution. That's Comcast, Charter, AT&T (now), Dish ... and new to the game are YouTubeTV, Hulu, Apple. But those that are paying for the TV rights to the games are content creators. They don't really care how their content gets distributed, so long as they get paid.

And if there are many millions of homes demanding to watch the games, and ESPN/FOX have the rights to transmit a broadcast of those games live .... then we're just talking about who wants to be the middle-man. Someone will do it.


The whole thing boils down to this: conferences and CFP just want to get paid and have it come from one (ideally, maybe two) source(s). They don't necessarily care who, or how. Just want someone else to take care of it. And in turn, the networks (ESPN, FOX, etc.) just want to get paid and have it come from as few sources as possible. They don't necessarily care who, or how, their signals get distributed.

But those two pieces are set. And the demand is there at the end of the pipe. Therefore, I can't see how the middle-men can muck it up, as you're worried a bout.

Right now, we don't have enough fans to fill the seats at any of our revenue generating sports. There wasn't a waiting list of people hoping that existing ticket holders would drop season tickets to take their place and make the donations. Some of those existing ticket holders will not be back or not be in a position financially to continue the donations. Will they be able to replace them? No one knows.

Don't disagree with anything you say here. But I was only comment on getting back up to what we had in 2019.

Improving beyond that will largely depend on the continued success of the football team.