Economics primer of FBS football

On the field, the game looks similar. When it comes to money, the schools in the Football Championship Subdivision and the top-tier Football Bowl Subdivision play on different planets.

Five programs _ Georgia State, Texas-San Antonio, South Alabama, Massachusetts and Texas State _ are at various stages in the two-year transition process to FBS this season. Economically, the outcomes may vary widely from school to school. But overall, the difference between FCS and FBS is a matter of degree: much higher revenues, but also more expenses and, in many cases, much higher losses requiring the university to cover the difference.

Overall, a small majority of FBS football programs do generate more revenue than they cost _ about $4 million on average, according to NCAA data collected by Daniel Fulks of Transylvania University (virtually no FCS programs turn a profit). The most profitable FBS programs clear up to $38 million, money that can be used to subsidize the rest of the athletic department and in some cases gets turned back over to the academic side of the university.

The problem is there’s a wide range around the median (the program whose results are precisely in the middle), and nearly half of FBS programs lose money ($2.9 million on average). It isn’t easy for a new FBS school to reach even the median level. When schools join FBS, they don’t jump into the Big Ten or Southeastern Conference (South Alabama, Texas State and Georgia State are joining the Sun Belt; UMass the Mid-American Conference and Texas-San Antonio is moving into the Western Athletic Conference).

On the revenue side, the typical FBS team generates about $16 million from sources like ticket sales and television _ more than 20 times the typical FCS school. High-end FBS programs approach $100 million. But costs are higher, too. Programs don’t like losing, so inevitably feel compelled to fill all 85 scholarships FBS allows and to join in the arms race for top coaching talent.

“The majority of (transitioning) schools are going to lose more money,” Fulks said. “They’ll have fewer home games, they’ll have to travel more. If they’ve been winning in FCS, they’ll probably be losing at FBS at least for a while. At most institutions, it’s going to cost them, and it’s going to cost them on a long-term basis.”

There are other costs that don’t factor into the NCAA’s direct accounting of football programs. FBS membership often requires a new stadium, to generate revenue to fund the expanded program, and to meet the NCAA’s 15,000-per-game attendance requirement for FBS schools (UMass is moving this season to Gillette Stadium, home of the New England Patriots, where it won’t pay rent but which is nearly two hours from the Amherst campus).

FBS membership generally increases costs for other sports, too. Under NCAA rules, FBS schools must field at least 16 varsity teams and spend $4 million on grants for student athletes. Since football has no female equivalent, offering the maximum 85 FBS football scholarships can force schools to add women’s teams and scholarships to meet Title IX balance requirements.

Overall, the typical FBS athletic program costs about $11.5 million more than it generates (compared to $9.2 million in FCS) and must get the difference from the university whose name it carries. Essentially, that’s value that the typical FBS institution places on intercollegiate athletics _ a tough sell to some at time of austerity budgets across higher education.

But, says Fulks: “If it’s worth having, it’s worth paying for, just like your music program or anything else.”

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Online: http://www.ncaapublications.com/productdownloads/2010RevExp.pdf

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