Friday, January 10, 2014

The Business of College Football

Let's face it- there is more to college football than wins and losses, bowl games, national championships, and prized recruits. The sport of college football has created a parallel entity: The business of college football. What was once truly a seasonal product is now essentially a year-round product, with the year breaking down like this:

  • July: Media days and preseason predictions
  • August: Fall practice begins
  • September-December: Regular season
  • December-January: Conference championship games and bowl games
  • January-February: Recruiting and national signing day
  • March-April: Spring practice
  • May-July: Upcoming season and recruiting class
For evidence of college football as booming business, look to a recent Wall Street Journal article that showed rankings of the top 50 college football programs in terms of their financial valuation. The data come from research conducted by Ryan Brewer, an assistant professor of finance at Indiana University-Purdue University Columbus. The premise of the research is to establish a financial value for college football programs that would be analogous to their worth if they could be bought and sold like professional sport franchises.

Business-Driven Growth Factor
The "national champion" of the business of college football is Texas, with its valuation coming in at a whopping $875 million. Given the success of the Longhorns football program in terms of financial value, it might come as a surprise to some that the head football coach was replaced, a move often associated with performance falling below expectations. But, that's just it- performance expectations were not being met at Texas. One reason college football has become a lucrative business is that the product has undergone substantial transformation in recent years. College football programs are more than a sport team; they have become content creators. Interesting content is the fuel that sparks and sustains attraction between customers (fans) and a brand.

If the content is unappealing or fails to satisfy, the product loses appeal with fans. In turn, diminished appeal can lead to several undesirable consequences- a drop off in booster support, licensed merchandise sales, engagement with social media, ticket purchases, TV broadcast viewing, and sponsor interest. Texas was not losing on the football field as much as it stood to lose in all of the above mentioned areas if the content was not upgraded (i.e., bring in a new coach to energize stakeholders).

"Just Win, Baby"
This quote from the late Oakland Raiders owner Al Davis has a great deal of relevance to the list of the 50 most valuable college football programs... and other programs not in the top 50. Take for instance the University of Louisville. Over the past two seasons, Louisville football had an impressive record of 23-3. So impressive that the University of Texas lured Louisville's coach, Charlie Strong, to become its next head coach. Louisville replaced Strong with Bobby Petrino, who was the coach at Louisville from 2007-2010. Despite a reputation and character that is less than stellar, Petrino was given a second opportunity to coach at Louisville because his teams win games. As Louisville moves into the Atlantic Coast Conference and strives to move up the rankings of the most valuable college football teams, leadership has deemed it necessary to make sure the on-field product (i.e., content) continues to be of high quality regardless of any negative associations with its new coach.

Your Take
Today, the head coach of a college football team is more than an Xs and Os guy. He is Chief Executive Officer and Chief Marketing Officer of a multi-million dollar business. In your view, what role does a head coach play in shaping the brand of a college football team (or any other sport)? Has the coach taken on too much power or significance, or is he a much needed "face of the brand?"