How Does College Sports Make Money?
College sports are very popular and competitive athletic events. While college sports have been around for a century, the popularity and national prominence has grown exponentially over the past twenty years. Today, all of the mens and women’s college sports teams generate nearly $15 billion per year in revenues. The majority of this revenues is derived from Division 1 football and basketball programs. There are several different ways that college sports programs can generate revenues.
One of the most significant ways that college sports programs generate revenue is through ticket sales at their athletic events. In general the most prominent athletic programs generate nearly a third of their total revenue through ticket sales. Overall about 20 programs make more than $20 million per year in ticket sales alone. Well over two thirds of this amount comes from ticket sales at their college basketball and football games. This amount is exclusive of parking, merchandise, and food sales that take place on the day of the event.
Merchandise and Branding
Another way that athletic programs to generate money is due merchandising and branding. When going to a game, it is commonplace to see the seats littered with jerseys, sweatshirts, hats, and jackets that are displaying a team’s colors and logo. These items are for sale at the game, in retail stores, online, and through other intermediaries. Overall, a half billion dollars of merchandise is sold each year. Some of the bigger athletic programs will sell over $20 million in merchandise on their own.
For the past decade the amount of money made through media rights has grown considerably. Media rights revenues is generated when a television or radio station pays money for the rights to cover the game. In recent years, many prominent conferences have created their own television stations that carry conference games. These stations have proven to be very profitable. The top ten athletic programs generate over $5 million per year in media rights revenues.
The fourth way that an athletic program can make money is through donations. Millions of fans located across the world donate money directly to their favorite school’s athletic programs. The size of these donations vary widely from one school to the next. Many of the top grossing donation recipients report that they receive over $25 million per year in donations. These funds are then often used to promote the program, subsidize costs, and even build new training facilities and arenas, which will attract higher rated recruits.
Away Game Fees
The fifth way that a college sports program will make money is through away game fees. As mentioned previously, ticket sales is a primary source of revenue for many programs. To maximize their revenue, schools will pay the most popular teams to play a game at their home stadium. These away game fees can often generate more than a million dollars per game for some of the top college football programs. While this may be a big expense to pay, it will lead to more ticket sales and more valuable media rights. Many of the top ten football programs report earning over $5 million per year in away game fees alone.