College Sports Have Revenue Options Amid NCAA Settlements

Today’s guest columnists are Tom McMillen, president and CEO of Lead1, and Rick Allen, CEO of ViewLift.

The $2.8 billion NCAA lawsuit settlement over athlete pay is shaking up college sports programs nationwide as schools face looming pro-rata settlement payouts of millions of dollars each for former athletes, then up to $22 million more in annual forward obligations.

Cutting programs to cover that gigantic liability is one approach. But it’s complicated by Title IX equity requirements, and more importantly, it’s a terrible solution. Most universities simply can’t cut enough to break even while maintaining any semblance of a comprehensive sports program. Worse, this huge pending settlement is only one of several potentially transformative lawsuits looming over college sports.

Ultimately, athletics and university leadership must find new ways to operate amid dramatic change. We’ve been on the inside of these conversations for some time, but only now is the need for new answers so painfully obvious across college sports. So what’s the way forward?  One key element lies in creating new revenue streams, especially around video rights.

Professional sports teams offer a blueprint. Franchises have been navigating changing viewing habits, cable and satellite cord-cutting, and utter chaos among many regional sports networks  which are a crucial part of teams’ revenue structures. To adapt, pro teams are creating integrated video approaches. These often feature local broadcasters, which offer broad reach and new digital capabilities, aligned with direct-to-consumer digital platforms that can super-serve the most ardent followers.

College programs need to take a page from this potentially lucrative playbook, leveraging the power of the oldest video-distribution platform, local broadcast, with the newest technology, streaming.

RedBird Capital founder Gerry Cardinale, a long-time sports and media investor (YES Network, Legends Hospitality, AC Milan, etc), recently launched Collegiate Athletic Solutions with Weatherford Capital, founded by former Florida State quarterback Drew Weatherford, to  invest up to $200 million in as many as 10 schools to build a more sophisticated and integrated approach to media rights, marketing, merchandising, ticketing, and related revenue opportunities.

“This is about partnering with universities and athletic departments and helping them grow their sports business,” Cardinale said. He’s also backing David Ellison’s acquisition of Paramount Global, whose CBS network carries March Madness, college football and the NFL. “There’s a tremendous need for responsible capital partners for athletic department programs and universities” Cardinale said.

But you don’t need a big operator like Cardinale to rethink the way your school manages its opportunities in video in order to serve all fans from casual to hardcore.

Even tiny markets have local broadcast stations hungry for relevant local programming, especially must-have, tune-in content which might also boost their retransmission-fee negotiations. The possibilities are growing as stations convert to NextGen TV, the digital-broadcasting standard that brings two-way connections, datacasting (think statistics, game-day traffic and much else), and targeted, addressable advertising.

And digital? It’s more than just a bottomless repository of extra content for hard-core fans. It’s a data goldmine, allowing universities to understand their audience better and engage with those fans in ways not possible in the past.

And it’s not just sports. Engagement can extend to the university’s broader development and marketing efforts which are crucial in today’s changing educational landscape. Not only can schools regain control over their media – a data-informed approach enables schools to understand their most loyal fans and build even deeper relationships for years to come.

We’re already seeing examples of what’s possible at the pro level. NBC partnered with Hall of Fame announcer Al Michaels for a custom newsletter initiative tied to the network’s exhaustive coverage of this year’s Olympics.

Michaels agreed to allow the broadcaster, through its Peacock streaming service, to create an artificial-intelligence clone of his voice that will narrate custom-generated, highly targeted daily newsletters for Olympics sports fans. During every Olympics, NBC tapes thousands of hours of competitions and other footage that doesn’t make the primetime sportscast. The new approach allows more of that footage to be seen by the people who most care about it, backed with highly targeted advertising. 

The resulting rich data trove is a resource Peacock can use for years to come when fine-tuning marketing and commissioning programming. That fan of equestrian sports, for example, is likely to want more about the Breeder’s Cup, riding tack and watching National Velvet.  Bicycling fans likely also want to hear about European biking vacations, Breaking Away and electronic bikes.

Those are obvious connections, but plenty of other unexpected, powerful affinities exist that NBC Universal almost certainly will explore once the Games are done.

Applying a similar data-informed approach to a university’s sports media could unlock ticket, live-event, and merchandise sales while deepening institutional connections and long-term fundraising across a school. 

The opportunity seems particularly ripe in less prominent sports and especially for female athletes, whose sports are getting more audience attention than ever. And the opportunity goes well beyond the athletes to the programs they represent and the sports in which they compete. For a university, this can be a win for everyone.

In a recent report, S&P Global Ratings called sports rights “the jump ball in the streaming ecosystem.” The value of such rights (linear and streaming combined) is skyrocketing, as with the NFL’s $110 billion package last year and the NBA’s recent $76 billion deals. But sports rights can be so much more for a university able to build its own integrated broadcast and DTC service, connect more deeply with fans, and generate new revenue opportunities to navigate college sports’ complex new realities.

About the authors