College football at the FBS level has become increasingly expensive over the past decade. Or rather, television contracts between conferences and networks -- plus the typical rising costs of inflation -- have generated revenues that universities can pump back into their football programs.
How much are Universities spending and how effectively are they spending it?
Ross Benes of SB Nation used composite ranking and spending ranking to establish a trendline that cleverly shows who is under- and over-performing their spending. While that is interesting way to look at things, it made me more curious about the actual dollar amounts associated with wins over that time frame, not just a relative ranking.
Fair warning: Universities fudge these reported numbers. As Mr. Benes points out, TCU claimed $0 in profit (perfectly equal revenue and expenses) from 2005 to 2011 ... all righty.
Universities in the so called Power Five conferences increased annual spending on football by roughly $15 million since 2003, from around $10 million per year to a cluster near $23 million with the SEC near $29 million in 2014. Data generated using the Department of Energy, Equity in Athletics Data Cutting Tool:
The spike in SEC contract money from ESPN plays a large role in the conference's ability to outspend competing Power Five programs. Interestingly, you only see a small lag here between 2008 to 2009, where the housing bubble popped and highly impacted all other sectors of the American economy. You can see it in a few of the other graphs, particularly in expenses per win.
On the whole, average university spending per conference has risen over $100 million since 2003, and the disparity between Group of Five and Power Five spending continues to become more and more pronounced.
Everyone is spending more money, but not everyone gets what they pay for. You spend money to make money -- ideally -- and optimal money-making in college football involves winning games. You are essentially trying to buy wins at the lowest possible cost. Wins in football lead to university exposure: An increase in sales/marketing, fundraising, and (in a lot of cases) enrollment, once you pass a certain threshold that varies among programs.
So how much do wins cost? Depends on who's paying. By and large, a win next season will cost roughly $115,000 more than it did last season and the average going rate is around $2.5 MM per win.
This is what that looks like.
(Note: The University of Washington did not have a calculable per win average in 2008 because the Huskies had zero wins; listed is their football expenses as if they had one victory. Which, of course, the University of Washington did not. The Huskies had no wins in 2008.)
All but a small handful of programs usually fit within the 75th quartile of spending, and the average has "only" increased from about $1.5 million to $2.5 million per win since 2005. The top 40 teams with the highest expenses per wins won less than four games that season.
You typically have to be good to win games, mostly. When we check football expenses back to 2005 against (our favorite measure of "goodness") S&P+ ranking in the same season, it's not surprising to see a weak trend where teams that spend more rank more highly in S&P+. This could mean one of two things; either you have to be good in order to spend that much money or you have a greater chance of being good if you do spend that much.
Correlation doesn't equal causation for my math geek friends out there.
It's kind of insane to think you could essentially double the average spending that year and still only have a 50 percent chance of being a Top 10 team. Now, some of this spending will be a delayed effect that we just can't easily account for -- investments in new facilities being the major one, but also coaching hires that would inflate spending aren't generally expected to be immediate impact at all but a very few high profile Football Factories.
The University of Texas spent a larger dollar amount on football than the GDP of Tuvalu ($38 million) in 2013 and won eight games. Auburn upped the ante in 2014 and spent $40 million for nine wins and an overtime loss in the Outback Bowl. Unsurprisingly -- aside from the fact Alabama ranks 26th in GSP among American states -- Bama and Auburn are the only Universities that have spent more than $40 MM on a football season. Bama's done it every year since 2011.
College football is expensive ... if you want to win, anyway.
Data for Washington State
|Year||Team||Expenses||Exp per win||Wins||Losses||S&P Rk|