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Chapter 1: Background

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At present, more than 2,000 colleges and universities field intercollegiate athletic teams. There are a few small collections of institutions, such as the National Small College Athletic Association and the United College Athletic Association, but the three primary organizations are the National Association of Intercollegiate Athletics (287 members), the National Junior College Athletic Association (roughly 527 members), and the NCAA, which has 1,075 active and provisional member institutions. The NCAA is divided into three divisions—I (336 active and provisional members), II (294), and III (445). Each division has its own rules for institutional eligibility and requirements for teams and programs.

Division I itself has three subdivisions. The top level, the Football Bowl Subdivision, consists of 120 institutions competing in big-time football, where colleges award up to 85 full grants-in-aid to football players, must have minimum attendance standards, and must field teams in football and at least 15 other sports. This report is primarily concerned with this group. The next level, the Football Championship Subdivision, has 118 members, and is distinguished from the Bowl Subdivision primarily because its members compete in a 16-team football championship playoff, while the Bowl Subdivision members compete for slots in more than 30 bowl games.2 The third group, known simply as Division I, consists of 98 active and provisional members that do not field football teams.

In addition to sponsoring championships and maintaining rulebooks for its sports, the NCAA mandates an extensive system of rules and regulations governing ethics and conduct for athletes, coaches, athletics administrators, and institutions. Enforcement of these rules happens through self-reporting and, in significant situations, an NCAA investigative group. Additions and changes to the rules must undergo a complex legislative process that differs from division to division.

As will become evident later in this report, even the top level, the Bowl Subdivision, has its own pecking order, and this has significant implications for its members.

This complex hierarchy got its start in 1852 in a race between crews from Harvard and Yale on Lake Winnepesaukee in New Hampshire, and business considerations were present from the start. The event was designed to promote the Boston, Concord, and Montreal railroad and a new resort built on the lake, and it attracted a crowd of spectators from Boston and New York. (Harvard won.) (For more information, please consult Mendhall's The Harvard-Yale Boat Race, 1852-1924, and the Coming of Sport to the American College [1993]). Baseball, track and field, and, somewhat later, basketball and football got their start as student clubs that were eventually taken over by university administrations desirous of regulating sometimes-dangerous events, promote events that would interest alumni, and, of course, win. The National Collegiate Athletic Association was formed in 1906 and began sponsoring national championships in 1925.

College athletic events became massively popular in the last two decades of the 19th century and only continued to grow, particularly in the Northeast, but also in the Midwest and the South. Despite the enthusiasm of crowds that often equaled the largest of those today, criticisms of the enterprise also came early. What we now know as the Ivy League was the biggest of the big time in those days, and, for example, the University of Pennsylvania’s student-run Athletic Association was $6,600 in debt by 1894, turning to the university’s alumni to bail it out. By 1906, the Athletic Association had an administrative staff that reported to no one and a budget of $141,000. In 1922, in debt from a trip to the Rose Bowl, the university tore down Franklin Field and built a new, 54,000-seat stadium in its place. Four years later, the university added an upper deck. Penn financed the expansion and a new basketball arena with a bond issue that raised $4 million.

To the reality of burgeoning budgets and growing deficits, of heightened commercialism and aggressive marketing, add the layer of the global recession of 2008-09 . . . This has put big-time college sports in the eye of a perfect storm of economic challenges.

The salaries of football coaches were seen as a particularly egregious expense; a survey of 96 coaches in 1929 found that the highest paid salary was $14,000 per year while the median salary was $6,000 (taking inflation into account, that $14,000 would be worth about $175,000 in 2009 dollars). Both salary figures then were higher than comparable figures for full professors, and roughly equivalent to those of deans. Additionally, alumni often schemed to pay players under the table for their services, according to a report published by the Carnegie Foundation for the Advancement of Teaching (Savage, 1929).

The commercial enterprise of intercollegiate athletics continued to expand over the course of the 20th century. The NCAA began sponsoring championship events in 1925, with the men’s basketball tournament commencing in 1939. By the 1960s, the NCAA controlled regular-season football television broadcasts, doling out proceeds on a broad basis to universities from “Game of the Week” contracts. In the 1980s, however, the football powerhouses challenged the association’s monopoly on televised regular-season football. The Board of Regents of the Universities of Georgia and Oklahoma sued the NCAA and in 1984 won a landmark case that gave colleges control over regular-season television contracts, and by extension other revenue not tied to NCAA-sponsored events.

Live, televised college football, the court ruled, was a unique product that consumers desired, just like professional football on television. The NCAA could pass and enforce some rules that were non-commercial in nature, such as scholarship limits and requirements that athletes were amateurs, but it had no right to restrict its members’ opportunities to make money from televising football games.

Since this decision, the financial stakes have grown enormously, both for regular-season contests and for championship events, driven in part by the growth of the television market for college athletics, both on cable and the major networks. The Southeastern Conference divided $16 million in revenue among its members in 1990; in 2008-09, the league distributed more than $130 million (Southeastern Conference, 2009). In pursuit of similar opportunities, nearly all of the athletics programs and conferences in the top tier have been rearranged over the past two decades as colleges have tried to make the best television deals: The SEC grew from 10 to 12 teams; the Big Eight acquired four members of the Southwest Conference to form the Big 12; the ACC reached far beyond its Tobacco Road roots to create a league stretching from Boston to Miami; and most recently the Big East reached out to acquire the University of Cincinnati, DePaul University, University of Louisville, Marquette University, and the University of South Florida in 2005-6.

The NCAA has maintained control over the logistics and revenue for its championship events, and specifically uses money from the Division I men’s basketball tournament to fund the majority of its operations, other championships in all three divisions, and a large payout to its membership based on various formulas. The NCAA has signed contracts that exceeded $16 million a year in 1981 for rights to the tournament, $140 million per year in 1989, $216 million per year in 1994, and $545 million per year on average under the current contract with CBS.

In the 2000s, two groups have emerged among Bowl Subdivision institutions. The top group is the true “big time,” and consists of universities belonging to the conferences whose football teams are granted automatic access to the Bowl Championship Series, which consists of the BCS championship game as well as the Fiesta, Orange, Rose, and Sugar Bowls. These conferences are the Atlantic Coast, Big East, Big Ten, Big 12, Southeastern, and Pacific-10 Conferences. The champions of these six leagues are granted automatic and lucrative slots in this top tier of bowl games, and four at-large teams are selected from these conferences as well as the others, Conference USA and the Mid-American, Mountain West, Sun Belt, and Western Athletic Conferences. The conferences with automatic BCS access have guaranteed annual revenue from these games, while the other leagues receive revenue contingent on their teams qualifying according to a complex formula.

The differences between the universities in the conferences with automatic BCS bids and other leagues go far beyond this formulaic distinction. Most of the institutions in the “have” conferences have historically been the most prominent in their states or regions, enjoy deep and wide fan bases, and can command television contracts, bowl-game agreements, and ticket prices to support vast enterprises. Particularly in the Northeast, Midwest, and West, they have maintained large athletics departments with gymnastics, lacrosse, rowing, and soccer teams in addition to more-traditional sports like baseball, basketball, swimming, tennis, track and field, and wrestling. The "have-not" conferences tend to consist of newer, smaller, and more regional institutions that lack these resources and opportunities. Nonetheless, their leaders and constituents desire the visibility and the prestige associated with big-time college sports, and must supplement the revenue they can generate from athletics with substantial internal funds to “keep up with the Joneses” in the elite leagues.

To the reality of burgeoning budgets and growing deficits, of heightened commercialism and aggressive marketing, add the layer of the global recession of 2008-09, which has affected state appropriations, private giving, and enrollment at most colleges and universities. This has put big-time college sports in the eye of a perfect storm of economic challenges.