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Authors: Murray Sperber

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Not only do the administrators of Big-time U's like Northwestern fail to understand the campus gambling subculture that spawns fixes, but they totally miscalculate the long odds of winning their institutional wagers on intercollegiate athletics. Undoubtedly, one of the events that blinds them is the massive media attention to, and popularity of, March Madness, the NCAA Division I basketball tournaments. Success in the men's tournament can trigger the Flutie Factor; however, of all intercollegiate athletic events, none is more dependent on the public's and the media's infatuation with college sports betting.
 
 
One disturbing factor is the media hype surrounding the [office and campus gambling] pools … . The media seems to cater to pool-hungry fans. Newspapers conveniently create NCAA tournament brackets at the standard paper size of 8.5 by 11 inches [that] … handily photocopy onto a regular sheet of paper. The tournament brackets can even be downloaded off ESPN's web site and printed without adjusting a thing. The Nike ad campaign's logo is not a swoosh, but the brackets.
—A 1999 editorial in the Rutgers University
Daily Targum
Many events reveal the NCAA's hypocrisy on gambling, none more than March Madness. Most of the association's revenue comes from the sale of television rights fees to its Division I men's and women's tournaments, but these TV payouts—now in the multibillion-dollar range—depend on millions of people watching the games. Why do a large percentage of viewers tune into this NCAA event? Because they have bet money on the outcome of the games, anywhere from ten dollars to tens of thousands of dollars. A similar viewers-watching-their-bets principle effects the TV ratings of bowl games and regular season contests, but to a much lesser extent than March Madness.
A bookie in a Big Ten college town explains:
If everyone who bet money on college games, especially the NCAA b-ball tourney, stopped watching the games on TV and only followed their bets by looking at scores on the web … then the TV ratings would go into the toilet and out into the sewer system and never be seen again … . The same thing would happen to all the money the NCAA receives from CBS.
When NCAA officials campaign against betting on college sports, and lobby in Congress for bills to strengthen anti-betting laws, one wonders if they have a suicidal impulse. More likely, they know that such legislation probably will not pass, and, even if it did, the new laws will have minimal impact because the illegal bookmaking industry is so well entrenched and web gambling is growing so quickly. As with so many NCAA initiatives, public relations—in this case, wanting to appear high-minded and reformist—dictates policy.
However, the NCAA should care deeply about betting on college sports, for pragmatic as well as ethical reasons. The horrendous point-shaving scandal in college basketball during the late 1940s–early 1950s illustrated a simple fact: When the media and the public believe that games are fixed, the popularity of the sport declines. Ironically, professional bookmakers, because they depend on a level playing field, have always shown much greater concern about fixing than has the NCAA. In the late 1940s–early 1950s scandal, the bookies were the whistle-blowers; and, in the 1990s, Las Vegas bookies spotted the Arizona State basketball fix.
Opposing the NCAA's legislative proposals is the powerful gaming industry; its head lobbyist argues that if the NCAA were serious about its anti-betting campaign, its members “should do more to crack down on illegal gambling on their campuses, including using proceeds from lucrative television network contracts to fund gambling-prevention programs.”
The NCAA and some schools do produce videotapes on the dangers of gambling, but most students pay as much attention to these official pronouncements as they do to the brewers' “drink responsibly” ads. A much more persuasive source of information for college students is ESPN in all of its forms. Not only does its website provide March Madness “pool” forms and other betting paraphernalia, but it celebrates gambling in many other ways. For example, in a Special Summer Double Issue of
ESPN The Magazine,
titled “99 WAYS TO LIVE THE LIFE OF THE ULTIMATE FAN,” the fifth best was, “Watch the Big Dance [March Madness] at Caesar's Sports Book” in Las Vegas.
ESPN recommended that the “ultimate fan” obtain a “seat at Caesar's
Race and Sports Book on the two greatest days in spectator sports—the opening round of the NCAA tournament.” For ESPN, these days are “great” because all sixty-four teams in the men's field play, and the games produce some upsets as well as frequent failures to cover the spread. In terms of traditional basketball viewing, these contests—most are predictable and lopsided—cannot compare with the games in the final rounds when the best teams emerge and often play excellent basketball. But for gamblers seeking “action,” the first two days are heaven—and hell.
The ESPN reporter described the emotional atmosphere at Caesar's as bettors “fall to the carpet in anguish as a meaningless buzzer-beater by some third-string chucker from We-Don't-Have-a-Chance U closes his team to 98–69,” beating the thirty-point spread, and “killing” the fallen bettors. In the world of college sports gambling, so celebrated by ESPN and other media outlets, no athletic contest transcends the money bet on it; and gamblers much prefer winning their bets to viewing outstanding play, particularly if the latter costs them money.
 
 
This is the world of college sports over which the NCAA and member athletic departments preside. For all of their rhetoric on “ending the curse of college sports betting,” they must know that as gaming grows in popularity, more college students, more college athletes, and many more fans will bet increasing amounts of money on college sports events. The $75 billion annual “handle” will soon surpass $100 billion, and soar from there. And the media will provide more gambling information and glorify college sports betting more than ever before.
CBS-TV did not sign a multibillion-dollar contract with the NCAA for television rights to March Madness through 2013 because the network believed that the association will succeed in its campaign to end betting on college sports. Television executives probably hope that the gaming industry will triumph and legalize sports bookmaking nationally, and that legal Sports Books, as well as illegal bookies and office pools, will continue to thrive. For the networks, the equation is simple: More bettors equals more eyeballs watching college sports, especially more eighteen-to-thirty-four-year-old viewers, the beloved demographic. Only one element can imbalance the equation—if the Internet overtakes television, and sports viewers switch to it.
But this possibility has pushed TV networks to begin merger talks with Internet companies. At the beginning of the twenty-first century, as the TV ratings for March Madness rest on a slippery slope, the new NCAA/CBS-TV
contract indicates that the network will actively seek Internet tie-ins for the tournaments. One expert explains that CBS regards the NCAA events as “software” in case of “a transition of television to the Internet.”
 
This is the contemporary college sports industry as presided over by the NCAA. A detailed examination of its financial condition—beyond the megabucks from the March Madness deal—as well as its impact upon its member universities, is the subject of the next chapter of this book.
COLLEGE SPORTS MEGAINC.
T
en years ago, the big-time college sports entertainment industry could be termed College Sports Inc. Since that time, its revenue has exploded, and it has become College Sports MegaInc.
 
 
Six Billion?
Where's Mine?
Six billion dollars over 11 years [that's the new NCAA deal with CBS-TV]. It comes out to about $545 million per year … .
College basketball players watch the coach roaming the sidelines in his $1,500 custom-made suit. They read about his $500,000 salary and $250,000 per [year] from some sneaker deal. They watch the schools sell jerseys with the players' [names and] numbers on them … . They see the athletic director getting rich and the college president getting rich and NCAA officials getting rich and the coach's dog getting rich. And you wonder why they might ask, “Hey, where's my share? What am I, a pack mule?”
There is no other show business in which the actual entertainers don't get any money … . Even our Olympic teams pay the athletes above the table now. Believe me, the NCAA is not getting six billion dollars so we can watch [Duke University's] Mike Kryzewski coach a bunch of chem majors.
—Tony Kornheiser, sportswriter and broadcaster
Beyond the sarcasm and outrage, this writer makes a crucial point: How can the NCAA and member schools continue the pretense of student-athlete
amateurism when the people running big-time college sports amass fortunes from this huge entertainment business, whereas the actual performers—the young men and women who put fans in the seats and viewers in front of their TVs—receive only athletic scholarships, the most generous of which top out at $30,000, with the majority below $20,000 per year?
USA Today
led its front-page story on the new NCAA/CBS-TV March Madness deal with, “Amateurism has never been more lucrative” for the NCAA. As Tony Kornheiser indicated, Division I basketball players are rarely “chem majors,” but, most often, minor leaguers in training for the next pro level. And CBS-TV is not paying the NCAA for TV rights to games where the players take difficult majors, such as an Emory versus Rochester contest, which feature truly amateur athletes in action. Yet, the NCAA works hard to maintain the amateur facade of big-time college sports—without it, the association would lose its tax exemptions, and the IRS would place it in the same category as all other professional sports enterprises.
To maintain its nonprofit status, the NCAA employs full-time lobbyists in Washington, D.C., and it locates their office in a building on Dupont Circle that also houses the most reputable higher education associations in America. The NCAA's head lobbyist explained the decision to rent space at One Dupont Circle as a strategic move: “Because of our office location, we are perceived as and treated as one of the higher education associations.”
But the NCAA emperor has no clothes: When
USA Today
and other media outlets discussed the new March Madness TV contract, they put it within the context of “professional sports TV rights deals,” placing it third on the television contract list, behind the NFL and NBA, but ahead of Nascar, major league baseball, and the NHL. And when the TV deals of NCAA Division I-A football schools are added to the basketball money, the annual television revenue of “amateur” college sports surpasses that of every professional league in the world.
In addition, the athletic directors and coaches who work in big-time college sports tend to forget the NCAA's official line on amateurism, and they usually speak in sports business terms. In a typical comment in January 2000 the AD at North Carolina State justified his slow timetable on hiring a new football coach by arguing, “We are part of a corporate group bigger than N.C. State called the Atlantic Coast Conference,” and we have to consider the collective corporate interests before acting on our own.
Mike Kryzewski, the men's basketball coach at Duke University, another part of the Atlantic Coast Corporation, uses similar language. He has long
complained that “the marketing of our product [college basketball] is at a really low level,” and has urged the NCAA to bring in top corporate marketers to sell the college game better. Kryzewski, with an annual income of over $1 million, has marketed himself into the elite level of college coaches and, ironically, part of his success is the image of his players as authentic students, placing their academic goals ahead of their athletic ambitions. (In recent years, as some of his best players left school early to enter the NBA, this marketing ploy has eroded.)
Many college sports fans, particularly those over thirty-five, enjoy the student-athlete trappings of intercollegiate athletics. However, as Tony Kornheiser and other journalists constantly point out, the “big bucks reality” is omnipresent, and fans increasingly require a willful innocence to ignore the dollar signs.
Compare the BCS' [football Bowl Championship Series] $100 million [a year revenue] to the $545 million a year the NCAA basketball tournaments will get from CBS, and you can see why everyone's spinning in his boots. They [college sports administrators] say, “Wait a minute. I thought football was the king of college sports.”
—Jim Wheeler, vice president of an
international sports marketing firm
One hundred million dollars a year revenue from the BCS bowls—Rose, Orange, Sugar, and Fiesta—is not “chump change”; however, according to Wheeler, if the bowls were reconfigured into a playoff system, culminating in a College Super Bowl, “you'd be looking at $250 million” a year for the final games. To back this argument, his company, Swiss-based International Sports and Leisure (ISL), has offered BCS football schools a multiyear, multibillion-dollar contract for the rights to produce and market the college football playoffs. (The BCS encompasses the top six conferences in Division I-A football and Notre Dame.)
Many of the opponents of the ISL proposal cloak their objections in the rhetoric of amateurism—they claim that a playoff will stretch the football season too far into January, and players will have trouble starting their second semester classes—but the real roadblock is money. BCS officials believe that the current system works fine, and that other formats would render all games but the championship match meaningless, hurting overall bowl attendance, TV ratings, and the money flow.
That's exactly what occurred in late 1999 and early 2000 when the media focused primarily on the Sugar Bowl game between No. 1 Florida
State and No. 2 Virginia Tech. Probably a sixteen-team playoff series would produce more positive results: it could include many bowl games and, like the NCAA basketball Sweet Sixteen and final rounds when every game counts, college football playoff games would fill the stands, earn excellent TV ratings, and generate maximum revenue.
If, in future years, the BCS format continues to hamper the lower-tier bowls, the main participants in those games—the runners-up in the BCS conferences—might support a playoff system. The BCS television contract extends through 2005; however, a TV network insider explained that the executive in charge of the Bowl Championship Series, Roy Kramer, is always receptive to new ideas for postseason college football, particularly when it involves billions of dollars: “Money is what drove Roy to put together the BCS, and money can drive him to a better version.”
When that occurs, you can bet that no BCS or NCAA official will argue that “college football players should not suit up in late January.” Indeed, as an alternative proposal to the sixteen-team playoff, ISL suggests that after the current bowl season ends, a four-team billion-dollar playoff take place, adding more weeks to the winter football season.
[Bowl game] life is good—if you're part of the BCS. On the outside, rumbles of discontent remain … . Schools in the six major [BCS] conferences—the Atlantic Coast, Big East, Big Ten, Big 12, Pacific 10, and Southeastern—figure to pull in just under 94% of the total $144.6 million paid out by 23 bowls this season.
—Steve Weiberg,
USA Today
reporter
More than 110 schools play Division I-A football; however, unless they reside within the BCS fold, they remain at home during the bowl season or collect spare change in such marginal contests as the Motor City Bowl and the Las Vegas Bowl. In addition, although more than 300 schools play Division I basketball, the six BCS conferences hog the largest proportion of payout dollars from March Madness. According to a recent analysis of the finances of big-time college sports, the average annual revenue of the BCS conferences was $63 million, whereas the amount for the other twenty-three leagues in Division I averaged less than $3 million per year.
Those are the revenue totals in big-time intercollegiate athletics. But the expenses numbers are higher, resulting in the amazing fact that
most college sports programs lose money
. Most extraordinary of all, the losers include many schools in the BCS conferences, including those playing in the most
lucrative bowl games and advancing deep into the final rounds of the NCAA basketball tournaments. In late 1999, the athletic director of the University of Michigan—a school with an always full 110,000-seat stadium and 20,000-seat basketball arena—acknowledged that “the Wolverines intercollegiate sports program … last year ran a deficit,” more than $2 million dollars of red ink. If Big Blue loses money in college sports, what hope is there for smaller programs?
 
Historically, and contrary to popular myth, almost all colleges and universities have always lost money on their intercollegiate athletics programs. Moreover, athletic departments ran deficits long before the federal government's Title IX mandated equality for women's intercollegiate athletics, and male athletic directors seized upon their Title IX costs to excuse their overall money losses. Historically, the main causes of athletic department red ink were waste, mismanagement, and fraud, and this situation continues today.
Of course, these annual deficits preclude paying the players: journalists like Tony Kornheiser have logic and ethics on their side when they demand that the athletes receive their fair “share” of the TV payouts—except, after the athletic directors, coaches, and athletic department staff spend the revenue, nothing remains for the players. Before the athletes can obtain their share, the entire athletic department finance system must be overhauled. But the people who run intercollegiate athletics, and benefit so handsomely from the corrupt system in place, will not willingly overturn the red ink trough.
The NCAA, in its regular financial reports, provides an indication of the profit-and-loss situation in big-time college sports. The most recent edition revealed that a majority of Division I athletic departments lost money in the 1990s, running larger deficits at the end of the decade than at the beginning, even though their revenue increased every year. However, because of the accounting tricks used by almost all athletic departments, the NCAA reports are only partially accurate, and the actual annual deficit numbers are much higher than the NCAA and member schools admit publicly.
Some accounting experts multiply the NCAA's deficit numbers by a factor of three. They point out that almost all athletic departments routinely move many legitimate costs from their ledgers and place them on their universities' financial books. These items include the utilities, maintenance, and debt-servicing bills on their intercollegiate athletic facilities—multimillion-dollar annual expenses for most big-time programs. Economist
Andrew Zimbalist, after in-depth research on the finances of intercollegiate athletics, recently concluded that, despite all the accounting maneuvers, “the vast majority of schools” still “run a significant deficit from their athletic programs,” and “only a handful of schools consistently earn surpluses,” often small ones.
Athletic department deficits impact on host universities in many negative ways. Not only are millions of dollars siphoned from schools when athletic departments move expenditures onto university books, but more millions depart when schools cover the annual athletic department deficits. At the end of each fiscal year, universities “zero out” athletic department books; to do so they divert money from their General Operating Funds and other financial resources to cover the college sports losses. Money that could go to academic programs, student scholarships and loans, and many other educational purposes annually disappears down the athletic department financial hole.
The bottom line is clear: Big-time intercollegiate athletics financially hurts NCAA Division I schools more than it helps them. For every dollar that a few of these institutions acquire through college sports phenomena like the Flutie Factor, many more Division I members annually lose millions of dollars as a result of their athletic department deficits and other negative college sports factors. One inescapable conclusion appears:
College Sports MegaInc. is the most dysfunctional business in America.
But neither the media nor the public focuses on this fact. Even Tony Kornheiser, one of the savviest sportswriters in America, says that the schools, as well as the individuals in charge of intercollegiate athletics, amass fortunes from the fun and games. Other media personalities also state this loudly and frequently.
 

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