Wider Impacts of Media Coverage of College Sports

We’ve addressed the relationship between the media on college sports, as well as its financial impact on networks and athletic departments of colleges and universities. Media coverage of college sports also has important consequences beyond the ivy-covered buildings of academia, some of which are measurable, others of which are more qualitative, but no less significant.

Every March the NCAA men’s basketball tournament (and to a lesser degree the women’s tournament) turns ordinary folks into college basketball fans and illegal gamblers. Offices across the country become abuzz with talk of tournament brackets and betting pools, #1 seeds and “Cinderellas,” all of it revolving around “March Madness.” Break times and even work times find office workers checking scores online, or catching a glimpse of games on the closest television.

While the tournament is fun and exciting for these fans, it has been criticized because of the adverse effect it has on worker productivity. The outplacement firm Challenger, Gray, and Christmas, Inc. estimated that the 2006 NCAA men’s basketball tournament would cost companies $3.8 billion over the 16 days of the tournament. Their estimates were based on the following assumptions: (1) workers spend 13.5 minutes per day watching games on the internet, based on average viewing during the 2005 tournament, (2) workers earn an average hourly wage of $18, based on Bureau of Labor Statistics figures, (3) of the 142.8 million employees at the time of study, 58.5 million (41 percent) report themselves as college basketball fans to Gallup pollsters.

Given the above assumptions, the 13.5 minutes is worth an average of $4.05 per worker. Taking that number times the over 58 million workers who are fans gives a daily productivity loss of around $237 million. A daily loss of $237 million over 16 days brings the total to nearly $3.8 billion (Challenger, Gray & Christmas, Inc., 2006).

The 2006 estimate was a dramatic increase from the 2005 figure of $889.6 million. Why the increase? In 2005, it cost individuals $19.95 to view games online. In 2006, CBS Sports provided out-of-market games for no charge. As we know from introductory economics, or even just our common sense, when something is made “free” to people they will tend to consume a lot more of it.

How accurate are the Challenger, Gray and Christmas estimates? It is difficult to say, as there are strong reasons to believe they underestimate the productivity loss, and equally compelling arguments for why the estimates exaggerate the loss. Let’s turn to those arguments now, first considering why the estimates may be too low.

2. The 13.5 minutes per day estimate may be low. That figure was based on the average amount of time per session spent on ESPN.com. Users may visit websites far more often, especially when games are provided online at no charge. There may also be considerable time spent consulting newspapers, sports magazines, and co-workers, none of which is factored into the Challenger figures.

3. March Madness brings out people who don’t normally consider themselves to be fans, but who participate in the office pools. That may add to the numbers checking websites or otherwise distracted by the tournament.
While there is cause to suspect that the estimates are too low, there are also good reasons why the Challenger figures may overstate the loss of productivity.
1. As the tournament gets past the opening rounds, fewer games occur during regular 9-5 work hours, and there are fewer games for workers to follow. Also, many brackets have long since gone into the recycle bin, as hopes of winning the office pool have been smashed for millions.

2. The estimates assume that the tournament isn’t merely a substitute for other office distractions, such as playing solitaire on the computer or conversing at the water cooler about other topics. Additionally, these “distractions” may actually enhance productivity over the work day if they provide workers a quick mental break that helps them refocus their attention.

3. Many workers lack regular access to a computer during the workday. Many employees in both the manufacturing and service industries spend their day on their feet, not sitting in front of a computer where they could easily sneak onto a website for score updates.

4. Many employees that have access to a computer are salaried workers, meaning that they are paid more to accomplish tasks than put in a certain number of hours. Many full-time salaried workers work more than 40 hours per week with no additional compensation, so as long as tasks are accomplished in a timely fashion, we would expect no productivity loss for these workers. For the lucky few of us who get to be sports economists or otherwise in the sports industry, checking scores and studying teams is part of the job.

Expansion of media coverage and substantial growth in the dollars involved have caused some to decry the loss of amateurism in college sports. As the financial stakes rise, the opportunities and incentives for cheating (e.g. player payments) increase. Some have called outright for paying players and dispensing with the illusion of football and men’s basketball as amateur sports. Many prefer college sports to their professional counterparts, believing that college players have purer motives, playing unselfishly and for the love of the game.

A greater concern is that the commercialization of college sports, as fueled by the media, further distracts players from being true student-athletes. The Football Bowl Association praises the bowl system for many reasons, including that “Coaches get to work with their players for an extra two to five weeks, which pays dividends for young players” (“FAQ,” n.d.). While the extra time may benefit those with legitimate professional sports aspirations and potential, those whose time would be better spent on academics lose an additional two to five weeks of study time, often around the time of final exams. These effects extend beyond the players, as cheerleaders, band members, and other students involved take time from studies to prepare for the bowl event. How many are affected in a typical bowl season?
This season twenty-seven communities throughout the U.S. and Canada will host thirty-two post-season college football bowl games where some 6,400 student-athletes, 12,900 college band members, 1,200 cheerleaders, up to 100,000 additional performers and about 1.6 million fans will take part in the “college bowl experience” (“Bowl games,” n.d.).
To the extent that the media has influenced proliferation of the bowl system, it bears responsibility for the lost study time and the “beer and circus” path that some colleges and universities have gone down.
7.10.3 Alcohol advertising and campus drinking

The problems of underage drinking, particularly by college students, are well documented. Causes of underage drinking are numerous; one factor alleged to contribute is alcohol advertising on sports programs. According to the Center on Alcohol Marketing and Youth, in 2001, 93% of kids between eight and seventeen followed sports through television, radio, internet, and print media, with television being the most popular. That same year, alcohol companies spent $811.2 million per year on television ads. Of that $811.2 million, almost $53 million was spent on alcohol ads for college sports programs (Center on Alcohol Marketing and Youth, n.d.).

Not surprisingly, the beer industry disputes any connection between its advertising and alcohol abuse amongst college students. According to John Kaestner, a vice president for consumer affairs for Anheuser-Busch, “Preventing underage drinking or reducing excessive drinking has nothing to do with restricting beer ads on televised college sports.” Jeff Becker of the Beer Institute supports this claim, contending that “Young people themselves consistently rank advertising last when asked what influences them to drink” (Fatsis & Lawton, 2003).

Despite the claims of the beer industry, public efforts have been made to curb alcohol advertising. In 2004, Representative and former University of Nebraska football coach Tom Osborne (R–NE) co-sponsored House Resolution 575. The resolution was supported by a number of prominent college coaches, including John Wooden (UCLA Basketball), Dean Smith (UNC Basketball), Joe Paterno (Penn State Football), and Jim Calhoun (Connecticut Basketball). It called on the NCAA and its member colleges and universities to “voluntarily end alcohol advertising on college sports broadcasts” (Center for Science in the Public Interest [CSPI], 2004). In their letter supporting this resolution, these coaching legends write, “We share a common belief that alcohol and college sports do not belong together. Advertising alcoholic beverages during college sports telecasts undermines the best interests of higher education and compromises the efforts of colleges and others to combat epidemic levels of alcohol problems on many campuses today” (CSPI, 2004).

Since the Center for Science in the Public Interest launched its “Campaign for Alcohol-Free Sports TV,” 247 colleges and universities and 2 conferences have signed “The College Commitment.” Schools signing The College Commitment pledge to not accept alcohol advertising for locally produced sports programs, and to support policies against alcohol advertising at the conference, NCAA, and BCS levels (CPSI, n.d.). As mentioned earlier in the chapter, the new Big Ten Channel has already announced that they will not accept alcohol advertising for any program shown on the network.

Few would dispute that society would benefit from less underage and excessive drinking. The important question here is whether reduced alcohol advertising will significantly impact this drinking, or whether schools and media providers are turning their backs on easy money. Hopefully the anti-alcohol advertising efforts will reduce the extent to which the media relationship with college sports promotes underage drinking and the problems it creates, but if the beer industry is correct, the effects will be negligible.

Earlier in this chapter we asked whether the relationship between the NCAA and the media was normal productive economic exchange or an unhealthy co-dependence. The media clearly benefit from the college sports product, as evidenced both by the profits earned and by the creation and expansion of networks specializing in college sports. Whether the media has benefited college sports is less clear. Media coverage has increased the profile of college sports, expanding greatly the revenues for athletic departments and the exposure of top athletes. A number of coaches and athletic directors, and a handful of athletes, have reaped tremendous financial rewards, but it is unclear whether the majority have benefited. Universities earn millions for participating in bowl games, but then turn around and spend it to send the team, their families, and “friends of the program” to these events. The quest for money from bowl games and NCAA tournament appearances, leads universities to engage in an arms race for the best athletes and facilities.

1. How has media coverage changed over the past 30 years?

2. What is horizontal integration and why do firms pursue it?

3. What are some ways that media providers can achieve economies of scale and economies of scope?

4. What is the relationship between ancillary programming and shoulder programming? What are examples of each?

5. What are the main factors determining the maximum contract offer a media provider should be willing to make for broadcast rights?

6. How does the timing of expected revenues and costs affect the maximum contract offer? How does the interest rate affect it?

7. What is the media providers’ dilemma?

8. BCS bowl payments for 2006-2007 were listed as $17 million per team. Explain why none of the participating teams will actually claim that much as revenue for their athletic departments.

9. What are the various ways that colleges benefit from media exposure?

10. What are some ways that the media have influenced college sports?

11. What forces have driven the formation and expansion of the BCS?

12. Why were bowl games created? What economic consequence does that have for schools that play in them?

13. Why is ABC’s claim that it lost money on the BCS in 2003-2004 probably inaccurate in the bigger picture?

14. Why would media providers oppose moving from the bowl system to a playoff in DI-A college football?

15. What are some of the broader social and economic impacts of media coverage of college sports?

1. How will the proliferation of college sports networks affect the contracts that universities and their conferences sign with these networks?

2. How will the movement of college sports programming into the internet and mobile phone technology affect offerings by traditional media (radio, television, and print)?

3. Given what we learned about collusion and game theory in Chapter 2, how might we expect FOX and ABC to behave in bowl scheduling?

4. Do you believe that instant replay has enhanced the fan experience? The quality of contests? Fan demand for contests? Explain.

5. What are some externalities created by media coverage of college sports? Does the presence of these externalities suggest that the market is over- or under-providing coverage relative to what is socially optimal?

6. Suppose that NBC is contemplating a bid for the 2008 Party-Time Punch Bowl. If NBC expects to generate $300 million in advertising revenue, $50 million in ancillary programming revenue, and a $20 million boost to its non-sports programming. NBC also expects production costs of $200 million and it could earn $140 million by broadcasting other programming in that time slot. What is the maximum contract offer NBC should be willing to make?

7. Suppose that the numbers in Question 6 are the annual figures NBC expects over a three-year contract for the Punch Bowl. If the current interest rate is 5 percent and the rights must be paid for up front, what is the maximum contract offer NBC will make? (Assume that the revenues and costs generated over the three years are incurred at the beginning of each year). Now assume that the revenues and costs are incurred at the end of each year; what effect will that have on the maximum contract offer?

8. What controversies in college sports would you expect to stimulate fan demand, and which would you expect to reduce it? Explain.

9. Many NCAA basketball tournament betting pools are illegal, and some are NCAA violations. Why then does the NCAA not do more to discourage gambling on March Madness?

10. March Madness has gradually expanded from 8 teams in 1939 to 65 in 2007. Evaluate the costs and benefits of the NCAA further expanding the tournament.
7.15 Internet Assignment

1. At the time this book was published, Disney was trying to get ESPNU added to standard cable packages, and the Big Ten and FOX were working together to create the Big Ten Network. Search the internet to see how these are progressing, and to see what other network arrangements have emerged.

2. Table 7.2 covers through the 2006-07 bowl season. If you are reading this book after the January 2008 bowl games, visit the FOX Sports BCS Football website (http://bcsfootball.org) and update Table 7.2. Is the new data consistent with the earlier evidence that uncontroversial (in terms of participants) BCS National Championship games earn higher television ratings? If there was controversy over which teams belonged in the title game, did the games involving the excluded teams receive higher ratings than is typical for that bowl game?
7.16 References

All-time results. (n.d.). Retrieved January 31, 2007, from http://bcsfootball.org/