College Sports Go Pro on Player Pay, Arenas, $50 Million Coaches

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2:02Bloomberg News higher education finance reporter Janet Lauren wrote a terrific story about this very topic. In fact, it's one of the most read stories on the Bloomberg Terminal today, and she joins us here in studio. It's a great read. There's also a video that goes along with this. So, folks, be sure to check that out. You highlight the University of Kansas' David Booth Football Stadium undergoing an$800 million renovation. First, let's talk about where's the money coming from? Well, thank you for having me. So good question. The David Booth Memorial Stadium is named in honor of? David Booth.

2:36David Booth. Ding, ding, ding, ding. Very well-known investor. He donated$300 million for the renovation of the stadium, plus money for an adjoining district that will also generate more money with hotels and conference centers and all that stuff that comes along with it. He worked in the stadium as a teenager. He went to the University of Kansas and it's kind of a nice story. And there is a new arms race in college sports. And part of the reason is because they are paying players for the first time. So how are colleges generating revenue to share with players? They're looking for money everywhere.

3:19And part of that involves renovating and building new stadiums and arenas with more club seats, fancy amenities, more expensive food, ticket revenue, and that's all generating more money. You got to tell me about some of those amenities. Okay, so let's dig into them at this stadium. Crab cakes, there's all these different things. Can you like dig into what people will get for a suite? Well, they have 40 suites in Kansas. There's different levels and you have to have a, you know, an upfront donation and the least expensive would be$800 ,000. The least expensive, not all at once. You can pay it, you know, in installments.

3:56And then there's an annual fee, at least this year of$60 ,000 for the suite. How do local communities feel about this? Because as you said, this, this football stadium in Kansas university is going to have this district around it. So your article talked about UNC Chapel Hill. The folks there, there are some people who are pushing back on these kinds of things. Yes. And these are some of the alumni who are very proud of their extremely successful men's basketball team. I think it was three championships over the last 15 years. And they want to keep the old stadium. The old arena called the Dean Dome, which I visited, is 40 years old.

4:38And the chancellor of UNC, Lee Roberts, we had him in the studio not too long ago, and he talked about when it rains, they have to put buckets out. So it's in need of a renovation. And UNC is building a new campus. They're adding 5 ,000 new students to keep up with growth in North Carolina, adding new research facilities, new dorms, new housing, lots of change on the campus. And they wanted to move the basketball stadium. And they have run into a lot of resistance. They want to build a beautiful new stadium, club seats, fancy amenities. And there's a group of alumni, former players, and the former coach, Roy Williams, are all opposed to it.

5:23Well, you have to talk more about this going beyond football. I mean, I'm sure this goes to basketball. You know, I'm sure it goes to they wanting to make money to maybe have concerts there and make revenue that way. I mean, there's hotels, there's restaurants that probably pay money to the college to leave space there, too. Talk about some of these revenue-generating areas. That's exactly what's happening. And they're taking a page from professional sports because the University of Tennessee has a$300 million new district. Part of it is being developed with a private equity firm. and they're looking for apartments, restaurants, you name it, hotels, trying to extend that fan game day experience that people seem to want and will pay money for.

6:07There's something called the Protect College Sports Act. Tell us what it is and where do things stand with that right now? So that is happening in the Senate earlier today. It passed a legislative hurdle. We'll go next to the House. And that is federal legislation sponsored by Ted Cruz, Republican of Texas, as well as Maria Cantwell, Democrat of Washington. And there's real bipartisan effort to try to fix what's going on in college sports. Students, now that they're being paid, they are transferring, in some cases, every year. Teams are luring them with more money. If you look at the national championship football team this year, Indiana, their coach built a team with all transfers.

6:54The same thing happened with basketball at the University of Michigan, all transfers. And it's changing so much. And even the University of Michigan lost its coach to the pros. And people are very upset for a lot of reasons. Where's the education? If they're literally transferring every year for a better school, better team, more money. If you're a donor, you're trying to support the team, but the team is turning over every year. And a few weeks ago, LSU's coach, their football coach, tried to bring NFL players on the roster. I saw that. That's kind of insane. And the SEC almost, you know, they went to court and they were threatening to kick out LSU from the SEC.

7:40Right. So Congress is trying to find some guardrails. You know, the players are against this idea. It's very controversial. But everything that's going on in college sports right now is just the Wild West. It is the Wild West. And chaos. How likely is it that this passes in Congress? Is there a feel for it? For a bipartisan bill, again, just for clearing a hurdle to go to a vote, they had 75 votes. I mean, where else in Congress are you seeing this? So we'll see. We'll see what happens with the House. Can you dig more into just exactly what you're talking about? Like this push for these universities to stay competitive and the pressure they have behind them on this.

8:23Well, let's say you're UNC or Duke and you have been the premier destination for many, many years. And all of a sudden another school is going to pay you a lot more money like Michigan. And they're bringing in all these other top players. You're not going to necessarily want to stay at even a place like UNC. And this is why UNC says we need new facilities or training facilities. We need to be competitive. What about the money that you need to do these upgrades and have these fancy facilities? Is it being taken away from other areas of universities where they may need the money? Is it coming out of a general budget?

9:05Or I guess in the case of University of Kansas, it's not. But is that also a part of the situation here? Well, they're all financed a little bit differently. The University of Oklahoma, they're building a new arena for women's and men's basketball and gymnastics, and they're using something called tax increment financing. The Kansas Stadium also has some tax increment financing, some bonds, so they're getting some public assistance from it. But remember, unlike professional football teams, these are in some ways really built-in fan bases that have been fans for a generation. They've gone to the schools, so it's not like an NFL team where you could say, oh, I'm going to pick up and leave if the next town, you know, two states away is going to give me more money.

9:53Well, we talked about some of the challenges, right? You spoke about how surrounding communities, how they have, you know, some might be not as happy about this. But what about the challenge of how long like a project like this takes? I'm sure it takes a lot of time to put all these things and all these high end, you know, things together. Well, the University of Oklahoma began this project about a decade ago, and there was some resistance in the community, and then, you know, trying to figure out all the financing, and they finally broke ground in May, but they don't expect the arena to be built for a couple of years.

10:29Right now, they're doing, I think, parking and sewers and all that infrastructure that comes first. What kind of changes might we see to name image likeness in the near term? Well, right now, players are getting real money, in some cases, millions of dollars. And the first year was the last school year, and the revenue share was roughly$20.5 million, and it goes up about 4 % a year. Now, if this College Sports Act passes, the revenue share could almost double because colleges have been doing other deals directly, advertisers or sponsors directly with students. So their budgets are actually much bigger.

11:18And the legislators are hoping by having up to potentially$50 million, that would be for retention bonuses. Oh, boy. Because transfers would be limited in this bill. They would give them some, I know, it's crazy, right? They were giving them an incentive to stay put. Incentive to stay put. So thinking about all that, putting that in perspective, I mean, even before they started paying these players, weren't these athletic departments spending more than they generated in revenue already to begin with? Weren't they already in the hole? I don't know. Yes. It's just a crazy world, and there's so much money.

11:57Yeah. Well, listen, keep us posted on what happens with name image likeness and with this act now making its way through Congress. It's fascinating stuff. But in the meantime, schools are throwing a lot of money at players, at coaches, and at their own facilities to make everything just a little more attractive. And find, I guess, new revenue streams as well. So, Janet Lauren. No, but I'm saying it's this whole, like, new world that we have, that we're living in, where we have stadiums like this. There was just a story out the other day where college players are now buying millionaire homes instead of living in dorm rooms.

12:28Like, it's a different world. Yeah, it's a different world. And then it also begs the question, what happens to the ticket prices? So many ticket prices are above, you know, beyond reach for so many folks. And then what's it going to mean now to go see a college game? Janet Lauren, Bloomberg News, higher education finance reporter. Thanks so much for bringing this story to us.

12:46If you listen to financial news, you know, a lot of time is spent thinking about what's next. The next opportunity, the next investment, the next move. But sometimes what matters most is being ready for what you never saw coming. For more than 75 years, Cincinnati Insurance has worked with independent agents to help protect businesses, homes, valuables, and more. Because planning for the future isn't only about knowing what's next. It's about making sure you're ready for what you can't predict. Let Cincinnati Insurance make your bad day better. Find an independent agent at CINFIN.com. You already know how AI is changing how everyday work gets done.

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