Can a Billionaire Former NFL Player Fix College Sports?

0:05Congratulations. You made the varsity, the podcast. My name is John Arand and I am Puck's sports correspondent and the host of this pod. And today, Cody Campbell visits a pod. Now, Cody is the billionaire behind all of those save college sports commercials that you've been seeing on college football Saturdays this season. They're inescapable. Cody has a lot of detractors out there, mostly from the people running college sports right now, but he wants to shake things up and people who want to shake things up, they always have a lot of detractors. I find Cody to be a thoughtful guy with a compelling story.

0:40And I think you're going to like this one, but before we get to Cody today is Sunday, October 5th, and we're less than two weeks away from in the arena. That's a sports media conference that puck is hosting in New York with Moffitt Nathanson. The conference is on October 16th in New York, and we have an all-star list of speakers, the people who are running the sports media business. I will be interviewing Adam Silver on stage. The NBA, of course, is about to embark on a$76 billion media rights deal. And I'm also particularly pleased, as a native Washingtonian, to be on stage with Josh Harris. He's, of course, the owner of the Commanders, who in one year changed the entire culture of that franchise.

1:25We're also going to hear from Redbirds' Jerry Cardinal, Fanatics' Michael Rubin, Fox's Eric Shanks, Liberty's Derek Chang. I have to tell you, I'm particularly proud of this lineup. So reach out to me directly or visit our website, puck.news, if you want to buy tickets. Remember, October 16th in New York. Now, as far as the biggest sports media story that I'm watching, well, it's last week's deal between YouTube TV and NBC. I really believe this. It's going to have far-reaching effects on the business and how we all watch games. Now, I'm really not overstating things when I say that the rest of the media business was following these negotiations very, very closely.

2:07And the reason was because of how YouTube wanted to deal with Peacock, NBC's streaming service. YouTube wanted to make it so that its subscribers would be able to watch Peacock within YouTube. Essentially, that means that subscribers would not have to quit the YouTube app and launch the Peacock app to watch sports like the Premier League. NBC and CBS and ESPN, pretty much everyone fought this. They don't want to cede all that control to YouTube. If they cede that much control to YouTube, it's maybe not certain death, but it certainly will be death for those media companies. So what happened? Well, YouTube TV and NBC, they both got a little bit of what they wanted.

2:50In my private email that came out on Thursday night, I described it as sort of a Goldilocks deal. NBC allowed YouTube TV to ingest most of its sports programming by launching a linear channel that will carry almost all of Peacock's exclusive sports. That channel is going to be called NBC Sports Network. Yeah, it's going to be different than the one that NBC shut down a couple of years ago. As far as the entertainment programming, no, YouTube is not going to be able to ingest that. YouTube subscribers will have to head over to Peacock in order to watch entertainment programming. And most importantly for NBC, YouTube has no control over Peacock streaming data.

3:30And that's really the point that media companies have described as the third rail of these negotiations. As for YouTube TV, it ended up with a pretty good deal out of this. It now has access to Peacock sports programming within the YouTube TV environment. That was a pretty big deal for YouTube. And it also was able to make a deal for NBC, Bravo and Peacock, you know, the big three of the NBC package. And that deal is going to end at a different time than all those entertainment channels on Versin, which is also going to end at a different time from all the NBC RSNs. And so that's going to set up an entirely new battle royale when those deals come up again, probably in three years.

4:12And for YouTube, well, it's right back at the negotiating table. It's now negotiating another deal with Disney, and that contract is up in a couple of weeks. So it's really no rest for the weird. OK, now let's get to Cody Campbell. Cody Campbell, thank you for joining the pod. I think I want to open our conversation by just having you, anybody that listens to this pod over the past couple of years has heard about the problems inherent with college sports right now. I'm hoping you can just identify what you feel are sort of the biggest problems that need to be addressed right now in the college sports landscape.

4:54Well, you know, what everyone sees and reads about in the newspaper, as they say, are all related to NIL and related to the transfer portal. That's what people, you know, that's what gets the headlines. But in my view, and I think this is proven out by the data, the problems really are, the NIL and the transfer portal problems really are just symptoms of actual issues related to governance of college sports and related to the economic model of college sports. So when I mean governments, what I mean is that we do not have an effective governing body that can make and enforce rules. So the NCAA, you know, has never, hasn't been good for a really long time.

5:42You know, even before they lost 18 lawsuits in a row or whatever. But now they're really completely a toothless tiger. They have no ability to enforce any rules on anybody. And so now we form this new College Sports Commission. You know, the clearinghouse that comes under that isn't working very well. You know, the big leagues, the Power Four conferences have 65 % control of everything. What has been proven is that the institutions are incapable of governing themselves. Because at every turn, each individual institution, each conference tries to do everything it can to gain some kind of small relative advantage.

6:24and they to some extent tear down the the system of governance that we have in the process of doing that and they've done it now for 30 years or more and so it's resulted in just a completely chaotic mess the second problem the economic problem can i can i interrupt you for a quick second so when you say that uh the the schools and the conferences have problems governing themselves what exactly do you mean by that? Are you talking about sort of under the table payments or? No, what I mean is that the NCAA, the way it's set up is that it's a, it's a voluntary organization and university presidents represent themselves and their institutions in, in how the NCAA is governed.

7:10And so, you know, at different times, different groups of them have sort of gotten together and consolidated power and, you know, made rules that have hurt other schools. And so now what is won out is essentially the revenue sports and the big conferences, which, you know, most people know this, but football and men's basketball, the only two sports that make money, the rest of sports lose money. And so it's become so commercialized and that those two sports in the big conferences have become the only focus. And so this disparity between big and small schools and between revenue and non-revenue sports has gotten so massive that those that are on the losing end of that are at risk of being lost forever.

7:57And in fact, even the big schools are having economic problems, which leads me to the next point, which is that there just isn't enough money in the system to support what's going on in 2024. And this was before the house settlement kicked in, which we can talk about the house settlement. But in 2024, the average budget deficit for an FBS school among those 136 schools is$20 million per year per school. So that's not sustainable, right? And each institution sort of has to look at its budget and say, you know, how do we solve this problem? and for some of them it means putting the school actually putting money in like taking academic funds away from something and putting it in the in the program or charging a student fee and then for many of them it's it's how to which which sports do we cut we're going to cut the sports that lose money so that's women's sports and olympic sports we're going to cut some of those if we don't cut the sport all together we're going to cut scholarships we're going to cut roster spots, whatever, to save money.

9:02And so that's what we see happening right now across the country. And then in July the 1st of this year, the new house VNCAA settlement kicked off. The house settlement came from a class action lawsuit that started in California in 2020 and now allows the schools to pay the student athletes up to$20 million a year. Of course, the lion's share of that money, 95 % of it goes to football and men's basketball players. But now they have this additional expense that they have to come find a source for in order to remain competitive. So that$20 million per school deficit, you know, now becomes a$40 million per school deficit.

9:47And it becomes a situation where there's even more pressure on the schools to cut sports and even more pressure on the schools to maybe even not have athletics anymore because they don't feel like they can be competitive. So that's really my concern is just that the institution of college athletics is overall at risk because of those factors. I think that the lawsuits are disruptive. The state law stuff is disruptive. The players talking about unionizing, okay, that's disruptive. But really, the fundamental threat to the system is the fact that there are no rules. There's no body that can govern what's going on.

10:24Every sport has to have rules. And then there's just not enough money to go around. There's not enough money to support what's going on. And, you know, the people who are in charge, ostensibly, the conference commissioners, don't care. you know they are very concerned about their own position first of all but then they're running like a business you know because they're business people you know no longer have the former coach or former athletic director that's a conference commissioner you have a sports media guy that's there in most of the conferences and so you know they're they're looking at it as a business and they see that football and men's basketball are the places they make money and the big schools are the schools that make the money.

11:10The others don't, not because people aren't interested in them, but because they don't have a platform. They don't get broadcast on national TV and those kinds of things. And so, you know, they don't care about them. And so they're just fine with shrinking the system down to the schools and the sports that actually produce revenue, produce money, because they ultimately are, that's what they're motivated by. And so we're descending toward this place where college sports becomes much smaller, where there's much less opportunity. And my interest in being involved in this effort and trying to get it right and trying to fix college sports is that, you know, for me, the opportunity to play college football changed my life.

12:00You know, I wouldn't be where I am today if not for the educational opportunity that I got, the opportunity to develop my character that I got through college sports, the contacts I made, I wouldn't be here. The same thing goes for my dad who had the same opportunity. The same thing goes for all my teammates. And in my opinion, the opportunity that a kid gets to high jump at Fresno State is just as important as the opportunity that a kid gets to play football at Georgia. It's life-changing for both of them. And so I want to make sure that as many of those kids as possible continue to have that same opportunity to change their lives.

12:43I mean, there's so many out there who end up, you know, who have, this is their only chance in life to get out of a horrible home situation, you know, to get out of their town, to go somewhere and do something and be something better. 60 % of American CEOs have a college sports background. And so for our whole country, it's important. This is an incredible leadership development pipeline that we have that we sort of built accidentally. We came up with this. We're the only country in the world that has sports inside of higher education, right? So it's this incredible tool that we have for leadership development.

13:26But then our entire Olympic development program is housed inside of college sports as well. And so without that college sports system, we have no Olympic development system. And so, you know, we need to make sure that this entity continues to exist as it has and benefit the country as it has for, you know, now 120 years. And the risk in the, you know, it's at risk. I mean, it's going to go away. I mean, there is no question. It's going to go away if nothing is done. It's going to go away if Congress passes bad legislation. But what was made clear by the Supreme Court, 9-0 decision, the decision was authored by Justice Gorsuch.

14:09And then Kavanaugh had a consenting opinion that essentially said either there needs to be collective bargaining and essential unionization of the players or Congress has to act, one of the two, or else we're going to blow the whole thing up. and that was in the Alston v. NCAA case. And so those are the two options that we have. Option one with collective bargaining would have its own problems and I think also be very destructive. Option B is a good option if we can come up with good legislation. But if we have bad legislation that only favors big schools, that only favors the revenue sports, then we're going to end up in the exact same place that we would otherwise.

14:50So our goal is to try to influence what comes out of Congress, what comes out of D.C., in a way where all the sports and all the schools are protected and all the opportunity is protected, the communities are protected, the fans are protected. Because college sports are something that mean a lot to all of us. Aside from what it does for the student-athletes themselves, it's important to communities. It's important to families. And honestly, it's a national treasure that needs to be protected. If I boil down the problems with college sports, in your opinion, to two words, it's governance, like you said, and it's money.

15:34That's right. What's the most likely solution in your mind to fixing this? So I'll tell you what I think the best solution is. Whether or not it's the most likely is yet to be seen. We're working on that. But I'll start with the economic side. So the reason that there isn't enough money in the system, people have this this conception that money is just falling from trees and college sports. And really, I've had the ability to see a lot of the budgets across, you know, from G6 all the way up to the Big Ten and the SEC. And they're not doing well. I mean, they don't have enough money and you just scratch your head.

16:16You're like, how is that possible? You know, we see them on TV all the time. College football is the second most popular sport in America. How could they possibly not have enough money? Well, the reason is that they do an incredibly inefficient job of marketing their media rights. They don't get what they should get for the product that they put out there in the viewership that they attract. This goes to the Sports Broadcasting Act of 1961, which is a law that was passed in 1961. they gave the professional leagues an antitrust exemption and allowed them to act as a single seller of their media rights.

16:53So all the teams in the professional leagues, all 32 NFL teams, can come together and be one negotiating unit when it comes to their media rights. So they do multiple different deals, but they all act together. So this is important because in college, all the conferences sort of compete with each other. and so that means they have a weaker negotiating position so they get less money. Also, they don't optimize their scheduling as well. If you look last week, 7.30 p.m. last week, Penn State and Oregon and then Georgia, Alabama, they both played at 7.30 p.m. on different networks at the same time, one on NBC and one on ABC.

17:37The NFL would never, ever do that. They would never cannibalize their audience like that. But we do that constantly in college sports. And so we end up not optimizing the viewership and not capturing as many eyeballs. And so, you know, the NBA, for example, has about half as much viewership as college football does. But the NBA makes twice as much money as college football does. And it's all because they have more control over what they do with their media rights because of the rights that they have under the Sports Broadcasting Act. And so as we studied this issue, you know, usually you think of like finding more money or making more money as being the most difficult problem in any business issue that you face.

18:21In this case, it's actually pretty easy. You just pull that one lever, give college sports the rights under the Sports Broadcasting Act, and then a whole lot more money comes into the system. Our studies that we've done and the consultants that we've brought in say that it means about an extra$7 billion per year added to the ecosystem, the college sports ecosystem, which solves all the budget problems. It allows the sports, it allows the schools to pay the athletes. And I believe the athletes should be paid. I believe they bring a lot of value. Pay the athletes, but also keep the sports that don't bring in money.

18:59Keep the women's sports. Keep the Olympic sports. sustain this system that does so much for the country. And so that is a way that you can solve the economic problem. Now, will that pass? I don't know. You know, we've gotten an incredible amount of resistance from the big conference commissioners. They all acknowledge that they'd make more money if we were to do this, but they do not want to give up control. You know, they see it as a threat to their position. They see it as a threat to their kind of fiefdom that they have established and their importance. And so they've dragged their feet and they fought it in the halls of Congress, getting that in there.

19:45So we'll see. We'll see if it happens. It makes sense. It makes sense from a business standpoint. It makes sense in every way. and if we're going to kind of semi-professionalize college sports and make the cost side professional, essentially, we're going to pay the players. We also have to professionalize the revenue side as well. And to me, it's just obvious and it makes all the sense in the world, but I don't have any money in the game here. I'm not trying to profit off of this thing. I'm actually spending money to push these efforts and try to do the right thing and save something that I love.

20:21but there are a lot of people out there who are looking to scrape their piece of it and take from the system. And those people are fighting this any kind of change hard. Now, on the governance side, I think the NCAA has seen its day. I think that it's time that we either completely redo the NCAA or start a new governance organization altogether. other. And that governing body needs to be independent. You know, the USOPC is an independent, it's a good example, the Olympic Committee. And I'm not saying that the USOPC is perfect by any means. And this doesn't have to be set up that way, but it's a good model.

21:06It's a model that's independently governed by a group of people who are looking at the long-term benefit of the program and not necessarily just what happens that year. And they're certainly not concerned about advantaging one sport over another or playing these little games that are played in college sports right now. So we need an independent body. That independent body needs to have representation from big schools, from small schools, from women's sports, from Olympic sports, to revenue sports. Everybody needs to have representation and a say in the direction that college sports go. If you do those two things, you will solve the problem.

21:44Now again, a lot of people, you know, on the governance side are very happy with their position, very happy with their power, very happy with, you know, where they are. And so they're going to fight it and they are fighting it. But, you know, common sense has to prevail. The will of the American public has to prevail. Our polling shows that, you know, 85 to 90 percent of people want to make sure that women's sports and Olympic sports are preserved. You know, 85 to 90 percent of Americans don't agree on hardly anything, but this is one of the issues that they do agree on. And so I think that at the end of the day, you know, that is what something like that will happen.

22:25You know, we will come up with a solution that'll work. It's just, will it happen soon enough, you know, to save enough of these sports to stop enough of the damage that, you know, it's not permanently impaired. Since July the 1st, since the House settlement kicked in, we've seen 182 sports cut across the country. The president came out with an executive order about a month after that, and basically forced the universities to stop cutting sports. Said, you know, you can't cut any more sports. You have to stay at 2024 levels. That was a really good move, but it was essentially a tourniquet. You know, there's an unfunded mandate.

23:09The problem still remains that they don't have the money to pay for these sports, so they're having to figure it out, you know, in the near term. In order to figure it out, we have to have congressional help. Ultimately, the president's executive order has to be codified, and we have to fix this media rights problem in order to be able to pay for what he has told them they have to do. but I'm encouraged by the fact that that he has gotten involved that President Trump is interested in college sports he understands the importance of it and you know I was willing to provide leadership on that front you know I had not spent a lot of time in Washington DC prior to this effort as bad as anyone thinks anyone says that it is it's actually quite a bit worse and quite a bit more frustrating, moves more slowly.

23:59You know, many of the elected representatives are even dumber than you might think they are. But there are some very smart ones as well. And so you have to kind of find the right people who are willing to, you know, spend the time and have the capacity to understand the problem and come up with good solutions. And I've been working on trying to do that. Well, Cody, you talk about pushback and there is a ton of pushback to your plans. Let me take a quick break and I want to come up with a couple of them.

24:39Cody, I'm a little bit older than you are. And I was in high school. I'm from D.C. And I was in a Catholic high school. And when I was a junior and everybody was applying to colleges, that happened to be Doug Flutie's senior year at B.C. And that was when he beat Miami, went on this fabulous run. And Boston College was, I think it had more applications than any other college based on sort of the marketing that came from Doug Flutie and the Boston College football team from that year. And you've seen it every year since then. Like, you know, a team wins the national championship in basketball, like admissions go up.

25:28They do well on football. Admissions go up. Some of the pushback on you is saying, yeah, athletic departments are underwater. If universities view this as a marketing expense, like we're spending to be good, to draw in more applicants and more people to go to school. It's not necessarily a strict profit and loss business, the athletic department. Yeah. So what you're talking about is fairly well studied and documented. It's called the Flutie effect. Oh, so it is. literally caught the flu. I didn't even know that. There you go. And so there have been academic papers written on it and it's well studied.

26:04A great example is that from the time that University of Alabama hired Nick Saban until he retired, their enrollment increased by 70%. And so now, you know, University of Alabama is huge and healthy and, you know, doing well. there's been a 15 % decrease in undergraduate enrollment across the country over the last 10 years a lot of that's mostly males men just aren't going are choosing to not go to college anymore that's put a huge strain on the system but during that same period of time every single sec school has increased their enrollment and it literally it's all because of football it's all because of you know they're seen on tv and so it is the best marketing that an institution has is in the best opportunity for exposure to potential students and families and everything is through, you know, being on TV.

26:58And so, yeah, there is a marketing element to it that brings a lot of value to the school itself in terms of enrollment, but also the value of the degree, the brand. There's benefit to alumni engagement. There are a lot of reasons that you want to have successful athletic programs. As people say in higher ed, it's the front porch of the university, which, by the way, I'm chairman of the board at Texas Tech, and so we see this, I've seen this firsthand. And so I agree with you. However, there's no reason for it to be that way. There's no reason for the schools to have to put money into the athletic departments.

27:31Like I said, if we just would modernize the media rights, I mean, this law that's in effect that's causing the problem is 65 years old nearly, and a lot has changed in media in the last 65 years. I mean, we're on a virtual podcast right now. I mean, that kind of thing didn't exist, you know, much less streaming, much less, you know, even cable TV back then. And so we need to modernize this piece of legislation. If you fix that problem, then there's no need for academic funds to be diverted. And I think that there is sort of a, you know, something's just not right about tuition money going to pay for athletics.

28:09You know, there's just something not right at a state school for taxpayer money to be going to fund athletics. And and again, there's just no need for that to to be happening. I mean, there is a way to make enough money to pay for everything if we would just, you know, if we would just do it. Now, again, back to the conference commissioners who have been the real problem in this. They don't care. Right. They get they are at the top of the capital stack when it comes to how things are set up. But they receive, the conferences receive the media rights distributions from NBC, CBS, ESPN, Fox, whatever.