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Counter-Trend Spending & College Sport

I have to begin by letting everyone know that this topic (and a lot of the content of this post) is the result of an e-mail conversation I had with Nick Infante, the illustrious editor of College Athletics Clips. If you are not familiar with College Athletics Clips, it is a fantastic service that keeps professionals in college athletics up-to-date on news and events through providing summaries of articles as well as commentary pieces. Best of all, OHIO has paid for access for students through the library website (using your Oak ID).

Anyway, back to the topic. We all know that the country, and most of the world is in the midst of a recession. So, what is the best strategy for college athletic programs to survive and even thrive in this economic climate?  I’m not sure this post will answer the question, but I want to propose one idea that Nick and I think has some merit.

Can a case be made for going against the grain and increasing instead of decreasing spending in tough economic times? The term counter-trend spending (or as Nick puts it “ignore-the-recession spending”)  encompasses this idea.

Nick argues that, “Whether you’re a big-time athletic program, a beer brand or an appliance store, strategic spending during a recession could be an effective way to gain on competitors. Increased spending – on personnel, advertising, price promotions, etc. — could attract recruits, fans, coaches & staff (for big-time athletic departments); new customers, distributors and bars/restaurants (for a beer brand) and new shoppers (for an appliance store).”

If other institutions are not doing these things, will the programs that are reap a big payback later? This is not a new concept in business, but it is in education. It’s all about market share. For athletics, gaining market share is usually associated with the “arms race” of facility construction, spending on football, basketball, and coaches. I think it can have multiple meanings such as signing better recruits than the competition, raising more private dollars, securing more sponsorship deals, or having more fans. As athletic programs compete for the consumer entertainment dollar, fan affinity over other entertainment options might also be considered market share.

I also believe that there is internal competition within an institution for market share. For many institutions, there is a finite amount of alumni donors. If athletics is spending more on development while academic units are cutting back, will athletics see a bigger return and could they move donors from academic donations to those for athletics?

A core challenge in moving forward with this idea is having the financial means to leverage this strategy and the guts to try it. As part of institutions of higher education, is there any athletic department willing to take the risk?

Plus, how can ROI be measured in these scenarios? Few athletic programs are flush with cash right now, so where is the money to activate these ideas going to come from? Is it worth borrowing to make this happen? Plus, this recession is pretty darn big. So, even the business concept of counter-trend spending during a normal downturn may not hold true given the scope of this recession. It would take a gutsy A.D. and president to give this a shot.

Sponsorship Insight Group has a great write-up on attracting sponsors during a recession and the opening quote is in-line with this post, “Economies are like gardens, the seeds you plan today will reap rewards in the future. With the right seeds, the right amount of light (your positive attitude) and some TLC (creativity) your garden can do more than survive, it can thrive.”

**Nick Infante was an economics major at a prestigious eastern university (UConn), a marketing MBA from the same, and a dozen years as a hot-shot beer exec for Labatt, Rolling Rock, Guinness and St. Pauli Girl beers.

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February 1, 2009 - Posted by | College Sports Business, Finance, Marketing, Sponsorships and Sales, Uncategorized | ,

3 Comments »

  1. For those of you who might be interested, this post was re-blogged (is that a word?) on the NCAA Double-A Zone blog at
    http://www.doubleazone.com/2009/02/heather_lawrence_ohio_university_college_sports_recession_economy.php

    Enjoy.

    Comment by Heather Lawrence | February 4, 2009 | Reply

  2. There was an article about JMU pressing on with stadium renovations despite the bad economy. In fact, they stated in the article that because of the economy, their construction costs were down 10%-20%. Another benefit for those that do have cash to spend in these difficult economic times. The full article is located at
    http://www.dnronline.com/news_details.php?AID=35362&CHID=3

    Another one today about LA sports venues.
    http://www.latimes.com/sports/la-sp-stadiums10-2009feb10,0,4679403.story

    Comment by Heather Lawrence | February 10, 2009 | Reply

  3. Another article indicating that Alabama is also going again the grain and continuing investing in athletics during the recession.

    http://www.al.com/sports/birminghamnews/rmelick.ssf?/base/sports/1234602926138020.xml&coll=2

    Comment by Heather Lawrence | February 15, 2009 | Reply


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