The Two Sides of The Football Guarantee Check

September 14th, 2017 | by Dan Gale
The Two Sides of The Football Guarantee Check

Guarantee Check

September 2, 2017

Death Valley

Reigning National Championship Celebration

A Sold Out 81,500 Person Stadium

Tailgate lots packed for miles

Suites and Clubs Levels overflowing with donors

“The most exciting 25 seconds in college Football”

All this pageantry and spectacle requires an opponent.

Welcome the Kent State Golden Flashes who were being paid $800,000 to play Clemson to open the 2017 season. The game was ultimately a 56-3 tune up for Clemson before their week two home matchup against #13 Auburn.

That $800,000 was a discount compared to other guarantees being shelled out for games.

Guarantee games have become the norm for college football. Regardless of whether two neutral site teams are being paid upwards of $6 million dollars apiece (Florida vs. Michigan), you are Howard University being paid $600,000 to bring your band and pull an epic upset over UNLV or you are Kent State who has signed two upcoming $1.9 million-dollar guarantee games apiece against Auburn and Georgia (only three $1.9 million-dollar games have been announced and Kent State has two of them), this business has grown exponentially over the last fifteen years.

The USA Today reported that $150 million dollars would exchange hands in 2017 for guarantee games.

Ten to fifteen years ago, it would have been unheard of for a University to pay an opposing school a $1 million-dollar guarantee… so much so that in my graduate class I was given a B- since I contracted a $1.45 and a $1.55 million-dollar guarantee in the same year from two different classmates to play my ‘mid-major’ program. That was deemed ‘too unrealistic’ for the famous (well, famous to University of North Carolina Collegiate Sport Administration Master’s Program) Football Scheduling Project!

Now that amount is below the market rate for a FBS matchup and Kent State matched that last year with road games against Alabama and Penn State totaling nearly $3 million dollars.

How has the market increased so drastically in only a short period of time?

First- Supply and Demand

Once the NCAA and Conferences began to deemphasize FCS matchups, the market value and availability of opponents shrunk. Group of 5 schools who are being run more like a business now, saw the opportunity for their increased value to the Power 5.

“The pool of FBS opponents available to help us fill our schedule each year has considerably diminished due too many factors,” stated Graham Neff, Deputy Director of Athletics for Clemson University. “The average Clemson fan may not understand the difference in scheduling Kent State or Georgia Southern compared to a local FCS school such as The Citadel or Furman. The requirement that only one FCS game can count toward bowl eligibility has driven the increase in guarantee amounts to FBS opponents over the past few years.”

With schedules being done five, ten to now twenty years in advance, (Clemson vs. Notre Dame in 2037, get your tickets now) games against FBS opponents became more valuable and fewer have open dates to fit the needs of the Power 5 to count toward bowl eligibility.

Looking at this trend it is very easy to see that the rate will only continue to increase, reaching close to $3 million by 2022.

Second- Revenue Generation from Home Games

The importance of a home game and the amount of revenue generated from all aspects are only going to increase for the top tier schools.

With schedules being locked up longer and longer in advanced and more marquee neutral site games being offered. There is going to be even more of a need for home matchups.

Look at Clemson for example. IPTAY, the fundraising arm of the athletic department, brought in over $60 million dollars in donations with a majority of that coming tied to football parking, tickets and suites. The ability to host games is the lifeline of their organization and the way they execute it is flawless (It has been reported by the New York Times that 65% of donations and total revenue is tied to football with some schools being well above that mark).

Clemson is a machine! Projections from reviewing a per game basis for ticket sales and concessions alone have Clemson raking in over $4 million dollars (not counting the per seat donation or parking donation required).

All things considered, it would not be out of the realm to say Clemson is netting over $7 million dollars after staffing and football related expenses, but prior to paying an opponent. This would come when accounting for a per game percentage of revenue generated through parking, seat donations, and corporate partnerships from their new deal with JMI Sports worth $68 million dollars for seven years.

But the revenue generation for the athletic department alone is not the only factor driving the need for home games.

“Our scheduling philosophy at Clemson University is to host seven home games per year,” Neff added. “It is paramount for us to find these home games each year, not only for our fans and IPTAY supporters, but also for the relationship of campus to the local community. A home football game has tremendous economic impact and is essential for support of local businesses. Even though this revenue does not directly impact athletics, it helps further grow our local economy.”

The economic impact of home football games, and the revenue generation it enables, is a driving force to ensure that guarantee matchups continue to rise.

Third- Decreasing Revenue Streams

For this revenue generation, someone needs to be the opponent.

On this specific Saturday, it was Kent State.

2016 Operating Athletics Budget- $28,029,069 half of what IPTAY raised in donations last year  

2016 Revenues:  $26,018,611- 117th in Division I behind ten FCS and three non-football playing schools

Kent State is facing similar trends as other state universities throughout the country, dealing with shrinking enrollment – over half of their revenue is from student fees- partnered with decreasing revenue from ticket sales ($509,000 total sales across all sports) and limited fundraising (Less than $1 million annual). Kent State has been forced to examine every area they can to help find ways to fund their programs and support their student athletes.

Enter the Football Guarantee Check…

The $1.9 million-dollar guarantee check contracted for the 2019 game against Auburn or the $1.9 million-dollar game in 2022 vs. Georgia will be five times their annual rights fee from their multimedia rights holder IMG College, double their annual donations and four times the revenue generated from season long ticket sales.

“All revenue streams need to be examined to ensure we have the ability to enhance our student-athlete experience,” stated Joel Nielsen, Director of Athletics at Kent State University. “At Kent State, we are faced with the challenge of increasing external support from ticket sales, sponsorships and philanthropic gifts. The revenue from football guarantee games have essentially added another revenue stream, which allows us the ability to maintain a championship experience for all student-athletes.”

With budgets tightening more and more, the trend is going to increase and more teams are going to have to play on the road to fund their own budgets and help the Power 5 fulfill their obligations to donors, sponsors and television rights. You have seen teams in the Group of 5 play as few as five home games and take the extra guarantee check.

Currently there are twelve schools playing five home games… Kent State being one of them.

And, why wouldn’t they?

Kent State will make more money playing on the road when they cash their $800,000 dollars from Clemson than they will from all five home games combined the rest of this season!

“We have seen a sharp increase tied to guarantee game revenue from when I first arrived at Kent State in 2010 to now. In 2010, guarantee games would range from $400,000 to $600,000 per game, as now we are signing contracts between $1,500,000 to $1,900,000,” Nielsen continued. “The increase in football guarantee revenue over the past eight years has helped us enhance the overall student-athlete experience for not just our football program, but for all 425 student-athletes. We have been able to enhance facilities and services such as athletic training, nutrition and academic resources, including our new Athletic Training and Education Center and the New Jenkins Academic Resource Center.”

These guarantee checks help schools fund anywhere between 5-15% of their total operating budgets and help from the alternative of cutting opportunities for student athletes.

My projection is that once a school signs a $2 million dollar guarantee the class ceiling will reach $3 million in the next five years, due to less and less games available and more savvy leaders in college athletics who understand their value.

The two sides of the football guarantee check make for a compelling story that the average fan does not fully understand. Both sides need each other and must be willing to understand where they fit in the equation to make this business of college football work.

Dan Gale About Dan Gale
Dan Gale has been working in and around college athletics for the past 15 years. He has worked in fundraising and operations at the University of North Carolina, Temple University and East Stroudsburg University. He spent the bulk of his career at CBS Collegiate Sports Properties in leadership roles at the United States Air Force Academy, Old Dominion University, Towson University and University of Maryland. Upon leaving college athletics, he spent four years in the private sector building companies focusing with college athletics in the areas of technology and secondary ticket sales. He is currently the President of Leona Marketing Group, helping athletic departments formulate their revenue generation strategies and negotiating their multimedia rights.

Comments are closed.

A Briefing Of The Day's College Athletics News
To Your Inbox Tonight.

* indicates required