College Coaching Salaries a Bubble?

[cymonw1980]

EDIT: Corrected the % of Revenue to NFL Players.

The money right now for college football coaches is crazy... Probably unsustainable.

I think it is the result of:

1) Huge increase in media value of live sports*

*Side note on Sports Media potential Bubble: You can make the case that the ballooning value of sports media is a bubble. Once everything is streaming, and sports are once again competing with other entertainment $ more directly the relative value may diminish a bit. Right now linear tv has sports and news... everything else is down significantly in value. So these media companies are forced to pay huge dollars to get the rights to live entertainment in order to keep their business afloat. In the future, streaming could completely replace linear tv and sports would be competing directly with new streaming content for the same budgets again.

2) Players are not paid in College - meaning schools can only spend on Coaches and facilities

If you look at the supreme court ruling on pay for educational benefits, it is clear the court does not agree with the current compensation structure of student athletes. The NIL deal is fine. But this is different. Schools are bringing in billions of dollars and they must share these revenues more equitably in the future. When that happens, this will result in less money for other things. Right now, spending is out of control for college coaches. (1)

Compare NFL coaching salaries to College Coaching salaries:

The average salary for the top 10 college coaches is around $8.4M/yr (top is currently Riley at around 10M per year, Saban is at $9.8M). This is very similar to NFL coaching salaries where the top 10 make an average of around $9M/yr. (2)

If you look at all NFL coaches (only found 23 of 32 NFL coaches with reported salaries) the average salary was $6.2M per year (note: Matt LaFleur in GB makes $5M, only $1M more than Campbell at ISU, Zimmer makes $4M, the same as Campbell). The $6.2M paid to the "average" HC in the NFL represents about 3.4% of the salary cap for each team... In other words, teams are spending about 30x more on players than they do on the head coaches! (3)

Now, in college, you can make the case that a coach can be the face of the team for years, and top players may only be there for 3-4 yrs before they leave making the individual player less valuable and the coach more valuable. But the discrepancy in pay between players and coaches is not sustainable.

If you look at the school budgets for P5 Conferences the average budget per school is around $130M. With college salaries roughly 90% of NFL salaries, that puts a rough estimate for P5 coaches around $5.6M ($6.2M NFL x 90% = $5.6M) which is about 4.3% of the total athletic budget (NOT JUST FOOTBALL, TOTAL BUDGET).

If you look at the NFL, they brought in $15.3B in revenue in 2019 (ignoring 2020 due to the COVID impacts to revenues) or $0.5B/team. An average salary of $6.2M for the coach is 1.3% of average Revenue.

Here is the key... what should players get paid? If you look at the NFL model players get about 48% of the revenue. In College, about 13% goes to "Student Aid". (4)

Let's assume that the average college coach is about 2x more valuable than an NFL coach due to the fact that they are the face of the program with top players exhausting eligibility, leaving more often (although this is debatable with the average length of time players play for an NFL team, average time coaches are at a specific school). That would mean they "should" get about 2.5% of the FOOTBALL budget (not total budget). So, I would argue they are probably paid about 2x more than they should be at least. Players should be getting closer to 25% - 30% (at least) of the total athletic revenues they generate. This is about 2x more than they receive today. Probably should come from 1) coaches salaries and 2) facilities investments.

Sources:
(1)

Supreme Court rules against NCAA in compensation battle with college athletes

The Supreme Court handed a unanimous win to Division I college athletes in their legal fight against the National Collegiate Athletic Association.

www.cnbc.com

(2) https://www.sportingnews.com/us/nca...ails-lsu-notre-dame/22ip4ln3y64919gqrlkop2cc7
(3) https://www.nbcsports.com/boston/patriots/who-are-highest-paid-coaches-nfl-2021-season
(4) https://cafidatabase.knightcommission.org/fbs

 

[Mr Janny]

The money right now for college football coaches is crazy... Probably unsustainable.

I think it is the result of:

1) Huge increase in media value of live sports*

*Side note on Sports Media potential Bubble: You can make the case that the ballooning value of sports media is a bubble. Once everything is streaming, and sports are once again competing with other entertainment $ more directly the relative value may diminish a bit. Right now linear tv has sports and news... everything else is down significantly in value. So these media companies are forced to pay huge dollars to get the rights to live entertainment in order to keep their business afloat. In the future, streaming could completely replace linear tv and sports would be competing directly with new streaming content for the same budgets again.

2) Players are not paid in College - meaning schools can only spend on Coaches and facilities

If you look at the supreme court ruling on pay for educational benefits, it is clear the court does not agree with the current compensation structure of student athletes. The NIL deal is fine. But this is different. Schools are bringing in billions of dollars and they must share these revenues more equitably in the future. When that happens, this will result in less money for other things. Right now, spending is out of control for college coaches. (1)

Compare NFL coaching salaries to College Coaching salaries:

The average salary for the top 10 college coaches is around $8.4M/yr (top is currently Riley at around 10M per year, Saban is at $9.8M). This is very similar to NFL coaching salaries where the top 10 make an average of around $9M/yr. (2)

If you look at all NFL coaches (only found 23 of 32 NFL coaches with reported salaries) the average salary was $6.2M per year (note: Matt LaFleur in GB makes $5M, only $1M more than Campbell at ISU, Zimmer makes $4M, the same as Campbell). The $6.2M paid to the "average" HC in the NFL represents about 3.4% of the salary cap for each team... In other words, teams are spending about 95%+ more on players than they do on the coaches! (3)

Now, in college, you can make the case that a coach can be the face of the team for years, and top players may only be there for 3-4 yrs before they leave making the individual player less valuable and the coach more valuable. But the discrepancy in pay between players and coaches is not sustainable.

If you look at the school budgets for P5 Conferences the average budget per school is around $130M. With college salaries roughly 90% of NFL salaries, that puts a rough estimate for P5 coaches around $5.6M ($6.2M NFL x 90% = $5.6M) which is about 4.3% of the total athletic budget (NOT JUST FOOTBALL, TOTAL BUDGET).

If you look at the NFL, they brought in $15.3B in revenue in 2019 (ignoring 2020 due to revenue COVID impacts) or $0.5B/team. An average salary of $6.2M for the coach is 1.3% of average Revenue.

Here is the key... what should players get paid? If you look at the NFL model players get about 38.4% of the revenue. In College, about 13% goes to "Student Aid". (4)

Let's assume that the average college coach is about 2x more valuable than an NFL coach due to the fact that they are the face of the program with top players exhausting eligibility, leaving more often (although this is debatable with the average length of time players play for an NFL team, average time coaches are at a specific school). That would mean they "should" get about 2.5% of the FOOTBALL budget (not total budget). So, I would argue they are probably paid about 2x more than they should be at least. Players should be getting closer to 25% - 30% (at least) of the total benefits. This is about 2x more than they receive today. Probably should come from 1) coaches salaries and 2) facilities investments.

Sources:
(1)

Supreme Court rules against NCAA in compensation battle with college athletes

The Supreme Court handed a unanimous win to Division I college athletes in their legal fight against the National Collegiate Athletic Association.

www.cnbc.com

(2) https://www.sportingnews.com/us/nca...ails-lsu-notre-dame/22ip4ln3y64919gqrlkop2cc7
(3) https://www.nbcsports.com/boston/patriots/who-are-highest-paid-coaches-nfl-2021-season
(4) https://cafidatabase.knightcommission.org/fbs

I thought the NFL collective bargaining agreement stipulated that players get 48% of the revenue.

 

[AuH2O]

Yes, it's a bubble. How much longer it continues is hard to predict. We might be on the front end of a bubble, but .

Attendance and viewership in general has been declining. The lazy take is that the bigger salaries suggest it's in this massive growth phase when it is not. As you share, the salaries are more to years of a media dollar boom, with facilities largely built out and nowhere else to go with the money.

I've said this probably too many times, but due to NIL and consolidation of big brands, I do think CFB is on it's way to a financial crash in the next 10-20 years. Product differentiation from the NFL keeps eroding, and that's going to hurt fandom over time.

I just see every macro, long-term force going against growth of CFB in popularity. it will take time for the finances to fully come to roost, particularly at the big schools, but ultimately it's going to happen I think.

 

[davegilbertson]

The money right now for college football coaches is crazy... Probably unsustainable.

I think it is the result of:

1) Huge increase in media value of live sports*

*Side note on Sports Media potential Bubble: You can make the case that the ballooning value of sports media is a bubble. Once everything is streaming, and sports are once again competing with other entertainment $ more directly the relative value may diminish a bit. Right now linear tv has sports and news... everything else is down significantly in value. So these media companies are forced to pay huge dollars to get the rights to live entertainment in order to keep their business afloat. In the future, streaming could completely replace linear tv and sports would be competing directly with new streaming content for the same budgets again.

2) Players are not paid in College - meaning schools can only spend on Coaches and facilities

If you look at the supreme court ruling on pay for educational benefits, it is clear the court does not agree with the current compensation structure of student athletes. The NIL deal is fine. But this is different. Schools are bringing in billions of dollars and they must share these revenues more equitably in the future. When that happens, this will result in less money for other things. Right now, spending is out of control for college coaches. (1)

Compare NFL coaching salaries to College Coaching salaries:

The average salary for the top 10 college coaches is around $8.4M/yr (top is currently Riley at around 10M per year, Saban is at $9.8M). This is very similar to NFL coaching salaries where the top 10 make an average of around $9M/yr. (2)

If you look at all NFL coaches (only found 23 of 32 NFL coaches with reported salaries) the average salary was $6.2M per year (note: Matt LaFleur in GB makes $5M, only $1M more than Campbell at ISU, Zimmer makes $4M, the same as Campbell). The $6.2M paid to the "average" HC in the NFL represents about 3.4% of the salary cap for each team... In other words, teams are spending about 30x more on players than they do on the head coaches! (3)

Now, in college, you can make the case that a coach can be the face of the team for years, and top players may only be there for 3-4 yrs before they leave making the individual player less valuable and the coach more valuable. But the discrepancy in pay between players and coaches is not sustainable.

If you look at the school budgets for P5 Conferences the average budget per school is around $130M. With college salaries roughly 90% of NFL salaries, that puts a rough estimate for P5 coaches around $5.6M ($6.2M NFL x 90% = $5.6M) which is about 4.3% of the total athletic budget (NOT JUST FOOTBALL, TOTAL BUDGET).

If you look at the NFL, they brought in $15.3B in revenue in 2019 (ignoring 2020 due to revenue COVID impacts) or $0.5B/team. An average salary of $6.2M for the coach is 1.3% of average Revenue.

Here is the key... what should players get paid? If you look at the NFL model players get about 38.4% of the revenue. In College, about 13% goes to "Student Aid". (4)

Let's assume that the average college coach is about 2x more valuable than an NFL coach due to the fact that they are the face of the program with top players exhausting eligibility, leaving more often (although this is debatable with the average length of time players play for an NFL team, average time coaches are at a specific school). That would mean they "should" get about 2.5% of the FOOTBALL budget (not total budget). So, I would argue they are probably paid about 2x more than they should be at least. Players should be getting closer to 25% - 30% (at least) of the total benefits. This is about 2x more than they receive today. Probably should come from 1) coaches salaries and 2) facilities investments.

Sources:
(1)

Supreme Court rules against NCAA in compensation battle with college athletes

The Supreme Court handed a unanimous win to Division I college athletes in their legal fight against the National Collegiate Athletic Association.

www.cnbc.com

(2) https://www.sportingnews.com/us/nca...ails-lsu-notre-dame/22ip4ln3y64919gqrlkop2cc7
(3) https://www.nbcsports.com/boston/patriots/who-are-highest-paid-coaches-nfl-2021-season
(4) https://cafidatabase.knightcommission.org/fbs

I know room and board being diminished is what led to NIL in the first place, but if we go down this path, and only pure cash compensation is seen as value given, then players will need to pay their own way.

Unless NFL players are housed and have all living expenses covered that I'm not aware of.

 

[Drew0311]

I honestly like how Jim Harbaugh's contract is set up now. Heavily paid on how many wins and bowls games, mixed with bonus for making the playoffs. .

 

[Mr Janny]

I know room and board being diminished is what led to NIL in the first place, but if we go down this path, and only pure cash compensation is seen as value given, then players will need to pay their own way.

Unless NFL players are housed and have all living expenses covered that I'm not aware of.

I'm not saying you're incorrect. I'm just curious why you think players would need to pay their own way. There's plenty of precedence for employers providing housing and food to their employees.

 

[cymonw1980]

I know room and board being diminished is what led to NIL in the first place, but if we go down this path, and only pure cash compensation is seen as value given, then players will need to pay their own way.

Unless NFL players are housed and have all living expenses covered that I'm not aware of.

Room and board is included in the 13% of athletic budgets that go to students today... What I am saying is that needs to be increased, significantly for athletes driving the revenue. You can't pay a HC $10M per year and give a star RB, QB, etc. $50k - $100k in total value per year and say we're even.

Matt LaFluer makes $5M per year
Aaron Rodgers makes $25M+

Again, I am not saying it is all the same... you want to move the numbers a bit, that is fine. But you can't have star players making next to nothing (relatively speaking) and pay coaches the money they are making...

 

[Trice]

People have been saying this forever. I'll believe the bubble pops when I see it. We've already seen pure panic from college athletics administrators and presidents over this new world for college sports, and it's only going to get worse. No one is going to stand by while their alma mater falls behind. It won't stop until either universities start working together for the good of their sports (lulz) or the government is forced to step in to curb the excess.

 

[Farnsworth]

The money right now for college football coaches is crazy... Probably unsustainable.

I think it is the result of:

1) Huge increase in media value of live sports*

*Side note on Sports Media potential Bubble: You can make the case that the ballooning value of sports media is a bubble. Once everything is streaming, and sports are once again competing with other entertainment $ more directly the relative value may diminish a bit. Right now linear tv has sports and news... everything else is down significantly in value. So these media companies are forced to pay huge dollars to get the rights to live entertainment in order to keep their business afloat. In the future, streaming could completely replace linear tv and sports would be competing directly with new streaming content for the same budgets again.

A lot of flaws in #1. Yes it still primarily resides on platforms that are linear under a cable umbrella, but I think most users are already watching it via a service that includes those platforms. Cable is nearing dead.

In the future, streaming could completely replace linear tv and sports would be competing directly with new streaming content for the same budgets again.

This is where it goes off the rails. Live TV will always be king when it comes to being able to bring in ad dollars regardless if you are subscribed to a platform presenting it or not. Live Sports will never compete directly with new streaming content. It's not like in the future on a random Saturday I'll debate between watching Iowa State vs. KSU with ads OR continue binging Money Heist.

Sports are made for Live TV, you don't binge a season of football, so additional AD revenue will always be in place regardless if the platform is streaming or not.

 

[Gunnerclone]

IS housing a bubble? Is the stock market a
Bubble? At times there appears to be a “pop”, but over history they have ALWAYS gone up. The bubble shrinks sometimes but does it ever really “pop”?

 

[ClonesFTW]

Before Clay Travis got political he was sounding the alarm on a "sports bubble" that was going to pop in the near future based on media rights changing- I remember him discussing this on his old radio show 6-7 years ago.

 

[HFCS]

IS housing a bubble? Is the stock market a
Bubble? At times there appears to be a “pop”, but over history they have ALWAYS gone up. The bubble shrinks sometimes but does it ever really “pop”?

if the playoff and/or NIL really morphs into a 32 team semi regional club where 10 of those programs are just cannon fodder that would create an actual slump for at least a decade or two. Otherwise I’m not worried.

Part of college football’s success is how every little region has a team with real support. The only thing I can compare it to in that respect is the EPL. Really stupid to do things that have even a 1% chance of hurting that.

 

[BMWallace]

One of the things that is contributing the the wildness of this coaching cycle, and inflating coaching salaries is the adoption of the Early Signing Period.

The Early Signing Period was adopted in 2017, allowing high school student-athletes to sign their NLI in mid-December instead of waiting for the traditional Signing Day of the first Wednesday in February. This means that any school that opts fire their coach (or loses their coach) at the end of the season has about 2-3 week to hire a new guy. That head coach then has to rush to assemble a staff, and throw together a recruiting class in about 15 days.

This compressed window for negotiating is giving coaches more leverage to negotiate higher salaries, while also leading to a lot of attrition from the first signing class for a coach at new school. This article from Bud Elliot discusses this issue further.

I feel like its time to either abolish the early signing period, or move it even earlier in the year, like September.

 

[intrepid27]

I've felt for a couple of years that the salaries and the conference media contracts are not sustainable but I'm not sure when/what will cause the bubble to burst.

Also, I tend to get frustrated when the media glorifies these huge numbers and says "good for so and so".
I feel like I'm paying for this excess every time I buy a pair of Nikes, or a Bud Light, or a ticket to a sporting event, or even my monthly tv bill. Yes, I realize I don't have to but those things but most of them are not directly tied to sports and all that cost just trickles down to everyday consumer.

 

[Clonefan94]

A lot of flaws in #1. Yes it still primarily resides on platforms that are linear under a cable umbrella, but I think most users are already watching it via a service that includes those platforms. Cable is nearing dead.



This is where it goes off the rails. Live TV will always be king when it comes to being able to bring in ad dollars regardless if you are subscribed to a platform presenting it or not. Live Sports will never compete directly with new streaming content. It's not like in the future on a random Saturday I'll debate between watching Iowa State vs. KSU with ads OR continue binging Money Heist.

Sports are made for Live TV, you don't binge a season of football, so additional AD revenue will always be in place regardless if the platform is streaming or not.

I know streaming is still pretty new, but I think this past weekend, we saw the flaws with FloSports or whatever it was an trying to watch the women's game. It seems great on the surface, until you find out there are so many streaming services that all want to dip a toe in the pond, that in the end, it may be best to go with a classic cable subscription.

Yeah, if the Big 12 rights get snatched up by a streaming service, that sounds great until we play Iowa at Iowa and have to subscribe to who has their rights. Or any other away game that is not a Big 12 game. If this were just sports, then it would be fine, but I also like to watch movies and shows as well. These all seem to be getting fractured as well.

The thing about Live, over the air (or cable) TV, as you said, is it's king. It's just on. No one has to subscribe to see it, it's on. And as the numbers may be dipping because of the options available, Live Network TV is still the king of the roost. I really can't predict where things will be in 25 years, when teenagers today hit middle age and have money to spend as they please, but right now, it's about live TV.

OK, get off my lawn now, I'm going back inside.

 

[iowastatefan1929]

Probably need a demographic shift and lose reserve currency status to really tank this thing.

 

[jcisuclones]

I did a paper on this very topic in grad school. It's all a part of of the college athletics arms race. It follows under the same spectrum as facilities go. Schools are going to keep investing more and more money to win. It might eventually slow down, but it certainly will not stop climbing, especial.

 

[cymonw1980]

A lot of flaws in #1. Yes it still primarily resides on platforms that are linear under a cable umbrella, but I think most users are already watching it via a service that includes those platforms. Cable is nearing dead.



This is where it goes off the rails. Live TV will always be king when it comes to being able to bring in ad dollars regardless if you are subscribed to a platform presenting it or not. Live Sports will never compete directly with new streaming content. It's not like in the future on a random Saturday I'll debate between watching Iowa State vs. KSU with ads OR continue binging Money Heist.

Sports are made for Live TV, you don't binge a season of football, so additional AD revenue will always be in place regardless if the platform is streaming or not.

Don't disagree with most of this... But there is a key difference between "today" (maybe "today" is the next 10 to 15 yrs, not sure) and the future.

Today, streaming has no ads. This will likely change in the future. Even now you are starting to see this beginning on some platforms. There is too much money out there.

In the past, how many ads were on social media? How many ads were on Pandora? The point is, As more streaming platforms emerge, ads will find there way into the content again. May take 10 yrs... who knows? but when ad revenues have more homes, the current dynamic will change.

Right now, there is still significant value in live linear/streaming content for advertisers. This will always be the case. But, I believe that ads will begin to pop up more and more in streaming content offering another place for the ad dollars to go and competition for sports dollars that currently does not exist.

 

[BDAL23]

I don’t believe it’s a bubble. As long as coaches under contract can be poached from other schools without penalty besides the buyout.
College Sports needs a rule in place when hiring head coaches away from schools under contract. Like a 1 year post season ban if hiring a head coach under contract.
The NFL doesn’t have this problem because of rules in place. Teams usually aren’t willing to pay the draft compensation to take another team’s coach.

 

[Mr Janny]

One of the things that is contributing the the wildness of this coaching cycle, and inflating coaching salaries is the adoption of the Early Signing Period.

The Early Signing Period was adopted in 2017, allowing high school student-athletes to sign their NLI in mid-December instead of waiting for the traditional Signing Day of the first Wednesday in February. This means that any school that opts fire their coach (or loses their coach) at the end of the season has about 2-3 week to hire a new guy. That head coach then has to rush to assemble a staff, and throw together a recruiting class in about 15 days.

This compressed window for negotiating is giving coaches more leverage to negotiate higher salaries, while also leading to a lot of attrition from the first signing class for a coach at new school. This article from Bud Elliot discusses this issue further.

I feel like its time to either abolish the early signing period, or move it even earlier in the year, like September.

This is a very valid point and should not be overlooked. The early signing period definitely should be looked at. It has created significant urgency for schools looking for new coaches and has the potential to inflict a lot of strain on schools that have their coach poached.