Football or no football, a look at the financial crunch South Carolina faces this year
With having a football season still in question, South Carolina’s athletic department might not have much wiggle room. Even if games are played, and even if some fans are allowed in the stands, there’s a long road ahead.
The department has been self-sustaining for more than a decade, but to a degree that means it lacks a safety net from the school, more so with the expected shortfalls the university already expects to face with its own coronavirus issues.
The University of Wisconsin has already said up to $100 million could be lost even if football is played. Other schools have estimated tens of millions could still be lost. South Carolina said it has $40 million, nearly a third of its athletics budget, tied up in football tickets and revenue related to those tickets.
As things stand, the Gamecocks report as a team Monday and start practice Tuesday in preparation for a 10-game, conference-only schedule that begins Sept. 26.
South Carolina sport and entertainment management professor Tom Regan has done multiple studies that show Gamecocks football games have a more than $8 million economic impact per game weekend on the Columbia area. He painted the current situation in stark terms.
“Without the football program, the athletic department has no positive cash flow,” Regan said. “Without football, everybody else is broke. The only sports to make any kind of positive cash flow are football, men’s basketball — and baseball breaks even or makes a little bit of money.”
That means football funds nearly every other sport on campus. South Carolina has 19 athletic programs.
The school’s projections for the 2019-20 athletics budget included nearly $21 million in ticket sales from all sports. That number came down to $19 million in a projection for 2020-21, mostly because of a different home football schedule. Of that $19 million, more than 83% of that was football — and the full figure accounted for playing an entire season with full stands.
If that much revenue comes out of a 2020-21 athletics budget that was projected at $127 million, that’s a major cut Regan says most organizations aren’t built to handle.
And that doesn’t account for any of the donations that are connected to ticket sales or for walk-up tickets, which are both on shaky ground.
“Let’s put it this way,” Regan said, “football drives the point system that is given for all the other tickets for all of the sports. So if you’re a significant giver to the Gamecock Club at a level, then you’re going to have priority in basketball and those other sports, too.”
The school last week said 40% of its potential revenue was tied to tickets and donations. It also launched a promotion aimed at season ticket holders, asking them to consider keeping ticket and donation money with the school no matter what happens to the 2020 season. Fan attendance will almost certainly be limited, and the season itself could be disrupted as well. USC’s campaign is aimed at easing an already certain cash flow hit.
The school will petition the state government for a waiver to allow some fans at Williams-Brice Stadium this season. Tanner has suggested just under 20,000 as a possible capacity target (in an 80,250-seat venue) with social distancing measures in place.
Without football, the television payout from the Southeastern Conference that’s heavily tied to the SEC Network might drop close to zero, Regan said.
And the University of South Carolina is in a bit of a vise when it comes to the cost-saving side of things.
The state limits the athletics department’s debt to $200 million. As of the last budget projection, the school was carrying $168.79 million in debt, but that did not yet account for a $22.5 million upgrade at Williams-Brice Stadium that produced a range of amenities for certain sections (which makes those more premium and pricier).
The department should have a certain amount of money held as reserves, but Gamecocks athletic director Ray Tanner has said in the past that’s not enough to ride out a year without football. Regan said that after reserves and some borrowing, unless the school can dip into its funds (a tricky ask given where it stands), the only solution is to cut enough to make budget.
“The bad part is that any reserves that they have will be gone unless they make a big cut,” Regan said, noting schools with larger endowments have not used them to buttress athletics. “Here, it’s going to cut right into the core.”
A school spokesman told The State the athletic operating reserves are $8.476 million, and the Gamecock Club has reserves of $7.185 million
South Carolina already had some of its higher-salaried employees take pay cuts and is going through furloughs for employees making $118,000 or more. Not playing games reduces certain overhead, but much of the budget expenses (about 58.6% of the projected numbers) are tied up in scholarships and staff salaries. That latter area is one that could be the most painful to cut, and Tanner said the recovery process would be a long one.
“It’s going to take some time,” Tanner said in a radio interview in late July. “It’s certainly tens of millions that we could find ourselves in a situation that we’re going to have to recover. It would take us years to do that. There’s things that we can’t control. We’re not going to be the only school in the country that goes through a scenario such as this.”
Simply put, there’s no history with anything like this.
Regan noted one area on the political side that will have a large impact is the push from Sen. Mitch McConnell (Kentucky) and some politicians to limit the liability teams or venues could pay out. With that capped, it would mean those groups could have attendees without the risk of lawsuits and that those going to arenas or stadiums would assume their own risk.
“I talked to executives in the sport and entertainment business,” Regan said. “Every day I call one of them, one of the major players. All they talk about is liability. ‘If you limit my liability, we can open up.’”
He noted that would mostly affect smaller and mid-sized businesses, which don’t have the legal muscle to hold off trial lawyers.
The Gamecocks are expected this week to learn the dates for their revamped 10-game schedule, according to 247Sports. USC will have home games against Missouri, Tennessee, Texas A&M, Auburn and Georgia; and road contests vs. Kentucky, Florida, Vanderbilt, Ole Miss and LSU.
For the moment, the expectations around college sports are uncertain at best. The Big Ten and Pac-12 backed off the idea of a college football season, giving rise to a range of reports doubting the sport plays at all. The Southern Conference — which features The Citadel, Furman and Wofford — on Thursday joined all other FCS leagues in postponing fall sports.
That’s to say nothing of the economic impact around a city like Columbia. Regan said a game weekend generates around $8 million to $9 million in direct spending inside and outside the stadium (including tickets). Each year, 600,000 to 650,000 come to Columbia for football.
Certain bars, hotels, tailgating lots and local part-time workers could all feel the hurt if Williams-Brice Stadium sits empty in the coming months. Many of those businesses rely on big football weekends to carry them financially, and the trickle down will be a hit to local tax revenue as well.
There’s a multitude of part-time employees that rely on working football, basketball, concerts and other events year-round, Regan pointed out.
“Between the tailgating, the food, the drinks, everything after the game, Five Points and the Vista, there’s nothing (that’s) going to happen because people will not come downtown unless it’s for football,” Regan said. “The event drives the fans.”
This story was originally published August 12, 2020 at 5:00 AM.
