Monthly Archives: March 2014

Essentially, economics is the science of determining whether the interests of human beings are harmonious or antagonistic. – Claude-Frédéric Bastiat

This past November, I attended the 2013 SWAC championship game with my father despite our family school, Prairie View A&M not being present. My father felt it was important to go out and support the SWAC. Our family annually attends the SWAC’s Labor Day Classic between Prairie View A&M University and Texas Southern University, which was eventually put out of Reliant it is rumored from poor attendance. A very sad indictment since Prairie View and Texas Southern are located 45 minutes and 15 minutes from the stadium, respectively. My father and I discussed why HBCUs have such a difficult time with attendance overall, save for a few select schools that travel really well. Even more importantly to me was whether the economics of playing the SWAC football championship in football at Reliant Stadium and the SWAC basketball championship at Toyota Center made dollars and sense. My father noted as he bought our tickets that the median ticket price was $35 that night and if the attendance came in well that the SWAC and both schools should do well. However, my question was could they do better?

The reported attendance at the game was 38 985 according to HBCU Digest. Calculated with the stated median price from above it equals out to approximately $1.37 million. Not a bad days haul on its first examination. Unfortunately, the SWAC does not own Reliant and therefore having a game there is not free. Based on the financial terms that were given for the UH-SMU game at Reliant, we can start to see just perhaps what that final figure might look like. There is a $75 000 license fee per game. Then there is the facility expense of $85 000 for 30 000 to attend plus $2 for every attendee over 30 000, bringing the total expense for the SWAC game to $177 970. All parking and concession revenue go to Reliant and 20 percent of merchandise sales also go to Reliant. Using a ratio of four people to a car, then the SWAC championship car attendance was 9 746 with parking cost at $10 or revenue of approximately $98 000. The median soda/beer cost at Reliant is $6.13 and a regular nacho (easily the most popular item at the SWAC championship – probably because it was the cheapest) was $7.00. Assuming that half of attendees will purchase at a minimum a drink and nacho that is worth approximately $256 000 based on the game’s attendance. This means that HBCUs are potentially only taking home 61 percent of the potential revenue (not including merchandise) when they play at professional stadiums if this is a standard deal. In the SWAC’s case a loss of revenue equal to $532 000 (not including merchandise) just for the football game.

My father’s argument was that if the game had not been played at the Reliant, then most fans would not come nor do most HBCU stadiums have the capacity for 40 000 fans. Prairie View’s stadium at best holds 5 000 comfortably. He argues that fans want to be in a nice venue, especially if you plan to get the fan who has no rooting interest to come to the game. There is some validity to this since the attendance for the SWAC championship when it was in Birmingham struggled mightily with attendance, even when Alabama A&M or Alabama State were in the game. There is also the issue of lodging, which for rural HBCUs tend to be lacking. That being said, I am not totally convinced.

I believe if the game was located in the central most urban geographic location to both schools playing in the championship, then an opportunity to collect a vast more of the pie could be accomplished. Could I be wrong in this? Absolutely. However, that we have not explored alternatives is an issue that we can ill afford. Given that conferences tend to share the revenues of these games throughout the conferencem it is worth an economic examination. Just as classics should be re-examined and the very questionable deal that HBCUs have with ESPN and the Disney SWAC/MEAC classic where attendance has consistently been less than stellar.

It often feels as if there is a lack of creativity to HBCU athletic departments. HBCU athletics will never be profitable because demographics simply do not allow for it. However, they can be less of a loss leader than they currently exhibit. Already underfunded, instead of trying out of the box scenarios that could draw larger crowds to generate higher revenues, we seem content to just mimic our counterparts who have vast resources and seven and eight figure boosters. Do we believe we can just walk by a penny on the ground? If we do, then we are in real denial about our financial crisis.