The Next Step: Can men’s lacrosse join the revenue-generating fraternity?

Posted on February 5, 2010 by

Categories: Economy/Lax Business

Currently, there are only two college sports that generate a profit for their universities: football and men’s basketball. That’s it. Considering most universities have at least 10-12 other varsity sports to fund, these athletic departments place a premium on their two revenue generators. Football and men’s basketball receive first-class treatment, operate with large budgets, and are frequently the public face of the university. Don’t believe me? What’s the first thing you think of when you hear Duke, Notre Dame, or Alabama mentioned? (For all Duke professors who are reading this, which zero is a safe bet, I know you are cringing hearing that). The point is that football and men’s basketball thrive at most universities because they are self-sufficient and provide a platform for promoting other aspects of the universities. Lacrosse has a chance to be the third member of this exclusive group. It is a challenge, but if successful, it will be highly rewarding for both lacrosse programs and the universities they represent.

Revenue generating sports are integral parts of most university budgets. For schools with low endowments, these sports can be major sources of funding for their day-to-day operations by making money via ticket sales, television revenue, and advertising. In addition, the public exposure a university gets from having a successful football or men’s basketball program is invaluable. This type of exposure cannot be measured on an income statement or in US News & World Report. Brent Musberger said it best when he referenced former Boston College quarterback Doug Flutie’s miraculous 1984 season. “When Flutie completed the greatest ‘Hail Mary’ in the history of college football against the Miami Hurricanes, it completely altered the history of the school. Flutie won the Heisman Trophy, BC football was put on the map, and the entire school rode the wave to becoming one of the better universities in the nation.”

Instances like Flutie’s Hail Mary are not isolated incidents. Universities benefit tremendously from on-the-field success. Applications at Northwestern increased 21 percent following their 1995 Rose Bowl season; George Mason’s run to the 2006 Final Four in men’s basketball was followed by an increase in applications of over 30 percent; even Penn State, a school already known for a traditionally strong football program, sees increases of around 15 percent in the years they go to a major bowl game. This type of exposure leads to a stronger student body, a more passionate alumni base, and a larger endowment from increased financial support. Because of the connection between athletic success and positive publicity, universities hold their revenue generating programs in higher regard (So much so, that some critics have declared that coaches have more power than the university presidents).

In order to become a revenue generator, a sport must accomplish three things. First, it must achieve a national audience. Lacrosse has begun to do this in the past decade. The sport has spread on the high school level to all parts of the country from Florida to Texas to California. On the collegiate level, lacrosse has migrated as far west as Colorado, but has not been able to extend further. This is a challenge, but there is certainly a brewing fan base on the west coast. The sport needs to get a Division I team in California in order to truly be considered national and I believe we will see that in the coming years. Stanford, Oregon, and Cal Berkley seem like good fits as all three already have DI women’s programs.

Secondly, the sport needs to see attendance numbers rise. This is the clearest measure of a sport’s popularity. With record crowds both at the National Championships and now in regular season matchups, lacrosse is making strides in this area as well. We will know the sport has arrived when the National Championship sells out and regular season games are filled closer to capacity. In the last few years, the National Championship has averaged close to 49,000 fans (~70 percent capacity) and regular season games see in excess of 2,000 fans quite regularly. Sold-out games lead to more demand as people want what they cannot have. Larger crowds lead to more publicity, a wider variety of revenue streams, and better gameday experiences.

Lastly, and most importantly, lacrosse must garner enough attention to attract television networks. Television broadcasts reach the largest audience and provides a massive revenue stream in the form of advertisements. Lacrosse on television has gained significant traction in recent years with games consistently landing on ESPNU and occasionally ESPN2. The most important development was the movement of the NCAA Championship from 11am to 2pm on Memorial Day. ESPN made this decision because it was profitable for them. Previous National Championship games did not generate enough advertising revenue to warrant broadcasting it in the 2pm time slot, but when ratings went up, it was in ESPN’s best interests to give the game a better slot.

Seems simple, but the bottom line is that in order to become a revenue generating sport, lacrosse has to become profitable. Not profitable in one area, or even in a few areas, but across the board. The cumulative revenues from ticket, television advertising, and merchandise sales must outweigh the massive costs of scholarships, coaches salaries, travel expenses, etc. This is not something that is accomplished overnight, but rather after years of steady progress. The sport has moved dramatically in the right direction but continued expansion, most notably in Division I, is the key to profitability.

Teddy Lamade played midfield at the University of Virginia from 2000-2004 where he was a part of the 2003 National Championship and captained the 2004 Team. He went on to finish his final year of eligibility at Georgetown while completing a masters degree in international affairs where he completed a thesis on the Invasion of Iraq and it’s Consequences. He is currently working at Bank of America Merrill Lynch in New York City on the fixed income rates desk dealing with a variety of products including government bonds, high grade corporate issuance, and mortgages. He writes about the business of lacrosse monthly for LacrossePlayground.com.

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  • bowlingdummy

    i work in the front office for a big university. lacrosse happens to be one of our very few money generating programs. it can happen

  • the cat

    Great read, well done Teddy. Always insightful.

  • LaxLogic

    bowlingdummy: Are you at a D1 program? To my knowledge, there have been no profitable D1 lacrosse programs, but my analysis was not comprehensive. Based on this Wall St. Journal article… it would seem the only programs that could possibly be profitable would be a school like Johns Hopkins (given that they don’t have a football program): http://online.wsj.com/article/SB10001424052748704224004574489281301154084.html

  • http://rugburnlacrosse.blogspot.com/ Vagabond Lacrosse

    For the division one programs to grow “proper” growth around the nation needs to take place. Has there been a ridiculous increase in kids with sticks in their hands, yes. Has youth and high school lacrosse all over the country exploded, yes. Has lacrosse at the NCAA DII and DIII grown over the past 10 years, yes. The one, and wildly important set back and key component to why lacrosse has not grown at the DI level is the absence of “proper” coaching and “proper” refereeing. Yes, DI recruits are now coming from all over the country. But, it sporadic and most kids are so raw they are recruited on their athletic ability. DI lacrosse is doing it right. DI’s time will come and we will see a separation between major and mid-major schools. Until then “keep on keep’n on.”

    http://www.rugburnlacrosse.com

  • http://www.lacrossecoachusa.com laxcoachusa

    The steady growth of the game will eventually lead to revenue producing in some of the major programs. I would be interested to hear how heavily DI programs cross market the lacrosse team to fans of the big 2. You would think some of the football fans could buy into a spring sport with heavy action.

    Some lacrosse programs now are self sufficient when you include the donations from alumni specifically to the lacrosse programs, Correct?

  • http://412.laxallstars.com/gameday-eastern-michigan/ Gameday: Eastern Michigan – 412 Lax

    [...] Teddy Lamade is back with an article about lacrosse and cash money (LPG) [...]