As University Athletic Director Dave Brandon, a three-time Big Ten champion under former Michigan football coach Bo Schembechler, took the stage, he was welcomed by the familiar sound of applause.
More than 200 students and University community members packed into Blau Auditorium last night to hear Brandon and Sports Management Prof. Rodney Fort address some of the key economic issues surrounding collegiate sports. Speaking as part of the Phi Chi Theta Professional Business and Economics Fraternity’s 7th annual economic symposium, Brandon, who became the University’s athletic director in March 2010, focused mainly on the Michigan football team and its positive effect on the local economy.
“If you think of Michigan athletics as an economic engine, it’s pretty big,” Brandon said. “It’s pretty widespread, and we have a lot of people going, a lot of people doing a lot of things, generating a lot of economic benefit,” Brandon said.
Brandon proceeded to explain that intercollegiate athletics is a highly competitive and cut-throat business.
“The pressure to win is great because people don’t show up if the team is losing,” he said. “Ticket sales fall and you lose your price leverage on trying to increase ticket price because it’s all about supply and demand. If you win, donors donate more money. It’s funny how that works.”
Hockey, men’s basketball and football provide funds for the rest of the athletic program, with one football game alone producing $15 million in revenue, according to Brandon. He added that to remain competitive and attract recruits, the University needs to make investments in infrastructure such as arenas, stadiums and coaches.
“There is a facility arms race where young 18-year-old men and women who want to compete at the next level are being recruited, and when they make their visits, (they) ask, ‘Where will I practice? Where will I compete? What kind of infrastructure is in place? Is this particular school serious about the investment they’re making in my sport?’” Brandon explained.
To meet this demand, Brandon said the Athletic Department “will continue to invest a substantial millions of dollars in the facilities that are required to kind of feed our athletic program to keep it successful.”
Brandon closed with a question-and-answer session in which students expressed their concerns and interests about the University’s apparel sponsorship switch from Nike to Adidas, the use of Michigan Stadium for events beside football games and the commercialization of the Michigan brand.
Brandon said though he has no plans to place advertising in Michigan Stadium to create revenue, the sponsorship Michigan currently receives from Adidas helps financially. Brandon added that he hopes to see the University use Michigan Stadium more innovatively.
“I’m frustrated over the fact that we have such a terrific venue that we only use seven or eight times a year, and we have to figure out ways to leverage it,” Brandon said. “We will try to come up with very creative ways to leverage all of the assets that we have — particularly those facilities that we made big investments in. I still very much want to do a concert.”
Fort followed Brandon by talking about college football revenue from a historic standpoint. He touched on the reformation of the football conferences, the inability of recessions to affect consumer interest in college football and Michigan’s athletic budget.
“The athletic departments are sustainable because they are a pretty sound investment with a pretty reasonable return given the small amount of money the University actually puts into it,” Fort said.
Engineering junior Sajan Shah, secretary of Phi Chi Theta, and Business senior Michael Tepatti, the fraternity’s vice president of external affairs, said they were pleased with the large turnout at the symposium.
“(Brandon) addressed a lot of concerns that the crowd had,” Shah said. “I think a lot of the students got their questions answered about pressing issues on campus.”
Tepatti added that the speakers spoke well to issues that affect the student body.
“We wanted to pursue a topic that would touch on current issues, and we want to promote an interest in economics to the rest of the student body at Michigan,” Tepatti said. “We thought that the speakers … would be best for this.”