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Podcast Transcript

In the 19th century, several American universities began to compete with each other in several sporting events in friendly intercollegiate competitions.

Fast forward over a hundred years, and college sports in the United States is a multibillion-dollar business. 

How did institutes of higher education become some of the biggest sports organizations in the world, and why does it only exist in the United States?

Learn more about college sports and how it became to be such a big business on this episode of Everything Everywhere Daily.

Several people outside the United States have asked me about college sports. To be fair, I understand how it can be confusing. 

Colleges and universities are supposed to be institutes of higher education. They are about learning, lectures, classes, and research. 

The United States has many of the world’s best institutes of higher learning. Whenever you see lists of the top world universities, it is dominated by American institutions. 

Yet, most people in the United States have an attachment to universities via sports. 

Moreover, the organization of collegiate sports is extremely confusing. Why does a conference called the Big Ten….have eighteen schools? How is an activity that is supposed to be amateur able to make more money than most professional sports leagues? 

It all has to do with history….

The first organized competitive sporting competition between two universities in the United States was a rowing competition between Yale and Harvard in 1852. 

I should note that this was not the first university competition overall. In 1829, a rowing competition took place between Oxford and Cambridge, and it became a regular event in 1856. The competition still takes place today, and it is simply known as The Boat Race.

The Harvard-Yale race began its regular competition in 1859 and predated their annual football competition by 23 years.

Rowing, while still a competitive university sport, is not what most people think of when they think of college sports today.

In previous episodes, I’ve discussed the history of various sports, including association football, American football, baseball, and cricket. I’m not going to go into too much depth about any one sport, but suffice it to say that almost every major organized team sport has an origin in college sports. 

In particular, in the late 19th century, football, baseball, and track and field were the biggest sports in universities, but other sports, such as soccer, cricket, and rugby, were also played.

As these sports became more popular, organizing the competitions and providing a consistent set of rules became necessary. 

Individual sports created their own organizations, such as the Intercollegiate Rowing Association, Intercollegiate Football Association, and others. 

In addition to sports organizing, schools began to organize as well. In 1892, representatives of four schools, Michigan, Wisconsin, Minnesota, and Northwestern, joined to form the Intercollegiate Athletic Association of the Northwest.

It only lasted for two years, but the schools later created a new organization with several more schools in the Midwest to form the Intercollegiate Conference of Faculty Representatives. 

This expanded to ten schools in 1916, and the organization became known as the Big Ten. 

In 1892, another organization of schools in the southeast formed the Southern Intercollegiate Athletic Association.

These became the first college sports conferences. 

They set the rules for the sport and determined the eligibility requirements for competitors. They established their own schedules for competition and their own championships. 

By the start of the 20th century, football (that is, American football) had become the prestige sport for universities in the United States. It was capturing an enormous amount of media attention, but not all the attention was good. 

There was a rash of high-profile injuries and deaths that were giving not just football but all college sports a bad name. Between 1880 and 1905, 325 deaths and 1,149 serious injuries occurred in college football games. 

President Theodore Roosevelt called university leaders to the White House in two different conferences to try and find a solution to the problems in collegiate football. 

Following the presidential conferences in 1906, universities around the country formed the Intercollegiate Athletic Association of the United States. In 1910, it changed its name to the National Collegiate Athletic Association or the NCAA.

For years, the NCAA was nothing more than a rules-making body. In 1921, they decided to host their first national championship in a sport, the National Collegiate Track and Field Championships.

Sports, especially football, were starting to become big business. High-profile college football contests between major universities or bowl games could draw crowds of up to 100,000, depending on the size of the stadium. 

While amateurism was vigilantly enforced amongst athletes, the increased competition between schools led to rising coach salaries. Knute Rockne, the head coach of Notre Dame, made $75,000 in 1931. Adjusted for inflation, it would be about $1.5 million dollars today. Most of that actually came from endorsement deals that he signed, but his athletes couldn’t. 

After the Second World War, there was an increase in collegiate conferences. The Ivy League was formally established in 1954, even though the member schools had been competing amongst themselves for over 100 years. 

The 1960s and 1970s saw the NCAA struggle for supremacy with the Amateur Athletic Union. The NCAA eventually won the struggle due to inefficiencies in the management of the AAU and their lack of support for women’s sports. 

By the 1970s, there was an increasing need for change. All colleges and universities were not the same. Some were small, with only a few hundred students, while others were enormous land grant institutions with tens of thousands of students. 

In 1956, the NCAA created two divisions known as the University Division for larger schools and the College Division for smaller schools. 

In 1973, they created the three-tier system that exists today. 

Division I schools tend to be the largest schools. They may offer students scholarships, require letters of intent from recruits, and can be revenue-generating for universities. As we will see in a bit, they can generate an enormous amount of revenue for some schools. Division 1 is the successor to the previous University Division.

The College Division was split into Division II and Division III.

Division II schools can offer scholarships like Division I, but they tend to be smaller and less competitive. They also have more restrictions on the amount of practice teams can have and the number of scholarships. 

At Division III schools, scholarships for sports cannot be awarded. Sports are extracurricular and non-revenue generating. These also tend to be the smallest schools. 

There are a small number of schools that will sport different teams in different divisions, but they have mostly been grandfathered in.

In 1972, Congress passed Title XI, an amendment to the Higher Education Act of 1965. This required all higher educational institutions to provide equal access to all educational programs on the basis of sex. This included sports, and in particular, the number of sports scholarships. 

This resulted in an explosion in the number of women’s sports and female athletes.  Schools are not required to provide the exact same sports for men and women, or even the same number of sports, but must allow for the same number of athletes.

College sports have continued to grow in popularity, and the revenue earned by Division I schools has skyrocketed. Almost all of the revenue comes from just two sports: football and men’s basketball. The vast majority of that revenue comes from selling television rights. 

As the amount of money increased, the incentives for colleges to realign became greater. 

One of the best-known examples is the Big Ten, which was a conference of midwestern universities. In 1990, they admitted Penn State, a traditional football powerhouse.

With the 11th team, they decided to keep the name Big Ten. In 2011, they added Nebraska, then Maryland, and Rugeters in 2014, which were on the East Coast, far away from the traditional heart of the Big Ten. 

The pursuit of bigger television contracts resulted in USC and UCLA announcing they would be joining in 2024, and Oregon and Washington soon followed suit.  More marque teams equals bigger TV contracts.

As with all the other additions, they kept the name, which means there are now 18 schools in the Big Ten. 

Total revenues for all NCAA schools, across all sports, are now bigger than the NFL, which is the largest professional sports league in the world by revenue….which is not bad for what are supposedly amateur organizations.

One result of the money coming into universities has been the increase in coaches’ salaries. Currently, the highest-paid public employee in 42 US states is a head football coach. 

You might wonder how fair it is that billions of dollars can be made off students who earn no money. Not only did collegiate athletes not make any money, but they could be fined or suspended for something as innocent as having someone take them to dinner. 

This issue was central to a 2014 lawsuit filed by former UCLA basketball standout Ed O’Bannon against the NCAA.  

The traditional argument against paying student-athletes was that they had their college tuition paid for, and that was their compensation. 

However, O’Bannon argued that it didn’t give the NCAA the right to use the image of him and other athletes in video games and for other commercial purposes. Furthermore, the NCAA prevented them from earning money based on their name and likeness, which every other college student was allowed to do. 

In August 2014, U.S. District Judge Claudia Wilken ruled in favor of O’Bannon. The court found that the NCAA’s rules prohibiting student-athletes from receiving compensation for using their Name, Image, and Likeness violated antitrust laws.

In 2015, the NCAA appealed the ruling, and the appeals court sided with the lower court on the major issues. 

This resulted in the NCAA changing its name, image, and likeness policy in 2021. 

This was a seismic shift in college sports. Prior to this, the NCAA was adamant about not only not paying athletes but also preventing athletes from earning money elsewhere. 

Now, athletes can sign endorsement deals with brands and companies, monetize their social media presence through sponsored posts and collaborations, be paid for personal appearances, autograph signings, and other similar events, and start their own businesses and promote them using their name, image, and likeness.

This has quickly resulted in many top athletes becoming millionaires even before graduating. 

Caitlin Clark, who recently graduated as the all-time leading scorer in women’s basketball supposedly made $3.1 million her senior year doing endorsement deals for Gatorade, State Farm, and Nike.

Bronny James, the son of NBA great Lebron James, has made over $7 million off his name alone. 

It isn’t just the big names who are making money. 

Texas Tech, for example, had a collective make a deal where every player on the football team would earn $25,000 a year for their name, image, and likeness. 

On top of this, the NCAA has been forced to change its transfer rules. Formerly, students had a sit out of year of competition if they changed schools. 

This has created a new world where students are now selecting colleges based on the name, image, and likeness deals that they can get, and, because they can now transfer between seasons without having to sit out, they can literally hop between schools based on who offers them the best deal. 

Not every athlete is getting paid, and in fact, most of them are not, so it isn’t as if amateurism has disappeared totally. 

College athletes getting paid is still relatively new, and no one is sure how everything will play out in the years to come. 

The end result is that some of the top universities are, for all practical purposes, now running professional sports teams. It all happened slowly over time, and no one really intended for this outcome, but that is where we are today. 

What started with mid-19th century rowing teams having friendly competitions has evolved slowly over time to a system where universities are making billions, and student-athletes can make millions, none of which really has anything to do with the core mission of education and research.

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