College Football: A Touchdown for Local Economies

There is a concept in economics called “the multiplier effect.” It asserts that when a new business is created, the money spent by the business owners and their employees creates income for others, which then stimulates more spending. This process can continue, creating a cascade of spending that boosts the economy.

Most economists pin the multiplier effect to five times, meaning that for every new job that is created by a business, another five jobs are created or improved to support that job. For example, if a new factory opens, every worker will need a place to live, transportation, groceries, entertainment, clothing, and so on.

College football is not a factory, but it is very big business and overall the highest-revenue-generating sport in college athletics by far. Here’s a look from 247 Sports at three of the top revenue-grossing university teams:  

·      The Ohio State Buckeyes, whose football program brought in $127 million out of total $251 million for all Buckeye sports in 2022. It total, Buckeye sports brought in $279 million in 2023.

·      The University of Texas Longhorns football program in Austin brought in $142 million of athletics’ $239 million budget in 2022. In 2023, the Longhorns roped in $162 million for football, with ticket sales bringing in an additional $13 million. Total athletic revenue was $271 million.

·      Michigan Wolverines football revenue was $131 million of total sports revenue of $210 million in 2022. Michigan football brought in close to $143 million in 2023. As with the Texas Longhorns, much of the revenue increase was from ticket sales, which increased $10 million to $65 million. Total athletic revenue for Wolverines sports was $229 million.

While college football generates considerable revenue, primarily from ticket sales, merchandise, and donations, the money usually does not directly impact the school itself. The programs tend to funnel revenue exclusively back into the football programs to attract the best players, coaches, trainers, and others.

That said, college football is an enormous benefit to the cities and towns where the universities are located. The University of Alabama in Tuscaloosa has won three College Football Playoff (CFP) championships since the inception of the CFP in 2014, and had plenty of success prior. Football will add close to $17 million per week on average to Tuscaloosa city revenue from game-related tourism, which includes hotels, dining, and shopping. Given that the general fund for the city is approximately $175 million, Alabama football is critical to Tuscaloosa.

What of other programs? Notre Dame, in South Bend, Ind., commissioned consulting firm Economic Solutions Inc. to calculate the economic impact of the university on the region, including its Fighting Irish football program. “For each football home game, Economic Solutions determined that the regional economy sees an influx of $26.4 million, with 660,000 visitors throughout the season spending $133 million on lodging, food, transportation and retail purchases.” South Bend’s municipal budget for 2024 is $417 million, making tax revenue from football significant. In addition, the university is the largest employer in the city, which is actually the case for most universities.   

Texas football is on another level, with some high school programs (Allen High School, Cypress Fairbanks Independent School District, Katy Independent School District) having budgets comparable to those of smaller college programs. For example, Allen High School’s new football stadium seats 18,000 and cost $82 million. Comparatively, the cost to build a new Division II football stadium can range from $1.5 million to $25 million.

And then there’s Texas college football. The University of Texas at Austin has won four national football championships from 1963 to 2005. As recently as 2022, UTA’s athletic department brought in almost $240 million in revenue, which made it the second-highest revenue-generating athletic department of the 232 NCAA schools that are required to disclose their finances. (Private universities are not required to publish such information, and some public schools have state exemptions.) Football accounted for approximately $160 million of that revenue. Austin, the state capital, has robust technology and manufacturing sectors (Dell, Apple, Oracle, etc.). Despite that, the state is Austin’s largest employer with[PO1] [CA2]  education and healthcare in second place. Longhorns football generates an average of $63 million in revenue for the city’s businesses per home football game.

Cities and states benefit economically from college football, while the universities benefit by attracting students. There is no hard survey of non-athlete students who list football or sports as one of their top reasons to matriculate, but many schools with football programs advertise the team and stadium in marketing materials. Even in cities with no shortage of recreational options, football games are often a large component of student social life.

Most alumni and the broader fan base of college football are, understandably, more focused on the games than they are on the economic impact created. That said, there’s no denying that college football, college athletics, and universities in general generate important revenue and jobs for the cities and towns where they are based.