Structuring CIS for Long-Term Growth: Step One: Define Revenue Sources

Tobi WritesAnalyst ISeptember 23, 2009

As I stated in my initial call to action article on Canadian Interuniversity Sport (CIS—Canada's version of NCAA Division I) the seemingly imminent loss of Simon Fraser University to the NCAA's Division II has created a desire at many CIS member institiutions to reform the rules governing CIS.

This is the first in a followup series of articles discussing positive changes that could be implemented to improve the financial bottom line at CIS member universities across Canada.

This article looks at the role of donors and the government in the creation of revenue generating sports that would one day allow self sufficient university sports in CIS.


Where we are today

The CIS is looking to change their rules to hopefully retain member Universities unhappy with the status quo of consistent financial losses married to low caliber competition that does not fulfill two of the primary reasons to have interuniversity sportsto bring media attention to their university and to build an alumni culture to aid in bringing in alumni contributions.

There is real talk among member schools of increasing the amount of money put aside for assistance to Canadian student athletes and even writing guidelines that strongly encourage universities to offer a few full scholarships to star Canadian athletes.

(Currently, the CIS offers little guidance on the matter, assuming the fact that most schools lack the funding to offer scholarships will keep competiton levels balanced.)

"We want to be the destination of choice for top Canadian student-athletes," said CIS President Clint Hamilton recently.

It is an admirable thought and is a step in the right direction, but just throwing a few more scholarships at the problem won't fix the issue.  In fact if done incorrectly, it could further harm sports at the schools by causing student resentment towards the student athletes.

You can't just pull money from campus projects to fund scholarships and expect that the fix the underlying problems in CIS athletic programs.

The CIS could, in relatively short order, develop broadcastable revenue sports that might fund its athletics programs and allow students who want to be top athletes the same opportunitythe same quality trainingas students at those universities who want to be teachers or architects.  But throwing out a few more full scholarships almost certainly won't get you there.

To reach the desired goal, seed capital and revenue streams have to be created and strict spending regulation on the top end programs need to be introduced and enforced. 


Seed Capital

New programs and improvements to existing programs need to be funded. I am going to stretch my definitions and define all of that money as "seed capital".

There are a variety of ways to generate capital to fund non-scholarship to partial scholarship programs or those programs' seed capital, from the well worn (public, alumni, and government contributions) to the obscure and, frankly, mundane (community food donations, lotteries).

We will only deal with the well worn here to keep this overview simple.

Lets start with the idea of a rich angel investor funding the whole program. Despite public opinions among Canadian sports fans, there are an abundance of filthy Rich Canadians with strong desires to help their countrymen. 

Canada is not a poor country. The country has 40 billionaires and many, many more multi-millionaires.  

Individuals like diamond mine multi-millionaire Stewart Blusson, Richard Tomlinson, Mike Lazaridis, and Michael DeGroote have contributed  multiple millions of dollars to universities in Canada.

Blusson gave $32-50 million to UBC. Tomlinson gave $64 million to McGill University. 

Lazaridis gave $33 Million to the University of Waterloo.  DeGroote gave $105 million to McMasters University.

Maybe one of these Canadian Billionaires or Multi-Millionaires wants to see an improvement in Canadian sports accross the board. Perhaps one of them might donate an amount of money to act as a seed fund for a revenue-generating sport at any qualifying university. 

In very theoretic terms, a donation of $50 Million could, for example, be given out in $2M lots of seed moneyenough to start football at all 25 non-football playing CIS member universities.

It is not out of the question that a single patriotic multimillionaire Canadian might give a sum in that ballpark. Or perhaps our patriot might inspire 50 multi-millionaires to each pedge a million dollarsa move that would inspire even more patroitic giving from less weathly Canadians.

As the prior examples also illustrate, it is not by any means inconcieveable to see a well off alumn give his alma mater a sizeable financial gift.  Maybe in this time of turmoil for CIS, an alumn might give 2-3 million to start a football program at the University of British Columbia Okanagan, Thompson River University, or Université Moncton to help stabilize CIS.

Finally Local, Provincial, and the national government could provide seed capital.

A strong university athletic program at a school in a small city can bring in travelling fans which feeds city businesses. It could make a lot of sense for say the city of Lethbridge to contribute $2M to help start a Pronghorns football team.

Likewise it would be in the interest of British Columbia if the provincial government helped ease UBC and SFU's travel budgets by providing $6 million dollars seed money to be divided between the 3 CIS universities in BC most likely to be able to support CIS football programs.

It is not unusual to see the national government provide $30-50M+ to build professional stadiums. Why is it never asked that the national government provide $50 million to launch CIS football programs at the non-football CIS schools, where there money might go directly towards helping amateur athletes instead of lining the pockets of paid adults?


Sharing costs

Blusson's gift to UBC requires the British Columbian provincial government and the Canadian Foundation of Innovation to match his contributions.  This is often the way pro stadiums get built in Canada

Toronto's BMO field cost $62 million to build. The City of Toronto owns it, but only contributed about $10 million to it's construction. The Government of Ontario contributed $8 million, the National Government contributed $27 million, and tenant Maple Leaf Sports & Entertainment Ltd. contributed $18 million.

New Moncton Stadium cost $22.5 million dollars. Owner Université de Moncton contributed $3.5 million to it's construction. The city of Moncton supplied $5 million, the Provincial government provided $6.5 million and the national government provided $7.5 million.

Certainly a single multi-millionaire, only the Federal government, or only a small collection of city and provincial governments could easily afford to provide the kind of money to dramatically reshape CIS overnight. 

The amounts of seed money needed in the short term are relatively minor, especially measured against the number of students and universities who could benefit, but a collaberative effort between all of the above would seem eminently affordable and make the amounts easy for all involved.

The question is not a financial one, but rather a question of will, perserverence, and patriotism.


The Lesson of UNT

A university local to me, the University of North Texas, recently completed a 10 year effort to secure the funding for a new $70 million dollar stadium for it's football team.  I mention this not because any university in Canada should be building a $70 million, 30,000 seat stadium (they should not), but because the administration and athletic department faced a number of the same challenges that Canadian universities will face in any effort to add funds to their sports programs.

UNT is the fourth largest university in Texas by enrollment with just under 35,000 students enrolled. 

It historically has had a large commuter student presence (commuter students do not generally drive back to campus to watch games) but also has a considerable amount of dorm housing and near campus student housing, so calling it a commuter school would be too strong. 

Additionally, the school is the dominant music school in the region, so it attracts a high number of students who have had an axe to grind with "spoiled athletes"especially football playerssince high school.  Again the dynamics of the student body create a very hostile crowd towards unversity athletics, especially football.

Needless to say, having the student body fund a new stadium was a very tough sale at this university, despite it's location (in Texas).

The first time the student government and the athletic department tried to fund the stadium, the students voted against it and impeached most of their student assembly for trying to override the student vote.

This time the athletic department was a good deal smarter and their allies (the student govenment, the Greeks, the alumni, and UNT football fans) were a lot more organized. 

The Athletic department sold that fact that the existing stadium was 50 years old and crumbling. They broadcast the fact that it was insuffient, embarrassingly inadequate, and hinted at it being dangerous in the future. 

They changed the discussion from an argument on the merits of football to an evaluation of the worth of the university's reputation and how it's facilities, especially its facilities regularly seen by the public should not be left to decay.

The athletic department took away the emotional objections. They said students who are around to enjoy the facility would pay the student fees, not current students. They also advised that no more than 50% of the stadium costs would come from student fees, the rest from public contributions. 

The athletic department allies built a group in Facebook. They organized strategy in local UNT athletic forums. They spent money and time publicizing the problems with the facilty to UNT students and got students to fund part of the stadium.

There was a coordinated effort that addressed student objections and allowed the new stadium to be built with approval from an audience that was historically harshly against it.

This is the kind of coordinated, multi-level effort that is required nationwide to transform CIS.  Just having a small coven of sports minded university leaders redirect funds to add a handful of scholarships at each school won't do it.

We have discussed seed money, where to acquire it, and what kind of effor is needed to get it, but we really haven't discussed why it is needed.

Contrary to what is being pushed out there to the public, adding scholarships won't fix the CIS's problems. The CIS need to build revenue generating sports.


Revenue Generating Sports

In the US, the vast majority of revenue at the collegiate level is generated by a school's Football and Basketball programs. These programs draw spectators to attend games and watch the games on TV. There are very few regions where colleges have a third "money sport".

In Canada, I see the potential for 5 money sports among the sports played at the CIS levelindoor soccer, outdoor soccer, hockey (obviously), basketball, and football.  (Baseball could be a likely winner for CIS, but they do not play baseball.)

Soccer is the growth sport and Canada and as Canadian sensibilities lie somewhere between European and American sensibilities and there are no well developed and financed Canadian minor leagues, I can see where soccer at the interuniversity level has a shot to become a money sport in the future. Indoor soccer seems ideal for snow covered Canada.

The problem is soccer as a spectator sport has not arrived in Canada yet.  Fan attendace for collegiate soccer is lousy numbering in the low hundreds at best per game.

There aren't 8-12 cities drawing 20,000, 10,000 or even 5000 fans per game to see pro soccer. Without that proveable viabilty, I think it is a tough sell to argue that soccer could be a money sport at the CIS level in say the next 10 years.

You need something that can work quickly.

I suspect that hockey is, at this moment, not viable due to competition from the CHL and the various well developed and comparitively well supported minor leagues. CIS Hockey attendance numbers seem to support that view.

Additionally there might be a huge backlash if money is given to build up CIS hockey and that is seen as harmful to the existing and popular minor league system.

CIS Men's Basketball is promising. The games are indoors during the winter and cold spring. There is no pro competition for basketball fans entertainment dollars and basketball competiton on TV tends to be foreign. CIS teams seem to regularly draw between 500-1200 per game. That is a very reasonable starting point for a money sport.

CIS football shows the most promise, inspite of playing outdoors in the bad weather towards the end of the season. Canadians have been attending pro football games by the thousands for generations. Some CFL teams average over 35,000 fans per game and their championship draws 55-60,000 regularly.

Canadians can envision large crowds at football games and it shows in CIS attendance numbers. 

In spite of the CFL has hobbling CIS football attendance in most of the big cities, schools away from CFL Killzones like Laval, Sherbrooke, McMaster, Western and a few others are starting to develop very respectable followings.

Most of the 27 football playing CIS schools average 1000 -3500 per game with about a half dozen in the 3500 -8000 range and Laval in the 13,000-15,000 range.

That is with poor scheduling, next to no local marketing, little tailgaiting, and without sensible stadiums. These are correctable issues.

I think CIS football is the most logical CIS sport to build into broadcastable, revenue-generating sport.

But just creating a system that allows the emergence of a revenue generating sport is not enough.


The need for regulation and rules

In the US, we have blown the financial end of our college athletics. If there were revenue sharing and tighter restrictions, we could have totally self sufficient programs all accross the US, but we blew it. We lack the guts to make a stand to do things right in college athletics.

Our national personality is strongly against regulation. Our leaders have failed to step up. They fear election day backlash from sports fans of out of control university athletic programs, so they allow the wolves of the Big 10, Pac 10, and SEC to run the hen house.

In Canada, there is more of an acceptance of government taking a role in governance of everything, including something as "trivial" as sports. Government regulation isn't looked upon with disdain like it is in the US.

That gives Canadians a real shot to outshine the US in collegiate sports.

For the CIS to succeed, the Canadian government will need to provide the hammer of regulation on Canadian universities' athletic programs. They need to provide an unbreakable will that will be the foundation upon which the coming CIS is built.

The government needs to keep the strong programs within reach by limiting what they can reinvest into that sport. Universities reinvesting small athletic profits into improvements in that sport is one thing, but massive profits should go into the university and be put to the use of all of its students. 

TV revenue should be shared equally among CIS schools at the insistance of the government, not any lower entity. These kinds of hard rules would keep the playing field level.

The government needs to impliment rules that create broadcast windows for CIS sports.  Why not try to prevent the broadcast of any football in Canada besides CIS football on Saturdays during the CIS seasonthereby creating a vacuumn that only CIS football can fill?

Why not pass laws that requires a previously unbroadcasted CIS basketball game to be broadcast for each NCAA or NBA game shown on Canadian TV? 

Even if it is a tape delayed game at 2 AM or 6 AM, it helps. A tape delayed game doesn't hurt game attendance and does help exposure. Fans will record games they want to see.

As fans see more CIS sports on TV, there will be demand for more of it.  Better timeslots will be earmarked for CIS games.

That will generate ad and ticket revenue that will generate money for the universities to fund their programs and will give more Canadian athletes a chance to work towards their dreams.

The government can play a huge role in helping CIS sports become self-sufficient.


A final word

Canadian student athletes aren't just athletes.  They are also students who pay their own way and as such deserve the same best effort from their university to help them to succeed in their chosen field as a law student or medical student.  They are also Canadians and deserve the support of their government, even if that support is not direct financial support.

It is time for every patriotic Canadian sports fan to pull their weight and make CIS sports the envy of the world.


    5-Star DE Pickens Commits to South Carolina Over Clemson

    College Football logo
    College Football

    5-Star DE Pickens Commits to South Carolina Over Clemson

    Adam Wells
    via Bleacher Report

    Imagining a CFB Version of 'Hard Knocks'

    College Football logo
    College Football

    Imagining a CFB Version of 'Hard Knocks'

    Former SIU DL Shot Defending Students at Indiana School

    College Football logo
    College Football

    Former SIU DL Shot Defending Students at Indiana School

    Mike Chiari
    via Bleacher Report

    Kentucky Safety Walker Arrested on Drug Charges

    College Football logo
    College Football

    Kentucky Safety Walker Arrested on Drug Charges

    Tim Daniels
    via Bleacher Report