Football in the Fall is a benchmark for the year. School starts back, fans start hyping their teams and soon the Upstate is awash in football. But this year is different … way different. With Universities working toward holding classes in-person, the future of the Fall College Football season is far from a certainty and this could have huge implications for the state of South Carolina economy and our Upstate universities.
It is hard to understate the economic impact college football has on Upstate economies. According to Clemson Chamber of Commerce President Susan Cohen, hotel revenue in the Clemson area from last year’s Texas A&M game exceeded $750,000. Other studies show that the average Clemson Tigers home football game is responsible for sustaining 198 jobs and producing $10.3 million in total output, $733,000 in net state revenue, and $542,000 in net local government revenue. Jobs may be also be impacted as evidenced by a recent study that found that Clemson athletics are responsible for over 1200 jobs in the Upstate.
How Clemson University May Be Affected
In the most optimistic projections, Clemson home games proceed as normal. However in this scenario revenue is still impacted as many people face difficult and uncertain economic situations. Even with games being played, Clemson is projecting a loss of around $7.5 million through reduced ticket sales, donations and marketing revenue. On top of that is a one-time loss of $2 million resulting from the cancellation of March Madness.
Keep in mind that this is a best-case. These losses can increase significantly should the season be reduced or cancelled. Similarly sized schools like Minnesota are projecting a losses between $10 million and $75 million in depending on our the season plays out.
Affects on the City of Clemson and the Upstate
If you have been to the city of Clemson in the summer, you will have a good yardstick upon which to approximate just how many people flood the town on game weekends. Remember, the population of Clemson is actually only around 14,000 once you take out the student population.
In 2018, September sales tax revenue for the city of Clemson was $142,080. Most of this was directly from people attending home football games. To lose the revenue from a home football season would be a devastating blow to the businesses that depend on the annual influx of fans.
In our discussion, Susan Cohen that the city of Clemson is already feeling the pain from the pandemic. With the cancellation of spring sports, an annual rowing event, graduation and a closed campus, the city has already lost millions of dollars. Add these losses to a cancelled or modified football season and the impacts to the Clemson economy quickly add up.
The Strom Thurmond Institute lab report shows each Clemson home game nets $211,824 in local government revenue for Greenville County; Anderson County, $109,122; Pickens County, $99,493; Oconee County, $42,793; and $579,842 statewide. State government net revenue from each game totals $784,177. By those numbers, Greenville County could lose $1.4 million in revenue if the season is cancelled.
How Can We Support The Clemson Economy?
Clemson announced today that students will be returning to campus this fall and that will definitely help the situation but I wanted to ask Susan Cohen how we can help support Clemson businesses in the meantime. She indicated that while “August Can’t Get Here Quick Enough“, Clemson shops have adapted well to the Social Distancing guidelines and that Clemson restaurants are offering both take-out and dine-in options to accommodate diners. Ms. Cohen indicated that challenge now is making sure that shoppers and diners feel comfortable. As businesses are working hard to make the user experiences safe, it is now up to us to get out and support all things local so that these businesses can weather this incredibly challenging storm. Here’s a Clemson area business listing to help you find businesses that you can help support.
What does it all mean and where are we heading?
To get a better picture of the situation, I reached out to Raymond Sauer a Professor of Economics at Clemson University and founder of The Sports Economist. Here’s our conversation …
With each home game producing $10.3 million in total output, what do you see as the short-term and long-term implications of missing a football season to the University, the city of Clemson and the Upstate of South Carolina?
I don’t have the crystal ball to pin good numbers on the financial impact of missing the football season. But your question puts the relative impacts in the correct order. The brunt of the financial impact will fall on the University, specifically the Athletic Department. It is possible there could be a broader knock-on effect to tuition revenue if some students take a gap year as a result, or something like that. Restaurants, bars, and hotels in Clemson will be hard hit. They are full on football weekends as everyone knows, so they’d miss a bunch of their best revenue generating days. For the rest of the Upstate there could actually be a small positive impact, as spending from fans gets re-directed to other activities. This aspect is important but frequently overlooked.
The pandemic has affected every aspect of the University system. Did this disruption expose bigger financial issues in the College System and College Athletics?
Warren Buffet’s maxim that when the tide goes out “you discover who is swimming naked” applies. Clemson’s Athletic Department has always struck me as being prudently managed. Others not so much. I worry about schools like Presbyterian. They pushed the boat out into what’s turned into a stormy sea. I hope they turned back in time.
Yesterday, Furman ended their baseball and lacrosse programs. With football generating so much revenue relative to other sports, do you see a potential cancellation of the football season as a possible catalyst for Universities re-evaluating their commitment to sports in general?
Meeting a budget has consequences. The model of enrollment growth driven by exposure through athletics – specifically football and tournament basketball – may get blown out of the water. However, I think we will get through this period in a matter of months, not years (most pandemics don’t last more than two years). So if Lacrosse continues to grow in popularity, there is a good chance it will return as an intercollegiate sport at Furman. In the meantime, club models for athletic competition between universities in sports like lacrosse will give young athletes the opportunity to compete as soon as it is safe. From my point of view that is a point missing from the doom and gloom talk.
Given the resources needed to have games without fans, do you see that solution as a viable option?
Games without fans are boring. I’ve watched some soccer from Germany in the last week and it was unusual to say the least. Games without fans are better than no games at all, but not the same. Broadcast revenues from football will support programs in this scenario, but won’t support coaching salaries, which are built on forecasts from yesterday’s pre-pandemic world.
What economic lessons do you see coming out of this pandemic?
As for economic lessons from the pandemic, the first is to make sure you have a rainy day fund. This goes for households, businesses and all public institutions. We are fortunate to have learned lessons from the Great Depression of the 1930s and the Great Recession of 2008-2009 that have helped guide Federal policy to offset the economic shock. The Federal Reserve has backstopped the fall of the economy to some extent, as did the CARES Act. The bill will come later, but these policy actions have helped and have been guided by previous experience.
A second lesson may come later, when we are able to compare policies across the states and the globe to see what helped and what didn’t. It is pretty clear already that the regulatory state, the FDA in particular, is in need of serious reform. But we need that institution to do it’s job for now, and reform can and should come later.
About Professor Raymond Sauer
Raymond Sauer is Professor of Economics. He served as Chair of The John E. Walker Department of Economics from 2004-2016. He has previously served on the faculties of the University of New Mexico, Stanford, and the University of Louisville. His research interests are wide-ranging, including the economics of regulation, financial market efficiency, and the organization of markets in general. His papers have been published in leading journals such as the American Economic Review, Journal of Economic Literature, Journal of Finance, and Journal of Political Economy. He is the founder of The Sports Economist, a popular multi-author weblog which focuses on economic aspects of sport, and was elected President of the North American Association of Sports Economists in June 2011.