College athletic departments are discovering the click of a mouse can sound just as sweet as the ring of a cash register: Across the country, colleges and universities are transforming their web sites into one-stop, multimedia channels with hopes of generating up to $1 million a year.
Enhanced use of the web also could enable colleges to better target their customers and raise even more money. The goal is to entice web-savvy fans to embrace the school’s official site, wallet in hand.
“Revenue has certainly become more of a focus,” said Nada Usina, president of XOS Technologies, a Sanford, Fla.-based company that helps schools host web sites. “It does vary, but without question the trend has become more about looking at profitability.”
Not all colleges have seen significant revenue gains from their web site just yet, but most are making a push toward audio and video-enabled sites that can generate a profit through advertising and merchandise sales, online auctions, and premium content subscriptions. The trend comes at a time when athletic department administrators are under increasing pressure to raise more money to offset rising expenses.
The University of Georgia, one of the nation’s most successful athletic departments, expects that revenue from its web site deal will be between $425,000 and $450,000 for this fiscal year, up from $200,000 last year.
Louisiana State University’s athletic department has doubled its web site subscription base since 2005 and has a goal of increasing its current 3,500 subscriptions by 50 percent each year. Subscribers pay up to $9.95 a month for access to audio and video content.
The University of Iowa’s recent 10-year, $55.1 million deal with Learfield Communications gave the company the multimedia rights to all revenue generating opportunities on the Hawkeyes’ web site, according to a Freedom of Information Act request filed with the school. The site includes advertising, web broadcasts, audio and video streaming, and premium content. The school’s contract with Learfield is weighted mostly toward TV and broadcasting rights and venue advertising.
Raising money through the web isn’t a new idea, but the technology needed to make it happen is, said Usina. The recent mainstream adoption of broadband internet connections has made streaming audio and video a much more viable investment, both for schools and users.
Schools can use multimedia tools to host more advertising in addition to audio and video, and more fans now have the bandwidth to support those platforms.
XOS Technologies has seen the number of its partnerships with schools jump from 40 in 2006 to more than 140 as of April. According to Usina, athletic department web sites have the potential to become a billion-dollar business.
Even schools with smaller budgets, such as Iowa State University, are investing in digital video cameras and other equipment needed to provide premium content web streaming. They hope the payoff comes down the line, through subscriptions that give users access to sports that draw less attention, such as gymnastics and softball, as well as press conferences and online auctions.
If colleges want to turn a profit from their web sites, it’s crucial they become more multifaceted, something blogs and many newspaper sites already have done. If schools can attract enough users, they can create online fan communities that ultimately will boost revenue through online spending, ticket sales, and fundraising.
“There’s plenty of information out there about schools,” said Allen Thomas, an associate athletic director at Georgia. “For us to be the official site, we’ve got to offer as many bells-and-whistles pieces to keep them ingrained into the Georgia Bulldogs.”
Compared with the budgets of major athletic departments, which can run $60 million and higher, an additional $1 million from a web site looks rather paltry. But David Ridpath, the executive director for a college athletic watchdog organization known as the Drake Group, said most athletic departments either lose money or barely break even because of the rising costs of competition.
According to the NCAA’s latest revenues and expenses report issued in 2003, Division I-A schools ran, on average, $600,000 in the red for the 2002-03 school year before institutional support was factored in. Seeing themselves in a budget hole, administrators will grab at anything that could help them balance the books.
And every little bit helps.
“In college athletics, we do a great job raising money, creating revenue streams, but we do a terrible job managing that money,” said Ridpath, also an assistant professor in sports administration at Ohio University. “We just continually grow costs, which means that we have to continue to focus on generating revenue.”
Brian Bedol is the president and CEO of CSTV.com, which has partnership agreements with more than 200 Division I web sites. He said while colleges have the potential to create significant revenue through web site deals, the main purpose is to create an online community for the schools’ most ardent fans.
“These sites have evolved from a place for the sports information department to get information out, to really being almost the equivalent of a school’s own [broadcast] channel,” Bedol said. “The value of the web site goes far beyond the revenue that it generates directly, because it really is the way for the university to establish a direct one-to-one relationship with its most important and valuable fans.”
University of Georgia Athletics
Louisiana State University Athletics
University of Iowa Athletics
Learfield Communications Inc.