Tennessee's 10% player-pay surcharge and the rising unaffordability of college sports

Photo by Angela Loria on Unsplash

The University of Tennessee’s announcement earlier this week that it will begin adding a 10% “talent fee” to the price of football tickets in order to share revenue with its student-athletes was, not unpredictably, met with widespread scorn.

I don’t like it either. But it’s a sign of the times, and one that should hardly come as a surprise.

As we’ve watched the NIL (Name, Image and Likeness) era evolve over the past few years, it was clear that the ultimate result would be an increased cost burden for the fans. Some have long argued that college athletes should be paid because, “the schools are making millions off them.”

That’s not really true, though. The schools may theoretically be making millions off football players, but they aren’t netting millions off football players. Football is a revenue sports, and so is basketball. Those are the two sports that most of us see when we turn on our televisions. Flying underneath the radar are the many non-revenue sports that get funded out of the money generated by football and basketball.

I was at Outback on Merchants Drive in Knoxville Wednesday evening and the Ole Miss soccer team stopped in for dinner. They were in town for a game against Tennessee the next evening. Soccer is, of course, a non-revenue sport. Their players weren’t flown to Knoxville, as the players would’ve been if it were a football game. Instead, they had their own bus. Still, though, there was food and lodging to pay for, among the many other costs. Care to guess what it takes to feed a team of 30 or so players at Outback? Answer: More than $500. That’s a drop in the bucket compared to the money Ole Miss rakes in at a football game. But those drops add up quickly. And guess how much money soccer generates from ticket sales? Nothing … as in zero dollars.

The point is just this: football is a cash cow for major universities, but it’s not generating tons of money that sit in the coffers or pad the pockets of the fat cats at the top. (Okay, those at the top — including coaches — are paid far more than they’re worth, but that’s a story for a different day.)

So when paying football players was an idea thrust into the mainstream, it had to cost someone … and that someone was always going to be us, the fans. It was one thing when collectives (in Tennessee’s case, Spyre Sports) were doing the bidding on behalf of the universities they were associated with. But that’s not how we got to this point. That was the start of NIL, not the endgame. In May, the NCAA and the five power conferences — which includes the SEC — agreed to allow schools to directly pay players for the first time. That was part of a settlement of anti-trust cases that had been brought against the NCAA, and it represented a seismic shift on the college football landscape.

It isn’t a surprise that Tennessee is at the forefront of implementing a new way to fund the decision that was made back in May; Danny White, the Vols’ athletic director, is an innovator.

But there are two points to be made here: 1.) All the major programs will be doing this soon. And, 2.) The solution isn’t really all that innovative.

In the corporate world, cost increases are always passed on to consumers. As McDonald’s has started paying its employees more, as demanded by so many, the folks who eat at McDonald’s have started paying more for their McNuggets. When the cost of a barrel of crude oil goes up, it’s reflected in the cost at the pump every time someone feels up their tank with gasoline.

College football is big business, and its consumers are the fans. So when it was first decreed that college football players could and should be paid, it was always going to come back on the fans. It had to, really, for the reasons discussed above. A part of business economics that most don’t understand is that gross profits aren’t as important as profit margins. It’s why Kroger becomes an easy scapegoat in times of grocery inflation because $7.7 billion (Kroger’s gross profit for 2^nd quarter 2024 alone) is an eye-popping number and most don’t look past it to see the 1.9% figure (Kroger’s net profit for 2^nd quarter 2024.) Put more simply: The old saying, “It takes money to make money” couldn’t be more true. It costs a lot of money for Kroger to make a $7.7 billion gross profit … and it costs a lot of money for any major college athletics program to make money, too. That’s why all of us, the consumers, are always taking hits in the wallet, whether we’re buying a gallon of milk or football tickets.

I despise this era of pay-to-play college athletics. I fear that it’s going to lead to the ruination of the sport(s). There’s another old saying: “If it ain’t broke, don’t fix it.” College sports weren’t broken … not by any means. No, players weren’t being paid, but they were getting to hone their craft on a big-time stage that almost every high school and youth league player dreams of, they were getting a free education (including meals and housing), and the very best were getting an opportunity to go pro. (For the record, I don’t oppose paying players … I just wish there was a better way. NIL, as originally intended, was better in theory but only allowed a finite number of players to benefit.)

I am a Tennessee fan, and I fully recognize that there is perhaps no school in the country that has benefited more from the combination of the NIL rules and the transfer portal than Tennessee. The Vols are the best three-sport school (baseball, basketball, football) in America right now, and that didn’t happen just by accident. So maybe it’s a bit hypocritical of me to cheer for the Vols on Saturday while decrying the new pay-for-play era of college sports on Sunday, but I don’t think the path we’re on is sustainable.

Ultimately, we’re going to price ordinary fans out of the game, much like the NFL did long ago. In fact, I think we’re pretty much to that point already. On Saturday, when the Vols were playing a team (Kent State) they were favored to beat by almost 50, the cost for a family of four to attend the game was over $300. That’s just the price for tickets if they were purchased on the resale market, not including the price to park, concessions, or any of the other costs associated with attending the game. I don’t think there are very many common fans, especially in the current economy, who can afford that on a regular basis.

The thing that makes college football so special to so many people is the pageantry of the game and the atmosphere of spending an entire fall Saturday on campus — things you don’t get with the NFL. Different things play into the pageantry of college football, but one key component is the passion of the fans — the common Joe who is spending his hard-earned money to attend a game. If you remove Joe and his passion, you lose a significant part of what makes college football special. And that’s where I fear we’re headed.

Clearly we’re not there yet. Tennessee has a waiting list of thousands of people who are in line for season tickets. And if the Vols can sell out the November game against UTEP, it will mark two consecutive seasons of sellouts at Neyland Stadium. But we’re not far removed from the days of the stadium being 75% to 80% full — which carried over for most games in Josh Heupel’s first year on campus. You can’t help wondering what the impact will be once the novelty of being a contender for the first time in 20 years has worn off. The big games — the Floridas, the Alabamas, the Georgias — will always sell out. But I’m not convinced that sold-out games against teams like Chattanooga and Kent State, or even the lesser SEC schools, are here to stay.

Along these same lines, there’s actually a bigger culprit lurking than revenue-sharing for players when it comes to the rising unaffordability of college football, and that’s the ticket resale sites like Ticketmaster, which Tennessee is currently aligned with.

Since the move to digital tickets and mobile entry, the days of scoring tickets to a sold-out game on the street a couple of hours before kickoff are largely in the past. More than 90% of resale transactions are now conducted through Ticketmaster or similar services, such as VividSeats or StubHub. And fans who are buying tickets through those services are slammed with added-on fees and surcharges, usually in the neighborhood of 10%-15% per ticket.

Just as an example: Tennessee’s next home game is Florida. The cheapest single ticket currently available on Ticketmaster is being sold for $324. However, the final cost is $413.45: $55.08 in service fees, which Ticketmaster says are shared between “parties that help make the event happen,” including the venue and Ticketmaster, a $3.95 order processing fee, and $30.42 in taxes. That’s an increase of more than 25% just in service fees. The total cost increase from asking price to final price is a whopping 27%.

For last week’s game against Kent State, a handful of tickets were selling on gameday for face value — $60. But the final cost to the buyer was just over $80 … an increase of more than 30%.

The cost of resale tickets is a far bigger threat to the common fan than a 10% surcharge for student-athlete pay.

The end result, though, is simply this: College sports continue down the path towards unaffordability, with no end in sight. But it’s the cost of doing business these days. Tennessee might be the only school telling you right now that they’re going to increase ticket costs 10% for this purpose, but that’s actually a credit to Danny White … because every school is going to soon be doing it, whether or not they come right out and say so.