USC's costly sanctions

Wow, what a disaster. Here's the LAT top:

Citing a history of misdeeds that "strike at the heart" of college amateurism, the NCAA hit USC with a string of penalties Thursday that will keep the powerhouse Trojans football team out of bowl games for the next two seasons and could cost the university millions of dollars. The sanctions, which also involve men's basketball and women's tennis, culminated a four-year investigation that began with separate reports that two star athletes - Heisman Trophy-winning tailback Reggie Bush and basketball forward O.J. Mayo - had accepted improper gifts from outside sports marketers and agents.

Ironically, the loss of two seasons of postseason play might be the least of the financial costs. Schools typically don't make a killing through bowl payouts because conferences pool the money (anywhere from a few hundred thousand dollars to $18 million), and then split it among all of its members. Actually, some schools going to bowl games barely break even or even lose money because there are so many expenses. From Medill Reports:

The Indiana Hoosiers of the Big Ten went 4-8 overall and 1-7 in conference, but by virtue of their membership in the Big Ten, took home a little more than $2 million from the BCS. Meanwhile, the Boise State Broncos of the Western Athletic Conference went 14-0 and defeated TCU in the Fiesta Bowl. The school received $3 million from BCS.

As for the non-bowl impacts at USC, there is certain to be a loss of ticket sales over the next two seasons (fair weather fans will be dropping like flies), plus ancillary revenue losses from concessions, merchandise and the like. All of which is a big deal because in 2008, according to Forbes, the USC football program had revenues of $35.2 million and overall profits of $14 million. The team had been valued at $68 million, which was 15th-highest in the nation (Texas is first).

College teams have value in terms of what kind of dividends they pay to their stakeholders. "Dividend" money is what's left for the team's university (for academic purposes, including scholarship payments for football players) and athletic department (to support non-revenue sports) after the cost of running the football operation in question. It also includes what's generated for its conference (the distribution of bowl game revenue) and the community around the university (estimated incremental spending by visitors to the county that's attributable to the program).

Typically, football and basketball are the only college sports to generate revenue. Part of that money pays for all the other sports (operational costs as well as scholarships). So lots of those dollars are out the window. Add to that all the PR damage - for many this will be an affirmation of all the suspicions about the sleaziness surrounding SC football. The football scandal is likely to touch many other corners of the school.