Cost of progress: Houston’s battle for relevancy sees gains
“If you want to win, there is a cost of winning,” said Chairman of the Board of Regents Tilman Fertita to start off the introductory press conference for football head coach Dana Holgorsen in December.
Houston has followed the mantra that “to make money, you need to spend money” in pursuit of reaching national relevancy.
Fertitta helped organize the rare hiring away of a Power Five coach to a Group of Five school in the winter and has helped fund other projects on campus like the Fertitta Center.
“We got to have an excellent athletics program, because that is what is an asset to the University. A mediocre program is not an asset, it is a liability,” said UH President Renu Khator at the press conference.
When an asset becomes a liability can be up for debate, but what is not up for debate is the University of Houston has not reported profits in either football or men’s basketball from 2003 to 2017, according to data pulled from the U.S. Department of Education’s Equity in Athletics website.
Though it sounds bad, it is not uncommon, as just about 64 percent of Division I schools reported they made money off of their football teams over the time frame, and about 30 percent made money off of their men’s basketball team, according to data pulled from the site.
In 2017, about 58 percent of football programs and 30 percent of men’s basketball teams made money.
Houston’s revenue in both sports consistently rose from 2009 until 2016, when both teams took a dip from which basketball recovered from but football did not. Revenue overall has continued to trend upward, and the Cougars are generally on the right track.
Success has already shown to breed results. Former head coach Tom Herman and his team’s success helped raise football’s revenue by almost $5 million dollars in his first year, according to the Equity in Athletics website.
Though his second year saw the numbers drop as the team struggled and rumors of his departure circled the team, his first year showed that winning will bring in money.
The average profit per school for football in the American Athletic Conference was $868,301 in 2017, while the Power Five football conferences averaged over $27 million in football profits with just five schools — West Virginia, Rutgers, Purdue, Arizona State and UCLA — that lost money or broke even.
In men’s basketball, the AAC’s schools averaged a loss of $7,720 in 2017. The average school in the biggest six conferences, including the Big East, profited about $3.9 million in the same year according to the data from the site.
Though the differences are staggering, the reason for them is not. Bigger programs have bigger fan bases, more donors and more lucrative media deals.
For example, the Big 12 gets about $200 million a year for its schools, which is split to $20 million per school.
The AAC, on the other hand, received about $2 million each year per school, though the conference signed a deal that is supposed to be worth about $7 million a year per school that will run until 2031-32.
Once that media deal is taken into account, the overall finances of Houston is not too dissimilar to many of the bottom teams in conferences like the Big 12.
Looking at total athletics revenues reveals that in 2017, Houston’s athletic revenue trailed Iowa State’s by $16.5 million and Texas Tech by $23.7 million, according to the Equity in Athletics website.
The 2024-25 season is when the Big 12’s media deal with ABC/ESPN and Fox runs out, and that will likely be Houston’s window to join that conference, specifically before another long-term deal is made.
Meanwhile, Houston can continue to spend with the goal of raising its profile to make it an appealing target for conference expansion.
Acquiring a spot in any of the bigger conferences would earn Houston the extra financial boost to stack up against many of the power schools and could launch the school into stardom.
Houston is a hot spot in one of the most talent-filled states for college sports, and having the national recognition could keep elite players home, which can turn off members of the Big 12 or other conferences that heavily recruit in the area.
Just like the difference between a liability and an asset, Houston toes the line between being an asset and a threat to any major conference it joins.
Though Houston has not yet reaped all the benefits of its spending, the dam will have to eventually collapse. Houston will either break through, or the school will need to face the idea that it will never reach that stage.