College Football’s Best Businessman Banking on Sports’ Survival
Joe Moglia may be the richest administrator in college sports, even with a Coastal Carolina salary of just $1 this year after forgoing his $177,000 paycheck amid the ongoing pandemic. Its a far cry from the $21 million he made in 2008 in his final year as CEO of TD Ameritrade, a Fortune 500 company. Moglia’s salary forfeiture came at the same time his tenure as the chairman of TD Ameritrade’s board–a position he took upon stepping down as CEO– ended in the wake of the company’s Charles Schwab acquisition. While he has part-time advisory work awaiting with his other business interests as founder and chairman of FG New America Acquisition Corp. (Fundamental Global’s SPAC) and a partner at Capital Wealth Advisors, that single dollar is still all Moglia is bringing home these days.
It’s even less money than he earned at his $20/week grocery gig at age 12—but the Renaissance man is keeping everything happening in college athletics in perspective.
Sure, there will be some adjusting. Yes, budget, staff or sport cuts may continue. Athletic departments might even have to operate like more balanced businesses, “reallocating resources when they need something new instead of just spending more money,” as the perennial financial services exec said. “If you’ve got a budget of a dollar and you need something that costs a dime, learn to cut a dime.”
At the end of the day, that’s still not what most concerns Coastal Carolina’s 71-year-old executive director for football and chair of athletics.
“Sometimes college football thinks it’s the only thing that exists in the world, but that’s not the case,” he said in an interview the same week his program cracked the AP Top 25 for the first time in its FBS history. “We’ve got a pandemic that’s a global crisis, and certainly a crisis in our country, and it’s having a major impact on many, many businesses. College athletics has it much, much better than certain sections of the economy.”
Prior to becoming what one could call the CEO of Chanticleers football, Moglia spent seven years as the team’s head coach, retiring with a .718 winning percentage. Before that, he served as Nebraska head coach Bo Pelini’s executive advisor in what a 2010 Sports Illustrated profile described as “the Nebraska version of Celebrity Apprentice” (he was basically a 60-year-old unpaid intern) and coached a couple of teams in the now-defunct United Football League. But even before that, he was a longtime businessman, and a pretty good one, too.
Schwab’s market cap from its TD Ameritrade deal is expected to be nearly $75 billion. When Moglia started as CEO, Ameritrade’s market cap was $700 million. Client assets are today are $5.5 trillion, compared to $24 billion 19 years ago when he took the helm at Ameritrade.
He transitioned to coaching because that was his passion, but he took a business approach with him—which made Moglia an outlier, a distinction now more evident today in light of the pandemic’s financial pressures.
“[Athletic departments] should know how to reallocate resources, but most of the time programs don’t. A lot of times you don’t have business people running those departments,” Moglia said. “Even in the business world, you have leaders who think the answer is more money unless they’re backed into a corner and forced to think differently. College programs have been doing things one way for a long time and it’s always worked, so they haven’t needed to change until now. But if they want to survive, they have to adapt and make tough decisions. If they do that, they’ll be fine in a few years.”
The sustainability of the biggest college athletics departments has been a question posed even prior to the pandemic, as spending continued to skyrocket (particularly on facilities and coaching salaries) while revenues from media rights and sponsor deals soared. Back in 2015, the Washington Post published a piece with the subhead: “Big-time college athletic departments are taking in more money than ever—and spending it just as fast.”
That’s still true today. Even before COVID-19, the margins for operating any athletics department tended to be slim with the amount of spending needed today to sustain a semblance of competitiveness. Ohio State’s 2018-19 revenues totaled more than $210 million, but expenses came in at $220 million. Michigan came out only $7 million ahead of its expenses, even after bringing in $197 million in revenue. Alabama’s $164 million in revenue was met with $185 million in expenses.
And despite the virus’ persistence, media revenue at top-tier football schools is largely intact with modified seasons underway or approaching, as is the case with the Big Ten and Pac-12. Despite ticketing losses, fundraising and sponsor dollars are still coming in close to normal for most. What the pandemic has done, however, is highlight the financial flaws and perhaps unsustainable systems in the current college sports model. It may force bigger programs to reassess in ways they perhaps wouldn’t have otherwise—recognizing that the current spending expectations didn’t always exist and still don’t within the lower ranks.
In other words, prominent college athletics departments didn’t always make and spend what Moglia describes as “gargantuan” sums of money seemingly without much oversight or concern for deficits or reserve savings. Maybe moving forward, they’ll do some more of that reallocating Moglia is so fond of instead of continually increasing spending. The pandemic may also force smaller departments to grapple with even smaller margins. In Coastal Carolina’s beach town of Conway, S.C., where the school just about broke even at $37 million in the most recent fiscal year, layoffs and furloughs were an almost inevitable outcome of the pandemic while sports paused. And still, the department stands.
“The [Power 5] money coming in today is still a multiple of what it was say seven, eight or ten years ago,” Moglia said. “In Group of 5 or FCS, you don’t have that kind of money coming in ever, not just now. But maybe now you have to eliminate a sport or two, you have to make those choices because things are going to get tight, but look at the bigger picture. What’s more ‘end of the world’ is [what’s happening with] small businesses. Those are going out of business—and they’re gone for good. They’re getting crushed. That’s not happening in college sports. Whole athletic departments aren’t disappearing.”
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