The COVID-19 pandemic continues to devastate the cultural and economic landscape of the United States, most recently leading to the cancelation of all fall college sports.
The only exception to the National Collegiate Athletic Association’s (NCAA’s) decision is the Division 1 Football Bowl Subdivision, which the NCAA does not control. The reason isn’t love of the game or the best interest of the student athletes—it’s money. And it’s not just for schools. College towns rely heavily on college football, the economic activity it creates, and the tax revenue it produces.
Losing football could cost close to $4 billion for participating universities alone. But the economic pain will spread far beyond schools. College towns are typically small, but they become population centers on football Saturdays in the fall. For example, Knoxville, Tennessee, home to the University of Tennessee Volunteers, has a population of just under 200,000 and a football stadium that seats more than 100,000. These visitors don’t just buy tickets; they also fill the town’s stores, restaurants, bars, and hotels, and they pay taxes. So if the games are canceled or played without fans, the resulting loss of economic activity and the associated tax revenues for these communities will be devastating.
Several members of Congress have pleaded with universities to not cancel football, but what Congress should actually consider is how college towns and their economies will suffer—regardless of whether the games are played—and how this is yet another example of why more federal support is needed.
What toll is COVID-19 taking on college towns?
As COVID-19 cases have increased across the country, some conferences, including the Big Ten and Pac-12, have canceled football while others hold out hope for games this fall. These conferences contain some of the largest higher-education institutions and football programs in the nation and often have a significant economic effect in their respective regions. Boise, Idaho, is projected to lose $15.4 million in business sales because Boise State canceled their home games, and State College, Pennsylvania, and Madison, Wisconsin, are projected to lose $70 million and $80 million, respectively.
These losses affect college towns in several major ways.
- Hits to the hospitality industry. According to 2018 Bureau of Economic Analysis data, 16 of the 25 municipalities hosting preseason Top 25–ranked college football programs have a greater percentage of their gross domestic product coming from the hospitality industry than from their respective states as a whole (data for Tuscaloosa were unavailable). Iowa City, Iowa, (4.3 percent for the city versus 2.9 percent for the state) and Eugene, Oregon, (4.9 percent for the city versus 4.4 percent for the state) have the largest differences among Top 25 schools that have canceled their seasons.
- Hits to local businesses. Many businesses in college towns are struggling to navigate the loss of sports tourism that often brings more visitors during events than there are total students enrolled at a given university. In some communities, such as State College, nearly 10 percent of all visitor spending is tied to football alone, and community businesses often rely on sale surges from game days for their annual budgeting needs.
- Hits to tax revenue. College towns rely heavily on tourism and sales taxes to generate revenue—both of which are projected to have more drastic revenue shortfalls over the 2021 fiscal year because their tax base is not as anchored as larger cities, which can rely more on property taxes. For example, Pullman, Washington, is down about 15 percent in sales tax revenue because of reduced tourism for Washington State University events. The athletics program at the Ohio State University alone is estimated to account for $31.9 million in state and local government revenue throughout Ohio, demonstrating the fiscal influence that collegiate sports often have with governments.
- Hits to employment. State governments have already begun to implement higher-education budget cuts that could harm college towns, as colleges and universities are often among the largest employers (PDF) in those municipalities. The loss of revenue from college football tourism and student economic activity combined with cuts in higher education funding would be too much for college towns to bear without effective federal assistance.
Many college towns hit hard by lost football revenue don’t qualify for federal aid
Access to the guaranteed minimum assistance from the Coronavirus Relief Fund under the Coronavirus Aid, Relief, and Economic Security (CARES) Act was limited to municipalities with populations of more than 500,000, so fewer than 40 cities out of more than 19,000 municipalities in the country received direct funds (totaling $7.9 billion of $150 billion in the relief fund). The vast majority of football programs in the four Football Bowl Subdivision conferences that have canceled their season so far (Big Ten, Pac-12, Mountain West, and Mid-American) are based in cities that don’t meet the 500,000 population requirement (seven programs out of 49 schools in those four conferences), so most college towns are forced to rely on their respective state governments to receive emergency funding.
Although the loss of college football is just one aspect of how municipalities have been devastated by COVID-19, it shows how important it is for future federal aid to mandate that states provide relief funds to local governments or that aid be adjusted to provide direct federal relief to additional municipalities outside of the previous limits of the CARES Act. With expected revenue shortfalls of $134 billion for municipalities across the country—just in 2020—additional unobligated relief funds provided directly to municipalities will be critical for municipalities navigating through the crisis into recovery.
Richard Auxier contributed to this blog post.