Print and Go Back ESPN.com: Rise [Print without images]

Thursday, May 21, 2009
Updated: May 29, 2:28 PM ET
High schools facing economic, licensing issues

By Patrick Dorsey
Special to ESPNRISE.com

Even three national television appearances in one season were hardly out of the ordinary for the St. Thomas Aquinas (Fort Lauderdale, Fla.) High School football team.

Duron Carter
Duron Carter is one of 11 St. Thomas players who took advantage of a TV platform on National Signing Day.

The Raiders followed up an early-season showing on ESPN with a successful defense of their Class 5A state title at Orlando's Citrus Bowl. They won the ESPN RISE mythical national championship in the process on Sun Sports/FSN Florida TV and opened the door for CBS to broadcast live from their school on national signing day as 11 players signed national letters of intent.

The South Florida school, like many high schools nationwide with high-profile sports teams, has grown accustomed to receiving more than five minutes of fame annually.

That's because high school sports is fast becoming a hot media commodity, with young players receiving increased exposure on TV and the Internet as well as in reputable, widely read publications. Games are being moved from cramped school venues to college and pro stadiums, thus increasing demand for tickets, air time and even merchandise.

So why are state associations so cash-strapped that they are cutting programming?

Even as prep sports grow more high-profile, many schools and state associations say they simply can't stay ahead of the struggling economy.

"We are trying to maintain and survive," Alabama High School Athletic Association (AHSAA) associate executive director Joe Evans said.

"Obviously," St. Thomas football coach/athletic director George Smith said, "money's tight."

How Tight?

The Florida High School Athletic Association recently voted to reduce the maximum number of games by 20 percent in all sports except football (40 percent on the junior varsity level). It's only a two-year plan, but is indicative of the economic times. Other states are considering similar plans. This week, Pennsylvania's state association mulled a trim to its sports calendar.

States such as Indiana, with geography that makes travel easier, are not considering budget cuts. Yet the state's commissioner, Blake Ress, encouraged schools to take cost-saving measures and said he won't force any school to play the maximum number of contests.

California Interscholastic Federation executive director Marie Ishida said individual leagues are reducing games and matches, with some athletic director stipends also being cut and lower-level programs -- such as freshman teams -- getting dropped.

Travel has become an issue at the individual school level. Schools nationwide are scheduling less long-distance travel or are combining trips for freshman, junior varsity and varsity teams, using just one bus for all three, and taking other measures to increase efficiency.

Lucas Oil Stadium
Sponsorships have helped Indiana defray the costs of holding its high school championship at Lucas Oil Stadium.

State associations also are working on cutting costs. Eighteen of the states whose most recent 990 (nonprofit) IRS forms were available online reported losses, with three other states listing income of more than $500,000 for the year.

Even Alabama, which was one of the three, isn't considering its income a windfall. AHSAA executive director Steve Savarese said the $2,292,169 income in 2007 was earmarked for the construction of facilities. Part of the money came from a one-time, $1 million government grant to build a track facility, with much of the rest to pay for the organization's new administration building. After that, Savarese said, the AHSAA's profit-sharing plan with schools goes into effect, similar to the process in other states.

"We try to make our athletic events as efficient as they possibly can be so we can return more money to our member schools," Savarese said. "We have evaluated everything we do, from the conferences we attend to how we get to those conferences, to where we attend in-state.

"We've tried to cut our expenses, as all schools have tried to cut their expenses."

Making It Up

A recent drop in event attendance also has state associations worried. While dips in attendance can't always be attributed to the economy -- weather and playoff matchups are other factors -- fewer fans mean a decreased revenue stream both for the schools during the regular season and for the state associations, many of whom control the gate for playoffs and state championships.

The Future

ESPN RISE looks into its crystal ball to see what stories, players and trends are coming to high school sports.

The future …
// Boys athletes to watch
// Girls athletes to watch
// Baseball: Bryce Harper
// Sports to watch (and play)
// Headlines in 2010
// Lifestyle: Music / Sneakers / Video games

Future issues facing high school sports:
// National championships
// Liscensing deals
// The national federation

California's Ishida said states are exploring "anything we can do to try to [make money] for our schools in some way."

That's where high school sports' rising profile comes in.

Cities and stadiums are now bidding for the right to host state championships (bids can reach six figures, depending on the state and the sport). While this practice hasn't reached the entire United States (Indiana paid Lucas Oil Stadium to hold its 2008 football finals, for example), it isn't confined to the traditionally prep-crazy states, either.

"I think that indicates a change," said Rick Strunk, associate executive director with the North Carolina High School Athletic Association, "because for years there was not [that level of interest], at least in North Carolina, for high school athletics."

Cable television contracts also are prevalent, although the system "has not been profitable for many state associations" in terms of excess cash, according to Alabama's Savarese.

Corporate sponsorships, too, make up a large part of state and school revenue. State associations are maintaining these relationships in the hopes that they will weather a tough economy. North Carolina's longtime partnership with Wachovia, for example, will last through next year, but it is in danger after the company was bought by Wells Fargo. "The long-term future of that, we just don't know," Strunk said.

Hitting Stores…

The next potential revenue stream: merchandising.

Alabama High School Basketball
The Alabama state association reported nearly $2.3 million in income last year.

In 2007, college sports merchandise accounted for an estimated $4.3 billion in retail sales, according to a USA Today report. By contrast, the estimated net worth of the high school merchandising market is as yet uncharted territory. High schools can and do raise funds by selling T-shirts and other products with their logos, but they are powerless to prevent any retailer from doing the same and pocketing the profits.

The National Federation of State High School Associations recently unveiled a pilot profit-sharing program by which schools can market their name and logo with retailers with a percentage heading back to the state associations and the NFHS. Eleven states have signed up for the deal, which includes merchandise from Champion and Under Armour as well as several other brands.

NFHS executive director Bob Kanaby refused to speculate on potential revenue.

"I'm not sure that there's anyone that really has their handle on the high school market," he said.

Said Welsh: "It's hard to give an answer to that, and particularly hard because we don't have any track record. We'll be real smart in a year or so. Or smarter, anyway."

The Future

What will the financial landscape of high school sports look like in a year or two?

That, in large part, depends on the economy.

Alabama's Evans is optimistic for an economic turnaround within two or three years.

If that happens -- and it is accompanied by cooperating weather and intriguing playoff matchups between teams from sports-crazy communities -- that would be a major step toward increased profitability, as Savarese said "gate receipts are what are truly going to be the foundation" of prep athletics going forward, even as television, sponsorships and merchandising expand.

North Carolina's Strunk believes high-profile high school sports like football and boys' basketball might never fully resemble their college counterparts. "You don't have the same fan base, alumni base, etcetera," he said.

St. Thomas' Smith is uncertain about whether high school sports will ever generate great revenue.

"That would be ideal," St. Thomas' Smith said. "I don't know if that would ever be the case. But maybe it could be."

Patrick Dorsey covers high school sports for The Indianapolis Star.