thependulumswings

In 1980 as newly inaugurated President Ronald Reagan strode into the Oval Office the American economy was a mess.  Interest rates reached double digits, unemployment was nearing the same, and inflation was rampant.

One of his economic team’s solution bets was to dramatically reduce the higher and eliminate the highest federal tax rates on the books.  The phrase “trickle-down economics” was born.  In essence if you incent the rich the poor would benefit was how opponents spun the policy.  Political opponents of the Reagan administration soon seized on this language in an effort to brand the administration as caring only about the wealthy.

The holy Reverend Jessie Jackson actually used his outrage against it, or “Reaganomics” as it also was mockingly called, to rally his minority base and make a run a the Democratic nomination a time or two.

Today, we face severe economic challenges as well.  While interest rates and inflation are quite tame, we have unemployment levels not seen since the Great Depression over 100 years ago.  Our economic challenges are different, varied, and numerous.

And, like it or not, the effect of “trickle-down” economics is in full view all over again.  If a business cannot open, it’s employees can’t work.  If they can’t work, the gas station sells less gas.  And, so on and so on.

One such “so on” is college athletics.  Yesterday, ESPN published a story with some staggering facts about what has happened in the spring of 2020 to the programs, and more importantly what will happen if there was no college football.  In short, the loss would total $4 billion dollars to the Power Five school’s revenue. It would alter, if not eliminate men’s and women’s revenue loss programs and decimate the administrations that manage them.

But one stat caught our attention more so than all of the others.  Of the 52 public (private ones have no legal need to share revenue info) Power 5 schools included in the Syracuse University study, only 3.8% cite football ticket sales as their biggest revenue source 2017-18.  That’s but two teams of the 52!

The fallout, therefore, from game day sales of shirts, parking, booze, concessions is significant.  If you have no games, you have no parking attendants. Unemployment.  Your popcorn vendor can keep the kernels.  Unemployment.  The t-shirt manufacturer can keep the ink dry.  Unemployment.  The beer distributor can keep the hops. Unemployment.

Even if social distancing forces limiting stadiums to half capacity; half of yesterday is 100% more than nothing.

TV revenue is the most important source of income from these events for many colleges.  The TV trucks don’t drive to the location. The production team stays home.  The TV station ad salesman sells no ads.  The ad agency produces fewer ads. Unemployment times four.  You get the picture, but not on your TV.

Trickle-down, like it or not, is our economy.

How many schools’ athletic departments saved for a rainy day?  Just about as many as American businesses both big and small.

Are you hoping and praying that you will actually be able to see live college football this fall?

So are several institutions and industries that live for live football.

They bet on the trickle-down effect yearly for their livelihood.