Good morning, and thanks for spending part of your day with Extra Points.

Some quick housekeeping notes:

1) The high score winner of last week’s Athletic Director Simulator 4000 challenge is has been alerted, but I don’t have his permission yet to announce his identity to the world. Thanks to the hundreds of people who played ADS4000 over the last week, and for all of your feedback and suggestions. We’ll do it again later this year!

2) Speaking of games, we will offer an EXTRA POINTS READER NCAA MEN’S BASKETBALL TOURNAMENT BRACKET CHALLENGE, starting on Monday. This bracket challenge will be free for all readers, even those who are not on premium subscriptions, with the winner earning more fabulous prizes. Stay tuned for that next week!

3) If you’re in the Columbus, Ohio area, I’m headed back to Ohio State next week. The Ohio State University Sports and Society Initiative is hosting a discussion with Armen Keteyian, the author of "The Price: What It Takes to Win in College Football's Era of Chaos" on March 21st at 5:00 PM. This event will also include a panel conversation with Andy Schwarz (economist and regular commentator on antitrust and college athletics), Mark Pantoni (the GM for Ohio State football)…and me. This event is free, but space is limited and filling up fast, so if you’d like to swing by, RSVP today!

In non-housekeeping news, my phone has been blowing up over the last 24 or so hours, after I sent the following tweet:

Let me try to offer some context

First, I stand by that tweet. I talk to all sorts of potential sources every day, from athletic directors and coaches, to agents, consultants, professors, business executives, other reporters, and more. When it comes to realignment and reclassification type stories, I’ve found it is important to talk to a wide variety of people. Folks in athletic departments don’t always know about conversations happening at the presidential or university system level, but sometimes consultants or other industry people do.

Over the last week or so, I’ve begun to hear from more than one of those sources, that multiple D-I schools are having serious talks about reclassifying. Having serious conversations doesn’t mean that they will reclassify. It simply means that senior university administrators are now willing to entertain options that normally wouldn’t be considered. Normally, nobody ever wants to reclassify out of D-I.

So what’s changed?

First, and this is critical, we all have to remember that every school’s situation is different. Schools are not impacted the same way by demographic changes, political risk exposure, reliance on federal grants or fundraising downturns. Their various political constituencies may value athletic membership differently. Something that’s a problem for a private school in New Jersey might not be a problem for a regional public in Florida or a religious private in Ohio. Or even a different private school in New Jersey.

Second, the athletic funding model is clearly changing. The costs to run an athletic department have only gone up over the last several years, but the revenue sharing/post-House era of D-I athletics will represent a significant upward bend of the cost curve for many institutions. With federal trade policy threatening to increase the cost of construction materials, borrowing costs higher than they were a decade ago, and now potentially significantly higher labor costs…there’s a real urgency for some schools to seriously evaluate how they plan to fund a D-I experience.

And finally, changes in athletics funding aren’t happening in a vacuum. American higher education was already in a precarious position, as COVID drained budget reserves, state funding declined in many markets, and demographic shifts have driven enrollment down for many non-elite institutions.

But on top of that already challenging environment, the federal government is slashing a lot of money. You’ve probably already heard of the potentially massive cuts coming from the National Institutes of Health, cuts that represent more than $60 million in lost revenue for many large research institutions. But between other cuts for agricultural research, DOE research, defense research and others, virtually every university is looking at playing defense. Schools across the country are establishing hiring freezes, and what-if scenarios are being planned out in case additional cuts are coming.

These aren’t just problems for the Harvards and Stanfords of the world. Almost everybody has some level of potential risk exposure.

So all of that together is why I’m hearing more about schools contemplating some very drastic actions.

If I get rock-solid enough sourcing about a school moving from “considering a D-II move in our latest SWOT analysis” to “yeah we’re moving to D-II next year”, I’ll publish the names. I feel comfortable enough sharing that we’re in challenging enough times that it makes sense for some schools to grapple with the uncomfortable possibility of a reclassification, and that it’s become a legitimate option as presidents and boards chart their next course.

Whether it’s a good idea or not, in my view, depends entirely on the school….their political and financial situation, their goals, and what their community is willing to support.

But make no mistake. D-I sports are getting more expensive. If that experience is important for schools, it’ll need to be meaningfully supported.

That’s going to require more revenue. One new way that I’m hearing schools are finding more revenue? Changing their stadium seating

Beyond earning money from television broadcasts, licensing and donations, one of the most important ways an athletic department earns revenue is the same way they made money back in the 1940s…by selling tickets and putting butts into seats.

Unlike most major professional sports teams, an awful lot of college stadiums were built back in the 1940s. Today’s fan is a very different person…a consumer who wants different amenities, different services…and let’s be honest…is also probably bigger than they would have been back in 1941.

One vendor I’ve heard mentioned a few times as schools are looking to tweak their stadiums is 4Topps, a company specializing in seating solutions. While the firm does specialize in installing mesh seats that breathe a little better than say, metal bleachers, company officials tell me they’re also seeing demand for two other products in the college space.

Some schools are replacing bleacher seats or other, more cramped sections, with bartables and drink railings. These seating formats give fans a little more breathing room, a chairback seat, and a place to set their nachos and beverage of choice. Schools can also charge more for this type of seating, meaning more revenue. I’m told this is becoming a particularly popular option in college baseball stadiums that are starting to see demand for more premium seating options.

At a different price point, 4Topps told me they’re also seeing higher demand for mesh bleacher seats, which are removable, and can be leased or purchased. The interesting thing to me, beyond the fact that it’s nice for your butt to potentially touch something other than metal, is that these seats also create sponsorship inventory. You can slap a corporate logo on the backs (or elsewhere), to build a completely new revenue stream.

The desire to better monetize the gameday experience also extends to the tailgate parking lots. Companies like REVELxp have already been offering Tailgates-As-A-Service for a while, but university interest is also opening up new business lines in the hospitality and experiences world.

That might mean the creation of special VIP seating setups in the grassy outfields for college baseball and softball games. It might be marrying a premium seating experience with on-field passes and program access. And, according to the folks there I’ve spoken to over the last month or so, it means turning what might have been a more transactional approach with schools (I give you tents and clean up garbage, you give me money) into a more consultative and deeper relationship over corporate hospitality.

There’s something to the idea of smaller, but deeper stadium experiences being better business. Last Fall, folks at Northwestern told me they were very confident that the temporary lakefront football field would generate more gameday revenue than old Ryan Field, even though the temporary lakefront stadium doesn’t even half the capacity of their old stadium…thanks to better premium seating (and the ability to sell alcohol). There’s a reason new stadium builds at places like San Diego State and Colorado State aren’t 75,000 seat behemoths, either.

Now, do I think that a school on the brink of dropping out of D1 can fix their budget problems with creative seat licensing and better baseball tailgates? No. I don’t think you can tailgate your way out of an institutional enrollment problem.

But you can revisit previous assumptions about infrastructure, corporate sales and gameday event management, as you try to figure out how to earn more money and compete in a new environment. And maybe that starts with revisiting how you do seating at some of your games.

If nothing else, different seating options may help fight one of the biggest problems in early season football games. Swamp butt.

Nobody wants that.

Real quick, here’s what else we hit this week

You can make sure you read everything we produce, and get access to ADS4000, and get the warm, fuzzy feeling of supporting independent journalism, by upgrading to a premium Extra Points subscription. It’s just nine bucks a month. That’s like a Taco Bell value meal. I think a month of Extra Points in your inbox is worth that. Don’t you?

Enjoy basketball, everybody. I’ll see you on the internet on Monday.