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ESPN, SEC Contract Part of Perfect Storm Killing Athens (GA) Businesses?

Tuesday, November 24, 2009 , Posted by Christopher Byrne at 12:35 PM, under , ,

In a smaller college town like Athens, Georgia, football season is more than a sport played in the late summer and fall. It is the economic engine that keeps many downtown Athens businesses, hotels, and restaurants afloat for much of the rest of the year. It is also a sport that, in theory, provides much needed sales tax revenue for the Unified Government of Athens-Clarke County.

But something has changed this year as the Southeastern Conference (SEC) enters the first year of a 15-year television contract with CBS Sports and ESPN. Businesses in downtown Athens are hurting.

Gameday in Athens: The population of Athens, Georgia can close to double
Georgia football game days. 2008/

How could it be that a sports that brings 92,000+ fans to Athens six Saturdays a year can suddenly be an economic drag on business? It is not an easy answer and there are so many factors that come into play. The economy is bad. The team is not so good (although some will argue they are bad). Add to this mix the fact that Georgia has had four home games televised at night on the ESPN Family of Networks, some of them on back to back weekends, and you have a perfect storm.

The Hotel Problem

Night games are absolutely killing us," said Shelby Wright of the Foundry Park Inn and Spa, located in the very north edge of downtown Athens. "With the games at night, people are not coming in on Friday night because they don't need to. They are coming in on Saturday afternoon. This means they are eating fewer meals here and in the downtown restaurants. And with these night games, that means we cannot have any shows in The Melting Point [the on-site concert venue at the Foundry]."

But what is the impact of the empty rooms? Prior to this season, and currently, most hotels in Athens have had a two-night minimum stay, whether the rooms are used or not. That was a price people were willing to pay to make sure they had a room for the game. But with the down economy, people are not willing to spend that kind of money if they do not have to. In addition, the recent opening of 4 new hotels in Athens means that people do have more choices that may be more economical, putting pressure on the higher end hotels who are seeing that the days of a two-day minimum in a new era of night games may be in the past.

The Foundry does have a little cushion that other hotels do not. The hotel is usually the place where visiting television crews stay. What does this mean for football games? It can mean anything from 35-45 rooms booked for at least two nights (70-90 room nights). Assuming a negotiated rate of $200 for a minimum of two nights:

Room Nights

What has traditionally been bad for some of the regional networks is that they had to book two nights even though they only needed one. That means that 50% of their loading costs were in essence "wasted money" that had to be spent to house their production and technical crews. Occasionally, when they needed to save money or enough rooms were not available, they would house the technical crews 20 miles away in Commerce, GA or in worst extremes, 45+ miles away in Gwinnett County.

Larger productions, such as those done by CBS Sports and ESPN do not typically suffer the "wasted money" hist, according to Shelby, as they usually book at least 3 nights.

The Foundry, unlike other hotels, will also get a boost this basketball season, as ESPN Regional/SEC Network will be covering all of the Georgia Men's basketball SEC Home games, a sharp increase from prior seasons.

Increased competition in the local hotel market, combined with the new schedule reality, means that hotels may need to back away from their two night minimums. So for four night games, Lets look at a 25% and 50% loss of booked room nights from the 1,000 available downtown at a $100 rate per night (just a round number used for easy math).

Hotel Rooms Nights Lost


Nighty Rate





State Sales Tax (4%)


Splost Sales Tax (1%)


Education Splost (1%)


Hotel/Motel Tax (7%)


Subtotal Taxes



Total Per Game



Translated over the 15-year life of the contract, the numbers could look like this:

Hotel Losses over One Season at $100 per night
(1,000 rooms available downtown)

Lost Room Nights
One Night Game
Two Night Games
Three Night Games
Four Night Games

Note that these numbers are hypothetical as hotels do not release their numbers individually. The actual occupancy rate is compiled by the local convention and visitors bureau. As such, the numbers for this football season are not yet available.

Restaurants Feel the Trickle Down Effect

Empty hotel rooms mean that people do not need to eat as many meals in restaurants. For a 12:30 kick-off or a CBS Sports covered game that starts at 3:30 PM (Georgia has had one at home this year), people arriving Friday nights would eat a late dinner, breakfast, and maybe lunch before heading off to the game. When the game would end around 7-7:30ish, they would get a meal in a local restaurant.

This means two to three lost meal opportunities per restaurant, per person, per game. It means lost tip revenue for the wait staff, It means lost sales tax revenue for the local government (more about that later).

Assuming the restaurants are hurting as bad as they are saying, an average bill of $15 per person per meal before tips and taxes, and restaurants losing 75 - 100 meals per day (of 2 people each):

Restaurants Lost Income Opportunity

Cost Per Meal
Subtotal Income


State Sales Tax (4%)
Splost Sales Tax (1%)
Education Splost (1%)
Subtotal Taxes


Tips (18%)
Total Per Night Game
Total for 2009 Season (4 Night Games)

Assume 5 restaurants with equal loss over 4 games

Lost Meal Revenue
Lost State Sales Tax
Lost Splost Sales Tax
Lost Education Splost
Subtotal Loss

Lost Tip Income
Total 2009 Loss to Community

Again, it is important to note that these are anecdotal numbers based on what is being said in the community.

When you factor in the 15-year length of the SEC Contract, you are looking at this impact over the length of the agreement, depending on the number of night games:

Potential Losses by 5 Restaurants over 15 Year Contract

One Night Game
Two Night Games
Three Night Games
Four Night Games
75 Lost Meals
100 Lost Meals

For one or maybe two local restaurants, catering for the television crews can help offset these losses somewhat. Local Athens retaurant Mama's Boy has provided the catering for ESPN's night games this year. The ESPN production manager found them through a Google search and decided to try them out. In many ways this has been a Godsend for the restaurant because, according to one of their managers, their game day business is non-existent because people do not go out to eat during games, and the night games put a serious dent into their bottom line.

Potential Commmunity Impact is Deep

What do these numbers mean to the community of Athens, Georgia? When you consider the fact that Athens has a poverty rate of 31%, it means a lot. If hotels, restaurants, and businesses lose revenue, jobs may be lost. The State of Georgia, already facing a huge deficit, takes a huge hit as well.

Locally, the impact is more deep than outsiders to the community may realize. Earlier, I mentioned two SPLOST taxes of 1% each. SPLOST means "Special Purpose Local Option Sales Tax." This is the right for local communities, under state law, to allow voters to vote to self impose a 1% sales tax for local projects and 1% to fund school construction and related education costs. The big "sell" of these taxes to the local community is the notion that most of the sales taxes raised will be paid for by out-of-towners coming to town for football games, spending freely throughout the weekend.

If the hypothetical, anecdotal numbers above do bear out, the voters will have a bigger hole to dig themselves out of when the bills come do. By law, the projects approved must be completed, and can only be paid for from these pots of money. Already the state of the economy has severely limited the collection of these sales taxes, and the football games at night are adding another dent.

So What Good is this SEC Television Contract for the Community?

The SEC television contract means an awful lot for the conference and the member institutions. The question is if any trickle down effect from these monies can and will offset the economic hurt being experienced by the local hotels, restaurants, and businesses in downtown Athens.

The networks will hire locally for utilities (e.g. cable pullers) and runners, but there is not much trickle down from this revenue injection. And if this is happening in Athens, what is being experienced in other small SEC communities like Oxford, Mississippi and Auburn, Alabama. Is their experience the same?

It is unfathomable that the SEC knew this would happen going into the contract. Now that the networks have the control they do under the contract, the SEC does not have a lot of leverage, or incentive, to help remedy the situation. As one athletic department staff member at the University of Georgia said to me, "the only way around this would be for UGA to pull out of the SEC, and you and I know that is not going to happen."

But there are small things that the SEC member institutions can do to help. One specific area that comes to mind is catering. Restaurants and caterers in Athens are lucky in that UGA does not require the networks to use in-house university services. As one production manager told me, this "is great because it allows the flexibility to put money back into the community."

This contrasts greatly with the University of Florida, which requires that the networks use their in-house services. Do the networks get value for this? Reportedly the answer is no. One insider told me that they are fed the exact same meal that the working press in the press box get for free, but that they have to pay $24 a head for the meal.

$24 a head for a meal, times 45-50 network staff on site for a game is chump change for the universities getting rich from the TV money. but that same $1,080 to $1,200 to a local business might mean the difference between surviving as a business and shutting down.

Currently have 3 comments:

  1. gat says:

    Good observations Chris. I checked with my server at a local restaurant last night, and she confirmed the hypothesis. I'm going to mention this in one of my classes next week.
    A few points, however.
    First, you mention increased competition in the hotel market. Those of us who live in Athens know that (for some reason that I do not understand), a few motels/hotels have opened recently. It would require a more detailed analysis to determine how much of the change in occupancy rates is due to night games vs. the rise in the number of available rooms vs. the general economic slowdown. Night games are certinly part of the story.
    Second, you write that "it is unfathomable that the SEC knew this would happen going into the contract." Whether they thought the issue through, I don't know, but what the Athletic Departments did know was that the new contract was going to make them do things they wouldn't have done on their own -- namely schedule more night games. There's always going to be more littering, drunkenness, and general anti-social behavior at night games, but the ESPN money convinced the ADs they could live with that effect. I would bet that the ESPN money would have convinced the ADs they could live with the effect you describe as well.
    Third, I don't think that general revenue funds have to be used to make up a SPLOST shortfall. I _think_ that if the SPLOST money runs out, some projects don't get built. [Of course, if debt was used to speed up the building process, local taxpayers would be responsible for making up any shortfall.]
    Fourth, I know this an old-media suggestion, but this issue is interesting enough to be in the local newspaper. If the Athens paper hasn't yet addressed the topic, you should submit a column.

  1. Unknown says:

    Let's ride out this recession before we draw any direct correlations between night games and lost revenues. I can only provide anecdotal evidence to the conversation, but:
    1) This is the first year since 1989 that I have not traveled "home" for a UGA football game & I usually attend 2 (sometimes 3). This is a direct result a HUGE drop in discretionary income brought on by the recession.

    2) When UGA had night games, I was more-likely to stay in town and eat AT LEAST 2 meals/day in Athens, whereas 12:30 and 3:30 kick-offs usually meant I simply drove up for the day and at one post-game meal while I waited for traffic to subside.

    Something tells me I am not alone in either instance above.

  1. Unknown says:

    Night games are great for bars in athens! I've been in the athens bar biz for about a decade and even though we're in a recession we just had our best football season ever. while I definitely feel bad for my waitron counterparts I cannot deny the effect that night games have on bar traffic. Interesting read though but i'm in favor of 14 more years of making money.

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