The Businessman Who Saved College Sports

“It is no longer a question of who can make the Top Ten, but whether there will be 10 left.”

–Steve Horn, former President of Long Beach State on the state of college football in the early 1970’s

A world where college football as we know it faces imminent death—almost unimaginable in today’s era of football frenzy. The massive TV deals, sold out games, and university logos on everything from bumper stickers to lampshades point to the power and wealth of the multi-billion-dollar college football of today. But it hasn’t always been this way.

In the 1960’s and early 70’s, the future of college football—and college athletics in general—was in question. Athletic departments bled money in the face of low revenues and quarter full stadiums, and the athletics directors of the time were doing nothing to save their beloved programs. That is, until Don Canham took over the athletic director’s office at the University of Michigan in 1968. An entrepreneur first and a sportsman second, Canham bucked long-held administrative standards, running Michigan athletics as a business, and in the process building a revenue model that would save Division I college athletics nationwide.

I. The College Football Landscape of the 1960’s and 70’s

 

Think of a simple business. Owners input money, time, and energy and in return receive revenues, and hopefully a bit of profit. Athletic departments operate in the same fashion; athletic directors spend on facilities, coaches, and equipment, and make money to return to the program.

 

In the 1960’s and early 70’s, there was an issue with the revenue side of this equation—it was minuscule compared to the expenses that programs were incurring to run their programs. Collegiate athletics was simply not making enough money to sustain itself. This revenue-side issue stemmed from an inefficient revenue model in athletic departments and the increased popularity of professional sports.

The 2014 Vizio BCS Title Game broadcast featured over an hour of advertising when including stadium ads, sponsored graphics, and television commercials—more advertising time then game time. All this advertising nets millions of dollars to networks, who are paying huge sums for the broadcasting rights (ESPN signed a 12-year deal worth $5.6 billion for rights to the college football playoff through 2025).

This high-revenue scenario of today is in stark contrast to the college athletics model of the mid 20th century; advertising was nearly taboo, and people frowned upon corporate presence in the college game. Additionally, for programs to advertise themselves to sell event tickets was condemnable, and thus, programs refrained nearly entirely from marketing themselves. It was an odd and inefficient model for an industry that relied almost entirely on ticket sales, as merchandising and branding had yet to be explored. There was no logo licensing, no jersey sales, no team shop. It was even seen as improper to charge for stadium parking; nearly 100% of college athletics revenues came from ticket sales.

 

With a model that was so intensely reliant on getting fans in seats, college sports revenues took a beating in the 1960’s when professional sports were growing rapidly. College sports waned in popularity and attendance as both the NFL and the NBA were setting revenue and attendance records. Annual professional football attendance nearly tripled from 4.2 million to 11.6 million from 1960 to 1969, and over 60 million viewers tuned in to watch the New York Jets beat the Baltimore Colts in the 1969 Super Bowl. Similarly, the NBA doubled in membership between 1966 and 1974, growing from nine to eighteen teams. “We’ve lost a whole generation of fans to the pros. The schools just sat back and watched the pros take them. It was not dignified for us to take advertising space,” explains Don Canham. As sports fans’ attention shifted away from collegiate athletics, the lopsided revenue models were taking a toll, and it was unclear if college athletics would be able to survive the national economic downturns of the mid 70’s.

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Super Bowl III (1969)

 

II. Canham’s Background in Entrepreneurship and Athletics

 

Don Canham, now a name that is revered in Michigan athletics history, had a background in both business and sports, and his entrepreneurial spirit drove his path to the Michigan AD’s office. With a grandfather in business and a father who worked at a magazine, Don Canham had been exposed to commerce and marketeering from a young age. When he started at the University of Michigan in 1937, he split his time between track & field practice and selling pairs of sweat socks at fraternities (he bought them for 8 cents a pair and flipped them at 5 pairs for a dollar). He was an excellent athlete as well, winning both Big Ten and NCAA titles in the high jump, and setting the groundwork for his later stint as head coach of Michigan’s track and field team.

After graduating from Michigan in 1941, Canham joined the Air Force, and once discharged he worked with a friend to develop a stamp to be used by football coaches. The stamp marked X’s and O’s, which made drawing up plays simpler and easier for football coaches. The stamp saw mild success, and is another example of Canham’s early entrepreneurial endeavors. In 1946, Canham rejoined Michigan Track & Field, and was promoted to head coach after just two years. He was very well regarded as a coach, leading Michigan to 12 Big Ten Championships during his 19-year career, and was eventually inducted into the US Track and Field Hall of Fame. In 1965, Canham directed the first NCAA Indoor Track & Field Championships in Detroit, and put his business intelligence on display by turning a revenue of over $80,000, returning profits to all of the participating schools.

While he was on staff with the track & field team, Canham founded Don Canham Enterprises, an athletic equipment and instructional video distributor whose main customers were high school physical education departments. The company grew into a multimillion dollar business, and is still operating in Ann Arbor today under the name School Tech. Canham Enterprises was the culmination of many attempted (and often successful) business ventures, and set the stage for Canham’s illustrious 20-year career as the athletic director at the University of Michigan.

 

III. Canham Rejects Tradition as Michigan’s Athletic Director

 

When Canham was offered an interview for the AD position at Michigan in 1968, he rejected the interview, claiming he had no desire to be an athletic director. After all, he was a businessman first and a sportsman second. In fact, he was planning on quitting coaching to run Canham Enterprises full time. “Some of the other coaches…came to me and said, ‘Look, take the interview and if they give you the job, just do it for five years.’ So I said ‘OK,’” recalls Canham. This business-first mindset defined Canham’s time as athletic director, and led him to revolutionize college athletics operations.

The first problem Canham addressed head on as AD was that of attendance, an ever-present issue in the college football landscape at the time. Michigan boasts the largest stadium in the nation, the Big House, which held upwards of 101,000 fans during Canham’s reign. However, Michigan had been suffering from a severe attendance problem at the end of the Fritz Crisler (Canham’s predecessor) era. Home games were averaging a measly 67,000 attendees, and Michigan hadn’t sold out the Ohio State game in 14 years; some joked that you could fire a cannon in the Big House and not hit anyone. Canham recognized the disconnect between the soft marketing tactics of the time and the desperate need for more ticket sales, lamenting, “We were projecting a deficit for the first time [in 1968], and there were forty thousand empty seats in the stadium.”

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Canham rebuffed the advertising standards of the time, and started a blitzkrieg marketing campaign aiming to fill the Big House once again. He developed a colorful, eight-page brochure selling football season tickets and sent it to over 1.2 million homes—no longer simply sending literature to alumni, but sending it to anyone who would listen (even across the Ohio border!). “We were supposed to get by just by mailing out the same drab brochures to the same alumni year after year,” complained Canham about the old standard, “It wasn’t dignified to advertise.” The brochures were so loud and aggressive that they were compared to “Florida land-development brochures” by a 1975 Sports Illustrated article. Michigan athletics also placed loud ads in newspapers and magazines, put up billboards, and Canham went so far as to fly a Michigan football advertisement from a plane over Detroit’s Tiger Stadium, drawing criticism from more ‘traditional’ football programs.

At the time, football attendance was driven by wins—if the team wasn’t winning, drawing a crowd became exponentially more difficult. Canham aimed to change this by transforming football Saturdays into an experience that surpassed simply watching college men compete on the gridiron. “We changed what a football game meant to people. We made it a spectacle, a carnival, a ball. Now they come at seven in the morning, go to the game, then go back to their tailgates. We realized early that you can’t always be No. 1, and can’t advertise that — so we made Saturday an event.” The advertising campaigns and the rebranding of football Saturdays worked—Michigan was averaging 90,000 fans by the early 70’s, and in 1975 Michigan hosted its last home football game with fewer than 100,000 in attendance at the Big House. Yes, you read that correctly—Michigan football has not had a crowd under six digits since October 25, 1975, a feat largely attributable to Mr. Don Canham.

The revenue implications of these figures are obviously huge, and part of what set Michigan’s athletic program apart; they were able to pay for sports that ran a deficit with impressive football revenues, and still return a profit on top. Canham developed additional sources of revenue too—he once earned $250,000 for Michigan athletics by hosting a professional football game at the Big House, upsetting NFL officials enough for them to change the rules about third party promoters making large sums from professional football games. More importantly, Canham drove a huge increase in annual alumni donations by starting alumni support groups such as the Victors Club and the Maize and Blue Club. When he took over, Michigan athletics was seeing about $46,000 every year from alumni donors. By 1975, alumni were donating $300,000 annually, and today the athletics department is expecting $7.35 million in donations this year alone.

Aside from securing donations and filling the Big House, Canham had another significant impact on Michigan athletics—the introduction of merchandising. College branding at the time did not have the national (and international) presence of today, as schools simply weren’t producing products with the school logo. Canham stepped in and capitalized on the demand for sports merchandise, citing the Detroit Lions’ brand presence as his inspiration. Using mail orders attached to his season ticket brochures, Canham sold everything from ashtrays featuring the ‘block M’ to lamps shaped like Michigan’s iconic winged helmet. This initiative helped achieve Canham’s goal of billing football Saturdays as an experience, and before long Ann Arbor was flooded with fans wearing the ‘block M’ every Saturday. In essence, Michigan had tapped into an unexplored revenue stream, which was reflected in the athletic department’s bottom line. “We found out we had a business going,” mused Canham about Michigan’s move into the merchandise space, “There were almost no collegiate novelty items available at that time, and we felt we could market the Michigan brand well enough to provide another revenue stream for the department.”

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IV. Canham’s Legacy

 

When Don Canham retired from his post at Michigan in 1988, the athletic department’s budget had grown to $XXXX from $XXXX when he started in 1968. He had revolutionized marketing, merchandising, and athletic administration at Michigan forever, and in the process, he built a sustainable model for collegiate athletics. After his career, Canham was sought after as a consultant for other programs where he helped implement some of his methods that made Michigan athletics so profitable. Canham met with over 40 other schools during and after his career, and the impact he made at across the national landscape is still felt today. When Canham took over at Michigan, even the largest athletic departments were running deficits; today, 169 out of the 230 programs in the 27 biggest conferences were profitable or breaking even in the 2016-17 athletic seasons. Clearly, Canham’s model brought college athletics out of trouble and is much of the reason Americans still enjoy college football every Saturday in the Fall.

Canham’s strategies can be seen in plain sight in college today, as athletic branding is often the face of large universities, and merchandise and licensing revenues continue to grow nationwide. It is hard to walk down the street in any American city without seeing a college logo brandished on someone’s chest or stuck to their back windshield. Advertising and TV deals were also a direct influence of Canham, who served on the NCAA Television Committee to hack out the first major TV deals for college football later in his career. Today, TV revenues are the bloodline of college sports—the NCAA basketball tournament costs CBS more than a billion dollars to televise, and the three-game college football playoff costs ESPN almost half a million dollars annually. The size of the college sports industry is no accident—it is a direct result of the work Canham did at Michigan and other programs.

Transforming college sports into a business has brought about its fair share of controversy as well. Arguments rage over the role the student athletes play in generating huge revenues in the more popular sports, namely basketball and football, as the players are not compensated at all. This has driven players, coaches, and programs to take backdoor cheating methods to funnel a piece of the pie to student athletes and incentivize recruits, and presents a large morality issue in college sports.

Another issue with the evolution of the college sports business is the top-heavy revenue distribution. While most athletic departments in ‘Power 5’ conferences are self-sustaining, less prestigious schools and lower division programs suffer from lower revenues that cannot cover the high costs of many varsity sports. Canham’s solutions work great at storied programs like Michigan and other large prestigious schools, but they do not translate well to small-market, low-revenue schools that have less demand for athletic tickets and apparel.

 

Don Canham undeniably changed the course of college athletics forever with his innovative business tactics that often strongly contradicted the norms of the time. Canham noticed that college athletics were on the ropes, and rather sit idly by as most programs did, he started guerrilla marketing and merchandising projects that served as a shining example of how athletic departments could build a sustainable revenue model. It is no longer a question of whether there will be ten teams left–Don Canham solved that one himself.

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