Deloitte Issues Annual Outlook on Sports

In the Deloitte 2022 Outlook on Sports, the public accounting and consulting firm looked at future trends in sports and reinforces many of the topics we have covered this past year. When summarizing the current trends in collegiate athletics, the overarching conclusion of the study warns of the “impacts of conference realignment and NCAA constitutional changes on smaller athletic programs.” Specifically, student-athlete Name, Image and Likeness (NIL) legislation along with spiraling costs to keep up with the Power-5 conference spending. The side-effects of these trends include the probable elimination of automatic conference berths and unlimited scholarships and liberalized transfer rules as just a few of the threats to mid-major programs going forward.

As the landscape changes over the coming decade, Deloitte sees a continuing liberalization of rules to benefit student-athlete mobility and income opportunities (NIL). Over the short term, there will be turmoil as policies are developed and challenged in court but there is no doubt that student-athletes will be in the driver’s seat in the transformation of collegiate athletics. This will leave “Student-athletes free to pursue financial opportunities across social and traditional media, physical and digital merchandise, endorsements, and many other areas… As such, we are likely to see a redistribution of power between student-athletes, coaches, teams, and schools.” 

Deloitte explains that there could be both positive and negative consequences: potential recruiting advantages, changes in gender disparity, newfound attention to niche sports (e-sports), and more empowered student-athletes.

The second major power shift which will continue to unfold in 2022 according to the Deloitte study is a significant realignment of conferences, with schools seeking to boost their status and revenue. While much of the focus nationally has been on Power-5 concentration of already highly successful programs (see the University of Oklahoma and the University of Texas to the SEC), the shakeout will impact midmajors as well. As we have previously argued, is DU’s brand elevated by membership in the Summit League in Olympic sports while other DU sports participate in the BIG EAST (lacrosse), Big XII (gymnastics) and NCHC (hockey)? Or, can Denver drive more value from membership in another conference to elevate its status, competitiveness and revenue?

Another key area of change is NCAA reform. A new NCAA constitution was developed by the Constitution Committee which provides each NCAA Division (I,II,III) a high level of autonomy to determine their own guidelines and future. As this relates to potential NCAA structural changes, the Power-5 will be driving the bus for Division I. At the same time, the Knight Commission on Intercollegiate Athletics, an independent group with a legacy of leading reforms that strengthen the educational mission of college sports, is calling for gender equity in revenue sharing and reforming the Academic Performance Program which financially rewards programs that achieve academic targets via March Madness revenues. These future reforms may further push Power-5 members to break from the NCAA and develop their own rules and revenue sharing.

Three other interesting trends cited by the Deloitte study are gambling, mental health and sustainability.

This past year has seen sports betting entering the mainstream. As of November 2021, it is currently legal and active in 29 states plus the District of Columbia, and legal in another three states, with more in 2022. Overall gambling revenue in 2020 and will grow to almost $6 billion by 2023. The University of Denver became the second Colorado university to strike a partnership with a sports betting operator when it made a deal with SuperBook Sportsbook that includes branding, media hospitality, and social media assets.

According to Deloitte, “we are likely to see an acceleration of market consolidation. In building out their infrastructure and portfolios, companies are looking to acquire strategic technologies to bring in-house and expand their user base. They are also looking to integrate fantasy sports, sports betting, and iGaming. 

Mental health awareness is another sports trend cited by Deloitte. The University of Denver Student Athletic Advisory Committee (SAAC) has five subcommittees and one of them focuses exclusively on mental health. DU gymnast Alexis Vasquez opened up about her mental health issues in an open letter published by the University of Denver. Competitive pressure, impacts from injuries, personal and family issues, and social media scrutiny are some of the issues that can affect the mental health of athletes. In coming forward, athletes help to reduce the stigma around these issues, as well as encourage open conversations with their fans and teammates.

While most professional teams require mental health services be provided to athletes, more attention is needed at the college level,” according to Deloitte.

Deloitte further cites the continuing trends around sustainability. We have seen green initiatives at DU around recycling and now all major professional sports leagues now have green initiatives and are looking to reduce their overall environmental impact. The Denver campus has a Zero Waste target by 2035 and Denver Athletics has achieved an 85+% diversion rate of recyclables for gymnastics and hockey. According to the report, “the future focus will also include renewable energy use, food recycling and donation, single-use plastics elimination, reclaimed rainwater usage, and LEED certification for venues.”

Photo credit: Deloitte

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