College football is known for its frenzied fans who come from far and wide to watch regional conference games, but more than just entertainment, these events create a significant economic impact on their individual regions, which may improve as regions become less defined.

Anchor Institutions Becoming Less Secure

Higher education institutions and hospitals are known as anchor institutions because they are usually tied to their regions, unlike manufacturers and corporations that can pack up and move to more economically hospitable areas.

With more conference realignments announced for the 2024-2025 college football season, the question of how these changes will affect local economies may become more clear.

Economic dependence on anchor institutions has had positive effects on regional economies, but as technology, demographic shifts, and rising costs disrupt higher education and health care, dependence on anchor institutions may become increasingly risky as time goes on.

During the pandemic, higher education and hospitals became more dependent on remote learning and telehealth, making their services less community-based and hurting local economies. The widening of conference regions could positively affect local economies by generating more revenue for these communities and a stronger reliance on their anchor institutions.

Regions Redefined

The majority of preseason top 10 football programs are based in the Southeast or Midwest regions, which also have experienced a revival in manufacturing due to investments in semiconductors and electric vehicles. Still, with demographic changes and the impacts of the pandemic, higher education institutions remain important to the economies where they are located. College football draws large crowds each season, increasing spending in these areas.

College conferences are crossing the lines of their regional identities, with the Midwest-based Big Ten now covering North and South Carolina and the Big 12 covering most of the country. Furthermore, the Atlantic Coast Conference (ACC) may soon expand to the Pacific Coast. 

Despite the apparent disappearance of truly regional conferences, the SEC remains primarily a Southeastern conference, and the "Group of Five" conferences remain regionally organized. Mountain West and Mid-American Conferences still hold strong regional identities, while American, Conference USA, and Sun Belt conferences draw most of their new members from the Southeast.

Economic Factors Fuel Reorganization

College football is big business and the reorganization of college football conferences is driven in part by television revenue. In order to increase viewership, more teams are being added to the postseason. This also opens up the postseason to smaller programs, which may upset powerhouse programs and significantly increase revenue for these communities.

To understand how significant these numbers are, consider the record-breaking seven-year, $7 billion deal signed by the Big Ten last summer, which will pay conference members $80 million to $100 million annually, setting a new standard for college sports media rights. 

Even smaller universities are major employers and major customers of goods and services in their respective regions. Additionally, colleges are often associated with health systems, which are another source of economic benefit for the community. 

How Local Economies Benefit

It’s not just college sports that play a role in local economies. The universities themselves also make a significant impact. Economic growth is driven by universities through research, innovation, and the development of human capital. Universities are major employers and major customers of goods and services in their respective regions. Additionally, colleges are often associated with health systems, which are another source of economic benefit for the community. 

According to the Anchor Economy Initiative from the Federal Reserve Bank of Philadelphia, "for high reliance regions with smaller populations, anchor institutions are responsible for a significant portion of regional employment, income, and GVA [gross value added]." 

Metro areas with a population of less than 250,000 accounted for 35 of the top 50 reliance scores, including Morgantown, West Virginia, home to West Virginia University, and State College, Pennsylvania, home to Penn State University. The metro areas studied with populations between 250,000 and 1 million include Ann Arbor, Michigan; Gainesville, Florida; and Durham-Chapel Hill, North Carolina, all home to state universities and regional hubs for research & development (R&D).

Including direct, indirect, and induced effects, the Anchor Economy Initiative estimates that university and hospital anchor institutions nationwide support more than 18 million jobs, $1.1 trillion in income, and $1.7 trillion in GVA.