As the price of oil continues to freefall, it is worth considering how a prolonged bust could hurt the Texas Tech football program.
Most days, Texas Tech football fans don’t spend all that much time fretting over the price of oil (unless of course you are employed in the oil and gas industry). But now that a number of geopolitical events have begun to portend the twilight of the nation’s most prosperous and longest oil boom we’ve seen in our lifetimes if ever, all Tech football fans should know that it could put a damper on the program’s long-term plans.
Make no mistake, college football is a money game. It takes hundreds of millions of dollars to keep pace in the modern-day arms race that universities are engaged in as success on the field almost always comes as a result of what can be found outside of the stadium.
Fans pay the most attention to what is being done in Jones Stadium but the most important aspect of a football team’s facilities are the locker rooms, weight rooms, practice facilities, and meeting rooms. That’s an area where Tech continues to lag behind other programs.
The good news is that there are plans to upgrade those facilities. On top of the recently completed Cash Family Sports Nutrition Center the university vision and planning webpage shows a $20 million renovation to the football training facility, a $45 million renovation of the south end zone of Jones Stadium, and an $8 million plan to finish out the east side building of Jones Stadium on tap for the somewhat near future.
The bad news is that donations from those in the oil and gas industry will make up a huge percentage of the funding required to complete those projects. And if this oilfield bust turns out to be as bad as some are predicting, the completion of these projects could be delayed significantly.
Without trying to wade too far into some very deep waters, here’s a look at what is causing the oil industry to spiral out of control. First of all, the Saudis and Russians are engaged in a peeing contest that is the global equivalent of a Texas vs. Texas A&M money feud but amped up to the nth degree. Now,
“A “price war” is a blunt tool, and the principal weapon that Saudi Arabia has at its disposal to reestablish discipline among the world’s oil producers,” writes Jim Krane in the Washington Post. “Ramping up oil production pushes down prices, hurting rivals like Russia and America’s shale oil producers.”
Most of those shale oil produces in the United States are huge players in the Permian Basin, which is where many of Texas Tech’s biggest athletic boosters have made their fortunes. Thus, when they hurt, Texas Tech is likely to hurt as well.
There’s a reason Tech has spent considerable time reaching out to the Midland area by holding men’s basketball games, baseball games, and spring football scrimmages in the “Tall City”. That’s because there is a ton of money in Midland and a huge portion of it goes to companies run by Red Raiders. What’s more, every year one football game per season is dubbed the “Celebrate Energy” game when Tech promotes the numerous energy industry companies that are so essential to the football program’s bottom line.
Unfortunately, the feud between the Saudis and Russians has come at a time when the coronavirus had slashed the global demand for oil. As a result, the price of oil has been cut to just $24 a barrel this week, roughly half of what it was just a month ago. And it doesn’t seem like the industry is set for a rebound anytime soon.
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“And this specter of doom and gloom appears set to continue for much longer, with concerns mounting that the ax could now fall on debt-ridden oilfield services companies,” writes Alex Kimani of Oilprice.com. “North American oilfield services and drilling companies face a $32 billion wave of debt that will come due this year through 2024, a daunting prospect considering that oil prices have crashed to nearly 20-year lows.”
Now the hope for Tech fans is that the businesses that are owned and operated by Red Raider boosters will be the ones that thrive and survive during this downturn through smart management and shrewd business decisions. But even if those companies are able to stay afloat, the discretionary money they have on hand to give to Tech is likely to be a casualty of this global mess.
That’s not good news for a Red Raider athletic department and football program that trails most of its Big 12 rivals when it comes to the money it spends. For instance, in the all-important world of recruiting, Texas Tech was just 7th in the Big 12 with a 2019 budget of just $535,362. That’s over $1.3 million less than Texas spent and more than a half a million dollars less than even Kansas spent.
What’s more, the decade-long struggles of the football program has made those willing to donate money to the athletic department more inclined to give their discretionary funds to the basketball or baseball programs than ever before thus cutting into even more of the money that would have gone to Matt Wells’ football program were it to be experiencing the success of the Mike Leach era from a decade ago.
This 2017-18 report by USA Today shows that Texas Tech walked a razor-thin line that academic year by bringing in less than a million dollars more than it spent. Assuming that the university has not substantially improved up on that in the past two school years, we have to believe that the donations of boosters is just as important to helping the entire athletic program achieve its goals today as it was then and if the oil industry is in for a prolonged downturn, that’s a worrisome sign.
Recently, Tech has upped the ante to bring in assistant coaches Derek Jones and Kevin Cosgrove. In fact, Don Williams of the Avalanche-Journal reports that those two new defensive assistants will make a combined $310,000 more than the men they replaced. But when it comes to keeping pace in the hundred-million-dollar facility arms race, it’s hard to imagine Tech being able to foot the bill without a healthy oil industry in West Texas.