Army-Navy game will be a financial hit for athletic associations at both academies
By BILL WAGNER | The Capital | Published: December 10, 2020
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ANNAPOLIS, Md. (Tribune News Service) — Friday, Oct. 23 was a devastating day for the athletic associations at the Naval Academy and United States Military Academy.
On that date, the academies announced the 2020 Army-Navy game would be played at Michie Stadium on the campus of West Point. Negotiations with the City of Philadelphia failed to produce an agreement on how the 121st Army-Navy game could be safely played at Lincoln Financial Field during the coronavirus pandemic.
Navy athletic director Chet Gladchuk estimates holding the game without a capacity crowd in Philadelphia cost his program 60% of its revenue from the historic rivalry — including the academy's share of more than $7 million in ticket sales.
"When you predicate the annual budget on realizing 100% of the anticipated revenue from that event then see it drop to 40%, that is quite a hit," he said.
Larry Needle, executive director of PHL Sports, said the organization worked with both academies for months to try to make it happen. "Unfortunately, like many things in 2020, it ultimately became a bridge too far. ... In the end, it just wasn't viable."
The decision was painful for Gladchuk and Army counterpart Mike Buddie. PHL also decided it didn't have to meet the financial guarantees if the game is canceled..
"Technically, by terms of the contract, Philadelphia owed the two institutions a significant guarantee," Gladchuk said.
PHL Sports, a division of the Philadelphia Convention and Visitor's Bureau, argued that restrictions on attendance at sporting events imposed by the State of Pennsylvania because of coronavirus made it impossible for Philadelphia to host the game.
" PHL Sports is taking the position this absolves them of their obligations because conditions were driven by the virus," Gladchuk said.
The Naval Academy Athletic Association and Army West Points Athletic Association have enjoyed an amicable and successful long-term relationship with PHL Sports and Philadelphia, which has hosted 89 of the 120 Army-Navy games held to date.
Army-Navy is due to be held in the City of Brotherly Love again in 2022, the final year of the current contract. Gladchuk and Buddie were understanding of Philadelphia's dilemma as the inability to welcome fans into Lincoln Financial Field wiped out all the usual revenue streams.
" Philadelphia could not realize any economic impact from the game. Everything dried up," Gladchuk said.
In normal years, when a sellout crowd of 68,705 packs into Lincoln Financial Field, revenue is generated directly from ticket sales, parking, concessions and corporate sponsorship.
After subtracting expenses and paying the agreed-upon guarantee to Army and Navy, PHL Sports take an unknown percentage of the revenue.
However, the real winner every year is Philadelphia. The game draws 50,000 out-of-town visitors booking 25,000 hotel rooms, dining in restaurants and spending money in other ways. The Philadelphia Convention and Visitors Bureau estimates the Army-Navy game pumps $30 million into the regional economy.
Despite the impact of the pandemic, Buddie and Gladchuk were hopeful the came could return to Lincoln Financial Field. There was a point in the NFL season when the Philadelphia Eagles were permitted by the state to admit 7,500 fans into Lincoln Financial Field for its games.
In negotiating with Philadelphia, the two service academies sought to increase that capacity to 9,000 to accommodate the Brigade of Midshipmen, Corps of Cadets and other ancillary personnel necessary to conduct the Army-Navy game.
City and state officials said no. .
"We're able to play football at Lincoln Financial Field, we're just not able to do so with any fans at this point," Needle said. "Our hope was that fan numbers would continue to increase as the fall went along. Unfortunately, it's gone the opposite way."
As the number of cases of COVID-19 surged this fall, the city and state banned fans at Lincoln Financial Field for Philadelphia Eagles or Temple University games.
"West Point is 100 percent the right place for Army-Navy to be this year," Needle said.
It proved to be the only way to have the Corps of Cadets and Brigade of Midshipmen in the stands.
Michie Stadium is not subject to New York state restrictions on attendance at sporting events because it is located on federal property. Nonetheless, the 8,000 members of the Corps and Brigade will be the only spectators in attendance Saturday.
Holding the Army-Navy game at Michie Stadium as opposed to canceling is still a small victory in the age of coronavirus. The athletic associations will each receive revenue from the television contract with CBS Sports as well as corporate sponsorship.
In May 2017, CBS Sports announced a 10-year extension of its contract to televise the Army-Navy game. That new deal went into effect last year and continues through 2028.
CBS Sports did not seek to renegotiate its contract this year because "America's Game" is not being held in an NFL venue with fans.
" CBS is going to meet its fiscal obligation to televise the game," said Gladchuk, noting the network has locked in advertising for Saturday's broadcast. "Army-Navy is still a sporting spectacle wherever it is played. I think Saturday's game is going to present very, very well and CBS feels there is still considerable value in the production."
In 2009, the financial services company USAA signed a 10-year contract to become the presenting sponsor of the Army-Navy game. That agreement has since been extended to 2025, according to Tony Wells, chief brand officer at USAA.
Gladchuk said Army and Navy are "incredibly grateful" to maintain the full sponsorship from USAA. He said the company has agreed to "stay whole" and provide the full stipend as outlined in the original contract.
"Without question, the Knight in Shining Armor is USAA. I mean that sincerely," Gladchuk said. "They realize they're not going to get the same exposure because there are no fans. Nonetheless, from the very first conversation, they said we could count on a 100% investment in this year's game."
However, Gladchuk acknowledged that other corporate sponsors have sought some level of relief from their financial commitment based on the fact exposure is limited, though none has bailed out.
Wells, a former Navy basketball player, said USAA has actually increased its sponsorship this year in order to help cover the cost of transporting the Brigade of Midshipmen to the game. That tab is much higher than usual because twice the number of buses will be required to do so in a safe manner and the trip to West Point is far more problematic than transporting the brigade to Philadelphia.
"We know the morale and welfare of the cadets and midshipmen have been challenged this year, and this game is something everyone looks forward to," Wells said. "We wanted to do our part to make sure this game happened in a safe manner."
Buddie, in his second year as Army West Point athletic director, said he's just happy the game will go on.
"As we know in 2020, the prospect of not having the game at all was probably more real than it's ever been..." Buddie said. "We're just excited to get the opportunity to play this game and realize some revenue."