Like professional sports franchises and major event organizations, college athletics departments are rapidly professionalizing their revenue-generation functions. New roles are becoming essential as universities face mounting financial and operational pressure from name, image and likeness (NIL), conference realignment, rising operational costs and student-athlete revenue participation.
These new roles include titles such as chief revenue officer for athletics (AKA chief revenue generation officer) (CRO) and expanded external relations teams with more specialized sponsorship and ticketing staff. And, along with this change, expectations for performance and pay are being reshaped and elevated while compensation and HR professionals are under increasing athletic-department scrutiny from HR leaders, CFOs, presidents/chancellors, boards and other stakeholders. At the same time, athletics and event organizations remain exposed to unpredictable, high-impact events.
Athletic departments can weather these disruptions as well as facility failures, environmental conditions, infrastructure breakdowns, regional emergencies or other catastrophic incidents that have the power to dramatically swing financial results — events that affect executives’ incentive plan payouts.
A “catastrophe” or “CAT” collar offers a practical, transparent mechanism to stabilize incentive outcomes without disconnecting actual payouts from financial performance.
Why volatility creates new challenges for revenue-generating roles
As revenue generation roles expand, incentive plan design must evolve to reflect:
- Higher accountability: CROs and their revenue-generation teams must drive results across multiple commercial streams and incentives must reflect what is within their control.
- Greater pay at risk: Compensation is increasingly aligned with private-sector models, where variable pay is more significant. Without guardrails, catastrophe-driven financial swings can make incentive payouts feel unpredictable or inequitable.
- Increased oversight: Stakeholders want transparent and defensible pay practices for leaders tied directly to revenue generation.
Core incentive-plan financial metrics can move sharply due to uncontrollable events that are entirely outside of leadership’s control, including:
- Weather-driven game or event cancellations
- Arena, stadium or field closures
- Air quality or environmental disruptions
- Infrastructure failures
- Regional catastrophic events affecting attendance or sponsorship
CAT Collars help balance accountability with fairness.
Balancing accountability and fairness with CAT collars
In incentive plans, a CAT collar establishes lower and upper bounds for catastrophe-related financial impacts. For example:
- Lower bound: $50 million in catastrophe-related financial impacts
- Upper bound: $150 million in catastrophe-related financial impacts
Rules:
- If actual catastrophic losses fall within the range (in our example, $50 million to $150 million), the incentive plan uses the actual figure
- If losses fall below the lower bound (i.e., an unusually lucky year), the incentive plan uses the floor (in our example, $50 million)
- If losses exceed the upper bound (i.e., a significantly bad year), the incentive plan uses the cap (in our example, $150 million)
The payout curve itself does not change; the input metric is simply adjusted to minimize extreme outliers. The purpose is not to ignore catastrophic events, but to prevent a single incident from distorting incentive outcomes.
Why CAT collars matter in shifting revenue structures
As universities modernize their athletic departments, often separating operations and commercialization, CAT collars support both performance management and governance. They help:
- Protect incentive credibility by focusing on strategy and execution rather than external shocks
- Support reliable budgeting for CFOs under tight financial oversight, with fewer year-end surprises
- Strengthen governance by offering clear, rules-based adjustments rather than year-end discretionary interventions
- Enhance talent attraction, motivation and retention, particularly for candidates and incumbents from professional sports or general industry who are familiar with and expect variable incentives as a significant portion of their pay
- Reflect broader market practices used in industries such as insurance, energy, aviation and large venue operators
Where CAT collars fit within the athletics revenue model
Universities are increasingly making clear distinctions between:
- Director of athletics: operations, student athlete experience, coaching oversight
- Chief revenue officer: commercial strategy, sponsorship, licensing, ticketing, analytics, development
Revenue generation roles sit at the intersection of commercial performance, financial planning and risk oversight by leadership and boards. CAT collars can be applied to incentive plans for:
- Athletic directors with revenue accountability
- CROs
- Sponsorship and corporate partnership leaders
- Ticketing and premium sales leaders
- Venue and events executives with profit-and-loss responsibility
However, before universities implement the CAT collar design feature, we suggest they consider the following challenges, as CAT collars:
- Require thoughtful modeling to choose appropriate financial bounds
- May be unfamiliar for some campus or athletic leaders, requiring education
- Create adjusted metrics that differ from audited financial results and must be documented clearly
Key incentive plan design questions
When implementing a CAT collar, leadership should align on:
- Who is covered? Senior leadership only, or revenue segment leaders as well?
- What qualifies as a “catastrophe”? Weather, infrastructure, government restrictions, environmental safety conditions and so on?
- How will impacts be measured and validated? Who quantifies them and how are they documented?
- What are the right financial bounds? Are they credible, historically informed and explainable to the board?
- How will the CAT collar be communicated and who needs to understand it?
As athletics departments formalize commercial roles and build modern revenue engines, they need more sophisticated approaches to risk in incentive design. CAT collars provide a practical way to ensure incentives are tied to controllable performance, support stable budgeting and reinforce transparent governance. They also help university athletic departments attract, motivate and retain revenue-focused talent in an increasingly competitive and unpredictable athletics landscape.
