College Sports a Money Loser?

April 2, 2010

Comments

With those megabillion dollar television contracts for football and men’s basketball, top tier universities are making a mint off their sports programs, right? Well, according to USA Today, that’s true for an ever smaller number of schools.

The nation’s highest-profile college athletic programs drew a greater percentage of their revenue from student fees and their schools’ general funds in 2009 than they had in any of the previous four years, a USA TODAY analysis of new college sports finance data finds.

More than half of athletic departments at public schools in the Football Bowl Subdivision were subsidized by at least 26% last year, up from 20% in 2005. That’s a jump of $198 million when adjusting for inflation and includes money from student fees, university support and state subsidies.

[…]

Meanwhile, among a quarter of the 220 public schools studied in the NCAA’s top-level Division I, athletic departments’ expenses exceeded total revenue — including money from subsidies — in at least three of the last five years. Since 2005, median athletic expenses at the 99 Football Bowl Subdivision public schools examined increased by about $10.6 million, to $41.2 million in 2009. From 2008 to 2009, median expenses increased by $3.5 million.

[…]

Counting only revenue generated by the athletic departments — including money from ticket sales, donations, radio/TV and marketing rights payments — the number of schools able to cover their athletic expenditures fell to 14 in 2009, down from 25 the previous year. This measure of generated revenue against total expenses is the yardstick the NCAA uses to determine whether an athletic program is self-supporting. Only seven met this benchmark during each of the five years studied: Georgia, Iowa, Louisiana State, Michigan, Nebraska, Oklahoma and Texas.

Now, I’m a fan of intercollegiate sports and have defended the lavish salaries paid to the top coaches as the cost of doing business. See, for example, a piece I wrote three years ago for TCS Daily titled “Crimson with Envy: Why Nick Saban Makes More Than Your Kid’s Teacher.”

But the working assumption behind this is increasingly belied by the facts. My strong guess is that Saban, head coach at my alma mater, is in fact worth his salary and more. He’s taken the Tide to the national championship and to back-to-back undefeated regular seasons. But what about the hundred plus institutions that are losing money and having to subsidize athletics? It may still be justified, if the non-monetary returns exceed the cost of the subsidies.

The expense of fielding big time football and basketball programs could be considered advertising for the university. When I was at Troy State (now Troy University) most of the faculty, myself included, opposed the president’s initiative to move from Division I-AA to Division I-A. It seemed a ridiculous move for a tiny school in a tiny community. But the move has unquestionably raised the university’s national profile which, in turn, doubtless makes fundraising and recruiting faculty easier. It could, in fact, “pay for itself” in this indirect manner.

And, presumably, there’s some actual educational value to college athletics. That’s probably not true for the major revenue programs, which are too much like full-time jobs and take students who really need to be there out of the classroom. But for the lower profile sports — golf, tennis, gymnastics, badminton, soccer, crew, etc. — intercollegiate competition remains relatively pure. To the extent that graduating well-rounded citizens is the institution’s goal, then these scholar-athletes are in the finest tradition of higher education.

The related problem is that schools have to either jump in with both feet or remain at the edge of the pool. That is, there’s not much point in participating at the Division II or Division I-AA level; those are no-man’s land where institutions have most of the expense of big-time sports with none of the television revenue. So, schools should either stay out of college sports altogether, participate at the Division III level, or go whole hog and try to make it in Division I-A.

via Inside Higher Ed

4 responses to “College Sports a Money Loser?”

Andy

April 2, 2010 at 9:46 am

That’s some damn expensive “advertising.” There also does not seem to be any effort to weigh that expense against other types of “advertising” or to compare alternatives, like raising a school’s profile by improving the quality of education.
Steve Plunk

April 2, 2010 at 10:39 am

MIT is considered one of the best universities in the world yet it’s athletics a small part of college life. Ivy league schools don’t use football prowess to attract faculty or students. The idea that athletics will enhance academics is flawed and since academics is the primary mission of higher education some refocusing is needed.

The model for how colleges and universities work is flawed from top to bottom. Out dated tenure systems, athletics taking precedence over academics, not focusing on undergraduate education. An overhaul is long overdue.

It’s funny how students are taught to roundly reject tradition and look forward by faculty and institutions that cling to outdated and inefficient traditions themselves.
James Joyner

April 2, 2010 at 10:59 am

Steve: I think a lot of that is right.

Recall, though, that the Ivy League is an athletic conference. The fact that these old schools are part of it has raised the prestige of most members. Harvard, Yale, and Princeton are by all accounts great schools. But how many of the other members of the League are riding high on that fact that they’re Ivies? They’re also among the oldest schools in the nation, existing before most of the states.

And the vast majority of institutions across the land focus primarily on undergraduate education. Indeed, most barely offer graduate degrees at all.
Trumwill

April 2, 2010 at 12:15 pm

I think that a lot of schools with athletics programs should consider doing away with them. The problem is, though, that they don’t think that they should do away with them. And it’s not hard for me to understand why. I’ve been out of college for a decade and a half and by what mechanism am I still most closely connected to my alma mater? Athletics.

Our program ran a $8m deficit (11 now). Divide that by the number of students attending and you get some $300 per student per year. That $1200 has been paying dividends ever since. Call school pride based on athletics irrational and you’re right and I really don’t care. It provides me an opportunity to bond with scores of thousands of alumni from different majors, races, and eras and gives us something to root for and something for us to collectively care about.

There’s a lot that I would change about college athletics. But “Why don’t we just get rid of it and be spend the money on something that matters” isn’t one of them.