BY ANNIE ADAMS

Annie Adams is a faculty member and AAUP chapter member at Morehead State University.

Decreases in state appropriations, increases in tuition, public doubt about the “value” of higher education, and exploding student debt—these are the contexts within which we need to discuss high cost of intercollegiate athletics.

In this “new normal” of higher education, where “value” is often equated with cots, we need to reassess the standard justifications for the subsidization of athletics.

Source: “Eye on the Ball: Big-Time Sports Pose Growing Risk for Universities”

 

Subsidization Justification #1: “Athletics Brings In Revenue.”

All athletics programs, even the most heavily subsidized ones, bring in revenue in terms of ticket sales, donations, and, when applicable, fees for exhibition games. Only a fraction of those programs is self-sufficient and an even smaller number net revenue.

A Chronicle of Higher Education article published in January of 2016, “As Sports Programs Get Richer, Few Give Much for Academics,” debunks the myth that successful sports programs necessarily net revenue for institutions of higher learning:

Over the past four years, more than 40 of the 205 Division I athletics programs in The Chronicle’s analysis reported transferring money to their institutions for academic purposes.  But at most of these campuses, the amount of money going to academics was less than the amount of student fees and other subsidies the university directed toward athletics.

According to NCAA Chief Financial Officer, Katherine McNeely, the “overwhelming majority of colleges and universities in the NCAA across all three divisions subsidize part or all of   athletics” (qtd. in Burnsed’s “Athletics Departments that Make More than They Spend Still a Minority”).  This necessarily creates “a budgetary strain” by “divert[ing] funding away from other university operations,” which is why Moody’s, in an Investor Service Special Comment drafted  in 2013, warned of the looming dangers of a system where 90% of athletic programs require monetary support from the institution (“Eye on the Ball: Big-Time Sports Pose Growing Risk for Universities” 1).  By and large, athletics programs, even those in top divisions, do not make money; they cost money—and lots of it.

(To see how much monetary support athletics programs require from schools, check out the USA Today NCAA Finances database: http://sports.usatoday.com/ncaa/finances/)

 

Subsidization Justification #2: “Alumni Donate to Athletic Programs. If You Cut Athletics, You Cut University Giving.”

True, but alumni don’t often mandate the level of athletic program/sport they support.  A donation for, say, Eastern Kentucky University’s football, could aid a Division III football team just as surely as a Division I team.  If restricted donations for athletics do not significantly offset the institution’s athletic subsidization on a yearly basis, those donations are not “supporting” the institution.  They are making contributions to a revenue- generating enterprise that remains in the red.  If an institution decides to “right-size” its athletic program, and loses some restricted athletic donations in the process, it is not “losing” alumni support for the university; it is controlling costs to support the core mission of the college/university.

According to the Delta Cost Project, “Academic Spending Versus Athletic Spending: Who Wins?,” “Most recent studies on alumni giving find little connection between athletic success and fundraising; in the few studies that do show effects, it more often relates to football, rather than basketball, success and is usually limited to athletic rather than general university donations” (Desrochers 2).  Athletics do not typically dominate fundraising efforts—nor should they.  Casting a wide net requires highlighting the full range of what the institution has to offer.

 

Subsidization Justification #3: “You Can’t Buy That Type of Exposure.”

According to many administrators, schools “can’t buy the type of exposure” they get in major athletic contests.  Actually, they can—with the right investments.  According to Doug J. Chung’s “The Dynamic Advertising Effect of Collegiate Athletics,” schools can “match the increase in total number of applications” in the wake of “athletic success” by either “decreas[ing] tuition by 3.8 percent or attract[ing]  better faculty who would be paid 5 percent more in the academic labor market” (28).  Furthermore, attracting better faculty provides the added benefit of increasing the number of “high-ability” students in the new applicant pool.

As recent scandals at Penn State and University of Louisville demonstrate, the seemingly priceless “exposure” that attends “athletic success” can also be negative (something Morehead State University discovered when every news story reporting Donnie Tyndall’s 10-year show-cause penalty mentioned MSU, even though Tyndall’s violations occurred prior to his employment at the institution).  After “several years of well-publicized scandals in the intercollegiate athletics program” at the University of North Carolina, Chapel Hill, UNC-CH’s Chancellor Holden Thorp convened the Rawlings Panel on Intercollegiate Athletics in March 2013 “to make recommendations about the role of athletics in the life of the university” (Rawlings “Report” 2, 1).  The panelists made their final report public because they determined “problems are now common across the landscape of universities engaging in Division I athletics” and they hoped UNC- CH could “take a leading role in improving the domain of intercollegiate athletics nationwide, first by establishing model programs that incorporate new approaches, and second by catalyzing change among peer institutions” (2).  The education and athletic leaders on the panel clearly want UNC-CH to gain positive exposure, and competitive advantage, from their winning teams, but only if the athletic program is properly subordinated to academics.

 

Subsidization Justification #4: “It’s the Front Porch to the University.”

This oft-used metaphor presupposes that athletics are a gateway for academics, not that academic institutions may provide students with opportunities for athletic competition.  Either this is an inadvertent misrepresentation of the institution’s core mission, or some administrators have consciously chosen to devalue academics for strategic purposes.

While a few schools with powerhouse programs, such as Notre Dame, OSU, and Alabama (for football), and North Carolina, Kansas, and Kentucky (for basketball), have set themselves apart through a consistent track record of winning, these “major players” are the exception, not the rule.  Many of schools in the highest division of the NCAA (Division I) are not well known for their athletics programs.  We need to ask why these colleges and universities continue to pour money into these “front porches” when the current edifices clearly lack the “curb appeal” needed to create regional or national recognition.

 

Subsidization Justification #5: “The Flutie Effect Is Real.”

There is evidence to suggest that major athletic wins can and often do lead to application bumps.  Doug J. Chung’s Harvard Business School Working Paper, “The Dynamic Advertising Effect of College Athletics,” finds “applications increase by 18.7 percent when a school has a higher level of athletic success.”

The fact that this increase in applications can allow schools to be more selective in admissions betrays the fact that a spike in applicants is not the same as an increase in acceptance rates or (desirable) enrollment.

According to Chung, the “dynamic effect” is not equally distributed: “students with lower than average SAT scores have a stronger preference for athletic success, while students with higher SAT scores have a greater preference for academic quality” (5).

While high-quality applicants are clearly not immune to the allure of athletic success, one could still ask why administrators are so willing to bet on athletic success.  Only a small number of teams have a record of major wins in a year, and even fewer achieve championship status.

For many schools, investments toward what might achieve the “Flutie effect” are really just gambles.

 

Subsidization Justification #6: “Athletics Are an Integral Part of the College/University Experience.”

Athletics used to be an integral part of the collegiate experience in America, when physical  education was a requirement for most students, but those days are long gone.  By and large, current college curricula are not predicated on Plato’s presumption that “physical training” facilitates moral education, so “highly desirable” is a more apt description than “integral.”

That said fans of the Republic need not despair.  Schools can fully subsidize a number of the so- called “Olympic sports” (where guardians of academe may be trained) if they reduce their investment in high-cost athletic items like football.  (For more on the dangerously high cost of intercollegiate football, see the Bloomberg series that begins with Eben Novy Williams’ “College Football’s Top Teams Are Built on Crippling Debt.”)

 

Subsidization Justification #7: “Athletics Contribute to Student Success.”

No one disputes the positive role athletics can play in a student’s life.  At issue is the cost of high-level athletic programs at cash strapped institutions.  Intramural sports offer all of the benefits of an athletics program without the hassle of excessive regulation and the cost of conference participation or NCAA division fees.

 

Subsidization Justification #8: “Student-Athletes Have Higher GPAs and Better Progression and Graduation Rates.”

This is clearly not true for all student athletes, or all teams, within a given athletic program.  That said, there are plenty of student-athletes and sporting teams that do have impressive academic records, and administrators can proudly point to those successes.  What’s important to remember here is that athletics programs, in and of themselves, do not make “better” students; the added support offered to student-athletes (and student-athletes alone) facilitate this academic success.  If every student had the same level of support, the institution’s average GPA could be raised, and the student body in general could have increased progression and graduation rates.

 

Subsidization Justification #9: “Our Athletic Budget Is Relatively Small [in Relation to Other Schools in the Region, in Relation to Other Schools in the Division/League, in Relation to Overall E&G, etc.]”

There’s a reason why the Huffington Post and Chronicle of Higher Education’s joint exposé of intercollege athletic expenses, “Sports at Any Cost: How College Students are Bankrolling the Athletic Arms Race,” focused on percentage of athletic subsidization, not budget size overall: it is the only way to accurately compare what students (and institutions) “pay to play” at schools of different sizes.  This percentage remains the most important metric in the USA Today database of intercollegiate athletic costs.

Everyone knows that the budgets of athletic programs at regional institutions are much smaller than budgets at the flagships.  This does not mean, though, that regionals are better stewards of student money, or more efficient in their athletic spending.  According to the USA Today database, UK’s total athletic expenses for 2016 were $127,225,580.  The program, though, brought in $132,180,246 in revenue, so its subsidization was, in effect, $0.  MSU’s total expenses for 2016 were $13,002,657.  The university contributed/paid $11,426,032 of those expenses, effectively providing the athletics program with $1,172 per UG FTE (at a subsidization rate of 88%).  As Matthew Denhart and Richard K. Vedder argue in “Intercollegiate Athletic Subsidies: A Regressive Tax,” “[w]hen schools are forced to heavily subsidize athletics, ICA [Intercollegiate Athletics] serves to impose an ‘athletic tax’ on other dimensions of the school” (15).  Sadly, this “tax” hits smaller and poorer schools the hardest, creating a “regressive” scenario where student bodies with a greater number of Pell recipients end up paying more for an often less successful athletic program, as the evidence shows (on p. 12 of the report):

Denhart and Vedder propose some sensible solutions (“we would see no harm in state institutions forbidding institutions receiving state funds to subsidize ICA more than, say, five percent of tuition revenue or two percent of all core expenditures” [16]), but there will be no support for sensible solutions until the problem of intercollegiate athletic expense is widely recognized.  The authors of the Knight Commission on Intercollegiate Athletics’ “Restoring the Balance: Dollars, Values, and the Future of College Sports” are hopeful this will soon be the case: “Academic reform hit a tipping point when graduation rates were first shared publicly.  We believe the same will be true for financial reform when there is far greater openness about the spending in college sports” (8).

 

Subsidization Justification #10: “We Have to Pay What the Market Demands.”

The intercollegiate athletic market is far from “free,” and in desperate need of correction.  Outrageous coaching salaries, for example, are sustained by several artificial factors: (1) no compensation is paid to the athletes; (2) intercollegiate sports benefit from substantial tax privileges; (3) no shareholders demand dividend distributions or higher profits to bolster stock prices at the end of every quarter; (4) athletic departments are nourished by university and statewide financial support; and (5) coaches’ salaries are negotiated by athletic directors, whose own worth rises with the salaries of their employees. (Gurney, Lopiano, and Zimbalist, Unwinding Madness, p. 218)

Moody’s Investor’s Service would not list “Big-Time Sports” as a credit “risk” if the market were stable and sustainable.  Jody W. Lipford and Jerry K. Slice, professors of economics at Presbyterian College who have studied the rising costs of intercollegiate athletics, “predict that budgetary pressures on small schools, especially those playing at the DI-AA (FCS) level, will intensify, forcing these schools to ‘right size’ their athletic programs” (“Is the Cost of College Sports Too High?”).  As Kirk Schulz noted when he was the president of Kansas State and chair of the NCAA Board of Governors, the “pressure” on schools “is going to intensify in the next five years,” and a number of administrators will have to admit: “We don’t have as much money from the state, we’re jacking tuition up, we can’t afford anymore to send this amount of money over to Athletics” (qtd. in Brady, Berkowitz, and Schnarrs, “College Athletic Finance Report: Non-Power 5 Schools Face Huge Money Pressure”).

 

Subsidization Justification #11: “If You Factor Out [X], [Y], or [Z], Which [Insert Appropriate Regulatory Body Name] Makes Us Include in Our Athletic Budget, You’ll See That We Really Don’t Spend All That Much on Athletics.”

The range of required accounting methods for athletics (as individual conferences, the NCAA, and national data depositories for higher education all have slightly different formulae for determining the cost of athletic programs) can offer cover to administrators who don’t wish to seriously reduce athletic spending.  These administrators can select the accounting method that puts the institution in the most favorable light while they decry the “unfairness” of reporting mechanisms in general.  Specific accounting methods should be defined in discussions of cost, but fine-grained distinctions among expense sheets do not negate the fact that the overwhelming majority of athletic programs require heavy subsidization, in any formulation or breakdown of a budget.

 

Subsidization Justification #12: “It’s What Students Want.”

Ticket sales and attendance at games at many schools prove otherwise.  Strong student support for intercollegiate athletics is amply evident at schools with “power” programs, where the subsidization rate is low and student tickets are limited (because of great demand).  It is less evident at smaller schools where students pay more for less visible programs.

 

Faculty Can Change the Conversation

In these austere times, high-cost athletic programs are not something most colleges and universities can afford.  Many academic leaders implicitly know this; they just lack the time, support, or political will to divest.  As Gerald Gurney, Donna Lopiano, and Andrew Zimbalist argue in Unwinding Madness: What Went Wrong with College Sports—and How to Fix It: “College presidents spend an average of six years in their jobs and are expected to accomplish a lot in that time.  Taking on the establishment of intercollegiate athletics is not one of them” (9).  While Gurney, Lopiano, and Zimbalist ultimately contend that “reform is an impossibility at the institutional level” (16), their “fix” presupposes that the conversation regarding athletics can and should change, so that administrators, boards of trustees, alumni, parents, students, and the public at large can finally see the deleterious effect the plutocratic model of the NCAA is having on “amateur” athletics and student-athletes.  Faculty, as the educators of those student-athletes (and indeed all students at the institution), and trustees of university’s core mission, have the opportunity to be the “voice of reason” in this era of “madness,” and help restore a sense of balance.  We need to check untenable subsidizations so that our institutes of higher learning can “win” in the “new normal.”

 

Sources

Brady, Erik, Steve Berkowitz, and Christopher Schnarrs. “College Athletic Finance Report: Non-Power 5 Schools Face Huge Money Pressure.” USA Today 26 May 2015. https://www.usatoday.com/story/sports/college/2015/05/26/ncaa- athletic-finances-revenue-expense-division-i/27971457/.

Burnsed, Brian. “Athletics Departments that Make More than They Spend Still a Minority.” NCAA.org 18 Sept. 2015. http://www.ncaa.org/about/resources/media-center/news/athletics-departments-make-more-they-spend-still-minority. Accessed: 1 Apr. 2017.

Chung, Doug J. “The Dynamic Advertising Effect of Collegiate Athletics.” Harvard Business School Working Paper, No.13-067. Jan. 2013. DOI: 10.1287/mksc.2013.0795. Accessed: 3 Mar. 2017.

Denhart, Matthew and Richard K. Vedder. “Intercollegiate Athletic Subsidies: A Regressive Tax.” Center for College Affordability and Productivity.org. Apr. 2010.  http://www.centerforcollegeaffordability.org/uploads/ICA_Subsidies_RegressiveTax.pdf. Accessed: 10 Aug. 2017.

Desrochers, Donna M. “Academic Spending Vs. Athletic Spending: Who Wins?” Delta Cost Project.org Jan. 2013.  http://www.deltacostproject.org/sites/default/files/products/DeltaCostAIR_AthleticAcademic_Spending_IssueBrief.pdf. Accessed: 1 Apr. 2017.

Gurney, Gerald, Donna Lopiano, and Andrew Zimbalist. Unwinding Madness: What Went Wrong with College Sports—and How to Fix It. Washington, DC: Brookings Institution P, 2017.

Knight Commission. Restoring the Balance: Dollars, Values, and the Future of College Sports. Knightcommission.org June 2010. http://www.knightcommission.org/restoringthebalance/recommendation-i. Accessed: 1 Apr. 2017.

Lipford, Joy W. and Jerry K. Slice. “Is the Cost of College Sports Too High?” Newsweek.com 1 Jan. 2016. http://www.newsweek.com/college-sports-basketball-football -411984. Accessed: 2 Apr. 2017.

Moody’s Investor’s Service. “Eye on the Ball: Big-Time Sports Pose Growing Risks for Universities.” Insidehighered.com 3 Oct.2013. https://www.insidehighered.com/sites/default/server_files/files/Sports%20Pose%20Growing%20Risk%20for%20Universities.pdf. Accessed: 2 Apr. 2017.

Rawlings Panel on Intercollegiate Athletics at the University of North Carolina at Chapel Hill. Report. http://rawlingspanel.web.unc.edu/files/2013/09/Rawlings-Panel_Intercollegiate-Athletics-at-UNC-Chapel-Hill.pdf.

 Williams, Eben Novy. “College Football’s Top Teams Are Built on Crippling Debt.” Bloomberg.com 4 Jan 2017. https://www.bloomberg.com/news/features/2017-01-04/college-football-s-top-teams-are-built-on-crippling-debt. Accessed: 28 Aug 2017.

Wolverton, Brad, et al. “Sports at Any Cost: How College Students are Bankrolling the Athletic Arms Race.” Huffingtonpost.com 8 Nov. 2015. http://projects.huffingtonpost.com/ncaa/sports-at-any-cost. Accessed: 9 Nov. 2015.

Wolverton, Brad and Sandhya Kambhampati. “As Sports Programs Get Richer, Few Give Much for Academics.” The Chronicle of Higher Education 29 Jan. 2016. http://www.chronicle.com/article/As-Sports-Programs-Get- Richer/235026. Accessed: 2 Apr. 2017.

 

This piece was originally published as a brochure. In case you would like to see it (or use it) in that format, I am attaching the jpgs of the brochure pages: