The 'arms race' in college sports
- Article by: Richard Vedder
- December 30, 2013 - 6:17 PM
With the college football bowls underway, all most of us will care about are the winners. But as a nation purporting to care about the costs of higher education, we should pay far more attention to the many losers.
Thanks to a newly available database, we can grasp the ugly truth: Universities are increasing their spending on intercollegiate sports exponentially, far faster than they are investing resources in teaching and research, and at rates that force higher institutional subsidies, usually paid by students.
The trove of information comes from the Knight Commission on Intercollegiate Athletics, a group dominated by past and present university presidents and committed to “restoring the balance” of costs and benefits to college sports.
Consider this eye-popping figure: Among the more than 100 top athletic powers (the football bowl subdivision), which enroll more than 3 million students, inflation-adjusted academic spending per student rose a modest 8 percent from 2005 to 2011. Meanwhile, “athletic spending per athlete” rose by more than 38 percent. (This is based on the 90 schools for which data were available.) At the same time, university subsidies — “institutional funding for athletics per athlete” — expanded on average by an extraordinary 51 percent, despite rising television and ticket revenue. Commercial receipts covered only 74 cents of each extra dollar of costs incurred in this athletics arms race.
In 2011, median academic spending per student at these schools was $13,736, while athletic spending per athlete was seven times as much — $96,948. Some of the highest-spending teams (such as No. 2-ranked Auburn University, which spent more than $212,000 per athlete) obtain large revenue from television, tickets, concessions and branding, so they can claim their investment has paid off.
But the cost-benefit balance doesn’t look the same at, say, Rutgers University, where spending per athlete more than doubled from 2005 to 2011 and inflation-adjusted academic spending was flat. Or at my school, Ohio University, where inflation-adjusted academic spending per student fell about 6 percent while inflation-adjusted spending per athlete rose 77 percent. At Rutgers, commercial revenue (ticket sales, television, concessions and so on) paid only 53 percent of total athletics costs, and much less — 15 percent — at Ohio University. (“Athletics costs” includes sports such as swimming, wrestling and cross country, as well as the big-revenue programs football and basketball.)
Schools spend more for two reasons. First, they calculate that athletic spending will lead to more victories, and with that more revenue. Second, they gamble that the spending will improve national name recognition and enhance student admissions demand, improving the school’s reputation. In reality, neither occurs often.
Thus the 134 percent increase in spending per athlete at Florida International University wasn’t followed by much revenue. Athletic subsidies per athlete roughly doubled, and the school accumulated more than $30 million in debt incurred to build new athletic facilities. FIU’s national reputation, as measured by national rankings, remains negligible.
Worse, some schools that invest substantially in intercollegiate athletics suffer declines in their reputations. Ohio University was ranked 98th by U.S. News & World Report in 2005. Despite some moderate athletic success, however, it fell 26 spots to No. 124 by 2011 (and has fallen even more since). Rutgers, ranked 58th in 2005, now ranks 69th.
It isn’t just reputation we should care about. Take the case of Boise State University, which has embraced the mantra of spending on ball-throwing contests as a path to greatness. In athletic terms, this has been a success. Yet the university’s six-year graduation rate is an extraordinarily low 29 percent, about half that (56 percent) of its less athletically obsessed state rival, the University of Idaho. Boise State, where 28 percent of athletics costs are financed by institutional subsidies, spent a lowly $9,134 on instructional spending per student in 2011, and spent $172,415 — 19 times as much — on “football spending per scholarship football student.”
Of course, academic reputation and athletics can go hand in hand. The University of Notre Dame is a top school, and its distinction has been enhanced by a long-term record of athletic excellence. Ohio State University is so successful athletically that the program is no drain on institutional finances, and the pursuit of athletic excellence has led to some academic success, as its rankings have risen somewhat. The same is roughly true for the University of Texas and the University of Southern California. But the sales pitch that spending more on coaches’ salaries and stadiums, among other sports subsidies, is a relatively risk-free way of improving academic achievement and reputation is a fantasy.
No school will unilaterally disarm, and the solution will probably have to be imposed from outside. Although everyone complains about higher education costs, politicians have been timid in proposing ways to limit the mania for sports. Yet state governments could limit the proportion of their subsidies to public universities that could be devoted to athletics (to, say, 3 percent). Federal income tax deductions could be removed for private gifts for athletic facilities or operational support.
Good luck with this, you may say. Yes, such measures may be politically unfeasible. The students and taxpayers who subsidize the profligacy even though they don’t benefit from it are no match for the powerful lobbies that support sports. But the next time you hear business and political leaders decry the costs of U.S. higher-education and shaky academic standards, remember: That touchdown wasn’t free.
Richard Vedder directs the Center for College Affordability and Productivity, teaches economics at Ohio University and is an adjunct scholar at the American Enterprise Institute. He wrote this article for Bloomberg.
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