On April 27 I wrote a sports column on financial issues facing major college sports. It’s the third year I’ve focused on what I believe is a national area of concern.
I don’t see spending on college sports as a sports matter only. It’s a public policy dilemma. Although Americans love sports—and college sports are at the top of the list—fundamental questions need answers: Who pays? And how much?
One of the biggest issues is what’s called subsidies to college athletics. Subsidies include allocations via public university general funds (tax dollars) and student fees. Subsidies supplement revenues that come from athletic ticket sales, TV revenue, conference allocations, merchandising, and donor contributions.
Although investigative reporters have followed the subsidy story for years (USA Today Sports is a leader in that regard), only now is the topic getting repetitive attention, both nationally and locally. It was a feature story on HBO’s Real Sports with Bryant Gumbel (April 19) and also on ESPN’s Outside the Lines with Bob Ley (May 4). And reporters in cities where I live wrote recently about college sports subsidies—Lansing State Journal (May 1) and Fort Myers News-Press (April 19).
The problem is straightforward: the aggregate dollar amount of subsidies is staggering, about $2.6 billion dollars nationally last year (USA Today Sports). But the total amount doesn’t reveal the full scope of the problem.
Most schools can’t balance athletic books without relying heavily on subsidies. In 2014-15 subsidies accounted for at least 65% of athletic budgets at over 120 public universities.
Most schools in America’s top athletic conferences have no or low subsidies. That’s because they generate a lot of revenue from athletic sources. For example, last year subsidies amounted to around 2% or less of the athletic budget at California’s flagship (public) athletic institutions, Cal-Berkeley and UCLA, respectively—about $4 million dollars, total, at both schools.
But that portrait doesn’t hold at the majority of America’s 230 major public universities. Most schools can’t balance athletic books without relying heavily on subsidies. In 2014-15 subsidies accounted for at least 65% of athletic budgets at over 120 public universities. The percentage was 80% or more at 40 private universities.
The epicenter is the so-called “mid-major” programs, schools that compete in lesser known and followed athletic conferences, like the Big West and Sun Belt conferences. Participating in major sports is an attractive, value-added attribute at mid-major institutions, making athletic investments an institutional priority. Research shows that athletic success can improve a school’s profile and enhance its brand, attract more and better students, invite more donor dollars, and generate more press coverage.
But, again, at what cost? And who pays?
Those questions, relevant nationally, are especially germane in certain states. That’s because the subsidy price tag is distributed disproportionally across America. States like Florida, Virginia, Ohio, and Michigan carry heavy burdens. Consider a recent headline in the Detroit Free Press: “How much cash should Michigan universities pour into athletics?”
The situation in California is no different. The aggregate amount of subsidies at California’s 15 major sports-playing public universities totaled over $210 million last year. The subsidy percent was as high as 90% at Cal-Riverside. It was over 80% at four schools—Cal-Northridge, Sacramento St, Cal-Fullerton, and Cal-Santa Barbara. Subsidies constituted at least 60% of athletic revenues at 11 of the 15 schools. In real dollars terms, subsidies last year totaled about $26 million at Cal-Davis, $24 million at San Diego St, and $20 million at Cal Poly-SLO.
While I support the right of universities to make financial decisions, there are other issues to be considered, especially the broader financial environment associated with higher education today. State allocations to public universities have been under pressure for years and college costs are at historic highs.
How high? USA Today reported on May 8 that the average cost of attending a public university in America has increased 130% over the past 30 years, even though median household income has increased only about 15%. And, since 2010, the aggregated student debt in America has increased from about $870 million to $1.3 trillion dollars.
That’s why America’s public universities need to do a better job managing subsidies to athletics. I endorse an approach being taken by one mid-major university I studied in preparation for writing this article—Florida Gulf Coast University. With a $15 million dollar athletic budget and 65% subsidy rate, FGCU is reducing university allocations to athletics, increasing donor support for athletics, and increasing revenue from student fees via enrollment increases only.
I also applaud university presidents and boards that “right size” college athletic programs. But I also recognize the challenges in doing so. Consider the case of Alabama-Birmingham. The president terminated the football program only to have boosters raise funds to reinstate the sport. And the president of the University of Idaho decided recently to downscale football participation. The response, hailed by some, was also met with widespread concern, especially from alumni and other boosters.
These examples show that presidents, athletic directors, and trustees need political cover to make change in athletics. That’s why the NCAA should work with its mid-major membership to develop a plan for funding college athletics more responsibly. If that doesn’t happen, then don’t be surprised if state legislatures and/or Congress takes charge. That may happen anyway.
What’s the take-away message for readers? Most sports stories are best left to the sports page. This isn’t one of those stories. And there are over 2 billion reasons why.