Time to talk education and research spending now that college football is back

With September, students arrive back on campus, including the college football players. The college football season generates so much interest this time of year it is easy to think of universities as little more than sports factories. Every new season brings a lot of commentary and garment-rendering decrying the seemingly out-sized importance of sports, and football in particular. The concern is always some variation on the theme that universities have sold their souls pursuing the almighty athletic dollar. But this is not one of those articles.

What I’ve done here is try to weigh athletics activity on campuses in context with university research and education, which are the two principal missions of the prototype university. I’m drawing this picture using basically two sources of data. The first is athletics program financial data for the 2014 year collected and published by US News researchers from over 200 NCAA Division 1 mostly public universities. All other fiscal and enrollment data are those reported by the same institutions to the US Department of Education for the 2012-13 academic year, the latest available.

The chart above is dynamic and built for exploration. By clicking on the conference legend, you can turn off and on groups of bubbles. You can use your cursor to highlight any bubble to see the university it represents. With that, you’ll see that school’s spending data on athletics, research, and education (cost of instruction + academic support + scholarships/fellowships + student support). I also split total enrollment into graduate and undergraduate. You’ll also see a ratio of total university spending to just that spent on athletics. Finally, you’ll see the percent of athletics spending that is subsidized by the institution.

Here’s some aggregate statistics:

  • Data represent 222 out of the 360 NCAA D1 institutions, mostly public, very few private
  • Total enrollment of 5.5 million students, including 1.2 million grad students
  • Total athletics spending of $8.19 billion
  • Total research spending of $26.85 billion
  • Total education spending of $78.39 billion
  • Median ratio of total university spending to athletics spending is 17.75
  • Average university subsidy of athletics spending is 52.8%

At the median, a university spends almost $18 for every $1 that its athletics program spends, and of that value, $13 is spent on research and education. The university with the highest ratio of total to athletics spending is Indiana University-Purdue University-Indianapolis at almost $138 to $1. The University of California-Davis is not far behind at $135 to $1. The lowest is the University of Mississippi at $6.08 to $1.

Taking into account that 53% of the $8.19 billion in athletics spending is actually subsidized by the universities, the athletics spending from university coffers is actually just $4.32 billion. The other funds spend by athletics programs comes from external sources, presumably to those programs directly. That’s important, because it means that, for example, the true ratios of spending at universities on research and education to athletics is closer to $26 than to $13.

It is clear from inspecting the chart that there is a strong correlation between research spending, enrollment and athletics. What is seems to reveal as a general take-away is that big time institutions tend to do everything big time. Big enrollments. Big research budgets. Big athletics programs.

Certainly, there are some outliers. For example, the research spending at the University of Alabama is lower than the cluster of universities in which it resides that have as high a level of athletics spending. The University of Central Florida, which has the highest enrollment in this group, spends less on both athletics and research then its enrollment numbers would predict.

This data visualization also shows an interesting inflection point. There appears to be a critical mass of enrollment size just over 20,000. Below this level, public universities spend less on both research and athletics. Above this level, they appear to bifurcate into at least two broad classes. On one path they choose, with few exceptions, to do research and athletics big time. The other path is a bit more heterogeneous, where they choose not to do athletics big, where some are robust research universities while others are not.

Athletics spending is about entertainment but that entertainment and that spending provides important marketing value to a school in terms of brand recognition and customer (student and alumnae) loyalty. The latter are important drivers of tuition revenue and donations. Public universities have always spent a lot less than private universities to acquire students as measured by traditional cost and marketing metrics. If I were the king of a university, I’d probably shift the accounting for my athletics program spending over to my line for marketing, branding and the overall cost of student acquisition because that’s what I think the value of college sports has morphed into.

I’ve heard people say that through his 4 day winning performance during the 2015 Master’s tournament, and all of the TV time during which he was exposed, that PGA golfer Jordan Speith provided over $30 million in advertising value for his major sponsor, Under Armour.  The point being that the value of all those football Saturdays, the TV air time, and all the newspaper coverage add up to advertising costs that would be too expensive for a university to purchase otherwise.

In the end, people make decisions on where to go to school using a number of factors. Some seek the big time experience in all that it offers, including sports, whereas many others do not. There is obviously a lot of diversity in terms of the institutions they can choose to attend, and what they are willing to spend their money on.

Whether or not you believe that college athletics is appropriate or should be down-sized is a value judgment. Viewed in terms of the overall cost structure of a typical university, and how well that university is fulfilling its other missions, athletic spending doesn’t strike me as particularly excessive. I think that the data don’t really support the notion that by embracing athletics, the university has lost its soul. In fact, I’d venture to say that most institutions probably experience a decent return on the investment in the form of tuition revenue and donor support, owing to the fact that sports can be a reasonably cost-effective marketing tool.

 

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