College athletics can’t continue the way they’re currently constructed, so maybe it’s time we accept them for what they are.
With many states in budgetary crises, the funds allocated to public universities have come under heavy scrutiny. In considering how much public money should go toward higher education, most legislators have decided that tuition should cover more costs, while the state should cover less. Due to these fiscal questions, we should be paying more attention than ever before to how academic institutions are linked to their costly athletic endeavors.
At schools like Kansas, Louisiana State, Penn State and Virginia Tech—universities that have all debated or approved tuition increases well surpassing inflation for the 2011-2012 academic year—the athletic departments are big businesses. The NCAA and its affiliated conferences comprise a very effective cartel in every sense of the term. Cartels, economically speaking, are a group of firms that collectively restrict output to artificially raise prices. Most sports leagues can be accused of this, since they agree to play a limited number of games per year, which raises prices for the games they play and the TV contracts they sign.
The NCAA takes it one step further. They restrict input as well, because they only allow a certain number of athletic scholarships per team. The combination of these restrictions, plus the historical devotion of fans to very specific brands (Alabama football or Texas football, not just NCAA football in general) leads to a very profitable business model for many universities, including the ones mentioned above. And in comparison to the four major professional sports, where labor makes up more than half of expenditures, the NCAA has reduced player costs to roughly nothing,
In his recently published book Big-Time Sports in American Universities, Duke professor Charles T. Clotfelter considers how universities justify their exposure into the profitable entertainment business, which has seemingly little overlap with the academic pursuits mentioned in nearly every university mission statement. Only 9.6 percent of the mission statements reviewed by Clotfelter mentioned athletics, and if we are to take these statements seriously, universities refuse to acknowledge their most visible and public department as a major function of the institution.
If athletics are not explicitly part of a university’s mission, then how are athletics at least related to their purpose? One of the first responses you will usually hear is the “Flutie Effect”, which refers to the famous Hail Mary thrown by the Boston College quarterback in 1984. Following the heave, BC witnessed a 12 percent increase in applications the following fall. If anyone was seeking confirmation that athletic success could spill over into academics, Flutie’s pass was a godsend.
Northern Iowa has a similar story. After upsetting Kansas in the 2010 NCAA tournament, their applications reportedly increased by 30 percent. Professors and researchers have tried time and again to find a tangible explanation for why prospective students surge towards successful athletic programs. One of their explanations is quite simple, if unsatisfactory: high school students watch college kids having fun at their sporting events on TV and want to experience the same. Success only heightens the elation. It plays into a lot of high schoolers’ image of what college should be.
Even if the Flutie Effect is significant, it still seems insufficient as justification for universities spending millions on big-time sports every year. After all, most schools are experiencing a surplus of applications, not a deficit. But we can extrapolate the Flutie Effect from prospective students to the fan base as a whole.
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As Clotfelter explains, there is an economic term called “consumer surplus” that is vital to understanding the business of sports. When a consumer agrees to a price on a good or service, they will often derive benefits of greater value to them than the price they paid. The difference between the benefits derived and price paid is the consumer surplus. Another way to think of it is: what is the difference between the price you paid and how much you would have to be paid to give up that good or service? How much would you have to be paid to not watch college football or basketball this year?
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This is heresy to many and would violate the “purity” of the college athlete’s motivation, but those still arguing that college athletes possess entirely pure motives must have their heads deep in the sand.
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For college sports, the consumer surplus is tremendously high for many Americans, which provides insight into how important this entertainment is to a lot of people’s lives. Look no further than the packed stadiums on Saturdays every fall across the country. In several cases, entire towns shut down so people can watch the Bulldogs, or the Volunteers, or the Buckeyes play.
The value in these products to a lot of fans is tied to the university, because it is a method of showing support for the institution that is part of their identity. When the Cameron Crazies paint their faces in blue and white, are they rooting for Duke, or are they rooting for an institution they are contributing to, and thus partially rooting for a status symbol of themselves? Is this any different than professional sports, where at least for die-hard fans, the team you root for becomes entrenched in your identity? If the consumer surplus of collegiate sports truly is this high, then this could be a possible justification for big-time sports at universities, since taxpayers largely fund the athletic departments (whether we like to acknowledge this fact or not).
However, this doesn’t get us any closer to our original question: how are academic endeavors linked to big time athletics? It might just be a matter of branding.
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The typical athletic department functions differently from its academic equivalents. Academic departments are decentralized to give more research and intellectual freedom to individual professors. Athletic departments are hierarchical, with coaches having complete control over athletes’ lives. Academic departments have many dispersed and muddled agendas—graduation rates, academic achievement, research goals, rankings, prestige, and so on. Athletic departments have an identifiable, solitary goal: win games. In short, athletic departments resemble businesses much more then they do schools.
Maybe athletic departments simply should be treated like businesses. This is heresy to many and would violate the “purity” of the college athlete’s motivation, but those still arguing that college athletes possess entirely pure motives must have their heads deep in the sand.
If athletic departments were treated like the businesses they are (at least big-time football and basketball), then this would solve the issue of paying players, since they could get paid in line with the revenues the department generates.
More importantly, donations to the athletic departments would no longer be tax-deductible, so if wealthy individuals were seeking a way to give back to their alma maters instead of to the state or federal government, they would be more likely to donate to the academic side of the institution. Likewise, athletic departments could become self-sufficient, alleviating tensions in funding between academics and athletics.
Such a move would probably not cure the fiscal issues afflicting many public universities today. (After all, there’s not much public universities can do when their states are many billions of dollars in debt.) But, privatizing athletic departments would allow lawmakers to focus on the academic side of universities without slighting the importance of athletics to their respective communities. Big-time college sports are self-sustaining precisely because few people want them to go away.
Universities encourage students to be intellectually honest with themselves as part of their education. Ironically, it’s the universities who aren’t being honest about the function of college athletics, clinging to antiquated notions of student-athletes that don’t reflect the profitability of their marquee teams. Once we can start being honest about the business of college athletics, it might do both the athletes and schools some good.
—Photo AP/Amy Sancetta
About Aaron Gordon
A lot of people talk about the revenue that the teams bring in or talk about the profits that some companies get from taking part, but I rarely see any discussion of what it COSTS the schoosl to keep the athletics departments going. From what I understand, the vast majority of the “big ticket” college sports teams, like basketball and football, actually cost more money than they bring in. Where I live, the football coach at the local 4-year public university makes more than the university president and the state governor combined and then doubled. That’s even with a losing season.
I think there’s been a massive sleight of hand going on for a long time, focusing the public attention on all the money that sports “bring in,” as if the teams cost nothing to run. I admit I don’t know all the details about the financial side of college sports, but I suspect the dirty little secret is that in fact these sports are NOT profitable on their own, not without a lot of donations and taxpayer assistance. Get the team to raise money to pay for a new stadium? Not likely. Even pro teams have trouble making that happen and have to beg the taxpayers.
I think the business world knows this, which is why you don’t see a lot of big corporations lobbying to privatize college athletics. They would be stupid to take on all those new expenses without much increase in profit. If there really were massive profits to be made in privatizing college athletics, politicians all over the country would be in the pockets of lobbyists looking to make that happen.
If the players were treated as employees instead of (for the most part) unpaid, overworked interns, the labor costs would be huge. There’s no way you could comply with workplace safety guidelines, workers comp, and all the other labor regulations that would apply to football practice, without spending a lot of money on legal fees. Forget the stereotype of the coddled, spoiled college athlete who’s secretly getting paid to play. The majority are renting out their bodies in a grueling full-time job, not much different from being a stripper, really. If you treated actual employees like that the government would be all over you.
I would love to see an attempt to privatize college sports, for no other reason than to call the athletic department’s bluff. Show me how profitable it really is, how great it is for the players, and how much people demand it.
Also, I would bring up the simple, inescapable math of sports. For every winning team there’s a losing team. For every team with a winning record, there’s a team with a losing record. No matter how much money you invest, no matter how much school pride you mobilize, that will never ever change. When you pay for a team that loses year after year, you are basically subsidizing the winning teams. If winning is the measure of success in college sports, then the industry will never ever do more than break even – failure will always be as common as success. Those are lousy odds from a business standpoint. Sure, there was the mythical “Flutie effect.” I have no doubt it boosted enrollments at BC. Did that increase in enrollment offset the decades of obscurity and low revenues? I doubt it.
@wellokaythen, thanks for commenting. First, I would like to encourage you to read the book I mentioned in the article. If you still think big-time athletics isn’t a huge moneymaker, then come back and we can discuss it further. I found the arguments in the book very convincing. But, let’s hypothetically say athletics weren’t profitable. Why would schools do it? We saw schools cut programs all the time before Title IX if it wasn’t profitable, and we still see it on occasion (Hofstra just cut their football program recently). It’s rare for a reason: the programs make money.
As for your stadium argument: If I said you could pay full price for a hamburger, or half price and the restaurant would cover the rest, which would you do? Of course you would choose half-price, even if you could afford to pay for the full price. If you can get the taxpayers to pay for a stadium, whether you can afford it or not, why wouldn’t you? I hope to write a longer article on this site about stadium subsidies, so stay tuned on that front.
Yes, sports are a zero-sum game on the field. But, as the NFL has demonstrated, there must be losers on the field, but not in their wallets. Every single NFL team makes a boatload of money every year, even if they only win 2 games. There is a difference between what goes on on the field and what numbers are in their bank accounts, because the whole reason we watch sports is because we don’t know the outcome. Leagues and teams get us to pay before we know who will win, which is why bad teams can still make profits.
For some reason, it is respectable for some kind in the marching band to get a scholarship in music and work toward a music career with dreams of playing Carnegie Hall or being a rock star. The odds are long. However, let that kid be black and have athletic talent and athletic dreams, the NCAA steps up to make sure his ambitions cannot be his major. He cannot major in “Basketball.” The odds are long.
Why are white dreams encouraged while black athletes are coerced into being Communications or Marketing majors not too demanding? Why can’t an athlete get a degree doing what he wants?
While we are here, let’s see the NFL and NBA pony up a few million dollars for having universities run a free farm team system.