On average, 70% of revenues come from university allocations and student fees. The Mid-American Conference is one example among many.
America’s major universities spend a lot of money on intercollegiate sports–about $11 billion in 2017-18–according to USAToday, which tracks the numbers of America’s 230 major public universities.
Most folks probably think that the lion’s share of revenues comes from athletic-related sources, like ticket sales, merchandise sales, media rights, and the like. While that’s true for America’s brand-name schools–places like Alabama and Penn State–that’s not the case for most of the other 230 schools. Known as ‘mid-major’ schools, schools like Delaware and Cal-Davis compete at a major level but aren’t in the highest tier of collegiate sports.
Courtesy: Huffington Post & Chronicle of Higher Education
Mid-majors need subsidies–plenty of them–to balance the athletic books. Subsidies come in the form of university general fund transfers to athletics and student fees. That money is added to the revenue line in athletic budgets and spent like other dollars (e.g., from ticket sales) to support athletic programs.
Per USAToday, subsidies nationally totaled about $3 billion last year–or about one-third of the $11 billion in total revenues. But that number doesn’t tell the whole story. Among 230 public universities, the median contribution of subsidies to total athletic revenues is about 73%. That’s right. For 165 programs–almost all of them mid-major schools–three out of every four athletic dollars come from non-athletic sources.
Intercollegiate athletics as we know it at mid-major schools–like those of the MAC–would be impossible without subsidies. For proof, let’s look at numbers.
Last year, the MAC’s twelve schools spent about $390 million on intercollegiate athletics. Nearly 70% of that total—$268 million, to be specific—came by way of subsidies to athletics. Last year wasn’t a one-off, either. It’s a storyline for the MAC and other mid-major conferences, year after year, school after school.
Put another way, MAC intercollegiate sports aren’t close to being self-supporting. Only about thirty cents of every dollar spent on intercollegiate athletics comes from athletics-related sources. There’s more to this story, too. The myth that revenue-generating sports—football and men’s basketball, in particular—pay for non-revenue sports (women’s softball, for example), isn’t true at the vast majority of America’s universities. Instead, football and men’s basketball need help from non-athletic coffers to balance the athletic books.
The MAC universities (photo, Wikipedia)
And there’s a geographic aspect to the MAC’s story. Clustered geographically, nine of the 12 MAC schools are located either in Ohio (N=6) or Michigan (N=3). There’s one school each in Illinois, Indiana, and New York.
That means Ohio/Michigan taxpayers and students at Ohio- and Michigan-based MAC schools carry a significant financial load. Last year, Ohio taxpayers and MAC students in the Buckeye State subsidized MAC athletics to the tune of about $125 million. The subsidy total for MI-based MAC schools was about $75 million.
Wait, though…. $200 million in athletic subsidies…in two states…for one year…doesn’t include subsidies incurred at non-MAC, mid-major schools in those states. Examples are (in Ohio) the University of Cincinnati ($29 million) and (in Michigan) Oakland University ($13 million).
How does the MAC subsidy picture stake up nationally? When USAToday ranked 230 major public sports-playing colleges by subsidy amount in total dollars, two schools in the top ten schools are from the MAC—SUNY at Buffalo is 7th ($31 million) and Central Michigan University is 9th ($30 million).
Mind you, all of the figures I’ve cited here are for one year only. Consider what totals look like over a decade’s time.
How does this portrait compare to brand-name schools? Those schools (e.g., UCLA) spend a lot more on intercollegiate athletics than ‘mid-major’ schools. But most big-time athletic programs are either self-supporting or close to it. No mid-major school is. Not even one.
To get a better feel for the comparison, let’s look at numbers associated with the MAC’s geographic peer, The Big Ten Conference.
Courtesy: University of Minnesota Alumni Association
Data show that Big Ten schools divide into three tiers when it comes to athletic subsidies. The first tier is no subsidies. Last year, four Big Ten universities—Ohio State, Penn State, Purdue, and Nebraska—collected over $616 million dollars in intercollegiate-related athletics-related revenues without including any subsidy money.
Three Big Ten schools—Michigan, Michigan State, and Iowa—occupy the nearly self-supporting tier. Those schools generated nearly $480 million in revenues, including $1,715,000 that came by way of subsidies (<1.0% rate).
The final tier includes the rest of the Big Ten—Wisconsin, Illinois, Minnesota, Rutgers, Indiana, and Maryland. (Northwestern, a private institution, does not have to report financial data.) Those six schools generated $714 million in intercollegiate-related income. Subsidies totaled $65 million dollars (9% subsidy rate).
Maryland and Rutgers, newest Big Ten members (photo, heraldtimesonline.com)
In total, the Big Ten Conference generated about $1,810 billion in athletics revenues last year with about $67 million of that total coming from subsidies (4% subsidy rate).
But those figures don’t tell the complete story. $45 million of the $67 million in Big Ten subsidies (70%) came from two schools, Maryland and Rutgers. UMD and RU joined the Big Ten recently, in part, to benefit financially from conference affiliation, which includes more TV revenue and other income vis-à-vis their previous conference affiliations. Each school had been struggling with athletic deficits. Rutgers has the highest subsidy rate in the conference at 30%. Rutgers is an outlier, though. The median subsidy rate in the Big Ten Conference is about 1% of total athletic revenues.
The Big Ten’s $67 million in subsidies is still a lot of money–there’s no getting around that–but it’s nearly $200 million less than what MAC schools needed during the same reporting period.
What does it all mean? It would be a losing argument to contend that intercollegiate athletics should pay for itself completely. And we shouldn’t get into the business of telling universities how to spend their money. However, the problem with subsidies is that taxpayers and students are sources of funds–during an era of high college costs. And it’s not a little bit of money, either, as our analysis has shown.
Huffingtonpost.com
For sure, public universities benefit from high-end intercollegiate athletics (e.g., attracting students, generating donations, etc.). But the defining issue, I argue, shouldn’t be about what’s best for the universities. It’s should about what’s best for the public. That’s why I think it makes public policy sense to cap the contribution of subsidies to, say, between 25-30% of athletic revenues.
The problem is getting there. In the MAC, Bowling Green currently has the lowest subsidy rate at 57%. Central Michigan has the highest rate at 76%. The median rate for the conference is about 70%. Getting to 30% would require a phase-in period.
The issues facing the MAC aren’t unique. Large subsidies affect other conferences, including the Big West, Atlantic Sun, Colonial, America East, and Western Athletic. It’s a national problem, which I have documented elsewhere.
If universities and conferences aren’t willing to impose subsidy limits on athletic revenues, then state legislators should act. The current situation is unsustainable and it doesn’t make public sense. No other industry would be tolerated with a 70%-plus subsidy rate.
What is a college for? Football? I think not.
Another great job from my writing hero. This article touches on every point of college sports. Good job Frank.