April 17, 2012

The Cost of University Athletics Programs

You might hear about the local public university building a new stadium for their football team and wonder why your tax dollars are being spent on sports.  One might wonder if athletic spending is contributing to the high inflation of university costs.     But do athletic programs really eat up that much of college spending?     Does increased athletic budgets at universities account for a significant part of the increases in college costs we've seen in recent decades?

Football and Basketball teams often make a profit.   When I say they make a profit I mean that the revenue generated from the sports exceeds the expenses.   So the teams basically make the school money which can then be used for other things.   Many universities see significant profits from these teams.  The business of college sports lists Which football and basketball programs produce profits.On the other hand the other sports teams at universities almost always do not generate a profit. When you add the spending on all sports then few universities athletic programs are self sufficient.  A USA Today article indicates that only 22 out of 228 public division I universities have athletic programs that actually pay for themselves.  

Most college athletic programs are subsidized. The USA Today article reports that "Altogether in 2010, about $2 billion in subsidies went to athletics programs at the 218 public schools..."    $2 billion sounds like a lot of money but it probably only accounts for 1-2% of total spending at those 218 schools.  USA Today also says  "Those subsidies grew by an inflation-adjusted 3% in 2010. They have grown by 28% since 2006 and account for $1 of every $3 spent on athletics."      University subsidies for their athletic teams are too small of a portion of total university spending to account for the high inflation rate in college costs over the past couple decades.

USA Today also has a database that you can look up the revenue and spending line items for specific universities athletic programs.

I decided to look into the details for a semi random sample of 10 universities.  I picked the 'State' schools and just grabbed the first 10 alphabetically.    This is just a small sample of 10 schools so we can't assume this accurately reflects university spending in general.   But its just a sample to give us an idea and I think its random enough to be fairly representative.

Here I look at the amount the athletic budgets are subsidized by either direct state spending or direct institutional spending and then compare it to the total operating budget for the university in question :

University Athletic Total %
Alabama St $6.5 $150 4.3%
Arizona St $9.0 $1,628 0.6%
Arkansas St $1.1 $138 0.8%
Cal St Sacramento $4.2 $250 1.7%
Colorado St $6.7 $821 0.8%
Delaware St $11.2 $84 13.3%
Florida St $0.4 $1,048 0.03%
Georgia St $1.4 $571 0.3%
Idaho St $4.5 $106 4.2%
Illinois St $2.4 $378 0.6%
(numbers are in millions)

Note: I looked up the university total budgets directly on the websites.  With the one exception of Alabama state which I found the number elsewhere.

You'll see theres a pretty big difference in subsidizes from one school to the next.    On one end you have Florida State which has a subsidy of about $400k for its athletes and a total university budget of over $1 billion so their sports subsidy is just 0.03% of total spending for the school.   On the other end Delaware state spends over $11million on its total budget is just $84 million so they spend 13.3% of their money subsidizing their sports programs.   Yikes!  That amount of spending on sports at Delaware State seems out of control versus their budget so I question if the numbers are correct. 

The median subsidy of the 10 schools is 0.8% of the total university budget.   The Average subsidy is 2.7%.

Larger schools can more easily absorb a few million dollars spent on athletics since they have massive budgets.    As you'd expect the larger schools generally spend lower % of their total budgets subsidizing their athletes.   Here is a look at the # of students at the school versus the % of money spent subsidizing athletics:

University Students spend %
Delaware St 4179 13.3%
Alabama St 5705 4.3%
Arkansas St 13438 0.8%
Idaho St 15553 4.2%
Illinois St 20762 0.6%
Cal St Sacramento 28016 1.7%
Colorado St 28417 0.8%
Georgia St 30263 0.3%
Florida St 40838 0.03%
Arizona St 50397 0.6%

Its not as if the money spent on student athletics is all just money thrown down the drain or wasted.   One of the major expense categories for college athletics is the 'athletic student aid'.   Thats the money given to students in the form of athletic scholarships and room and board.

University SUBSIDY AID diff
Alabama St $6.5 $3.5 $3.0
Arizona St $9.0 $9.8 ($0.8)
Arkansas St $1.1 $4.1 ($3.0)
Cal St Sacramento $4.2 $3.5 $0.7
Colorado St $6.7 $5.8 $0.9
Delaware St $11.2 $4.8 $6.4
Florida St $0.4 $7.7 ($7.4)
Georgia St $1.4 $4.8 ($3.4)
Idaho St $4.5 $3.0 $1.5
Illinois St $2.4 $4.5 ($2.1)

THis makes some of the schools look a lot better.    For example the last school there Illinois State subsidizes their athletic program by $2.4M but $4.5M of the athletic spending expense goes to student aid.  

If you subtract the student aid portion from the subsidy amount then you could look at that is the university directly subsidizing the athletic students.    If the athletic programs were all abolished then many, if not most, of those students would still go to college and most of them would still qualify for some form of financial aid from the university.   I won't pretend that all student athletes would end up in college based on their grades, but you can also look at this as a good benefit as athletics serves a purpose to provide a college education opportunity to students who wouldn't otherwise have that chance.

Lets summarize:

  • Athletic budgets subsidizes by universities generally account for 1-5% of total school spending.   For the 10 schools I looked at the average was 2.7% with a range from 0.03% to 13.3%.
  • This expense alone is certainly not enough to account for the high increase in college costs in the past few decades.
  • Much of university athletic spending goes to student athlete aid.  A lot of the cost of university or state spending to subsidize athletics is in the form of free tuition for the athletes themselves.  Which a lot of people would argue is a good and worthy benefit of college athletics.


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