Athletic success doesn't pay of in donations

[Rick]

Study: Athletic success doesn't pay off in donations

By Jack Carey, USA TODAY

Success in big-time sports has little, if any, effect on a college's alumni donations or the academic quality of its applicants, according to a study made under the direction of the Knight Commission on Intercollegiate Athletics.

The study — conducted by Robert H. Frank, a professor of management and economics at Cornell University — released Tuesday, concludes schools that invest heavily in their sports programs and facilities hoping to markedly improve fundraising are likely making a mistake.

"Alumni donations and applications for admission sometimes rise in the wake of conspicuously successful seasons at a small number of institutions (such as after a national title or Final Four berth)," Frank says. But, he continues, such increases are "likely to be small and transitory ... (and) there is not a shred of evidence to suggest that cuts in spending on athletics would reduce either donations by alumni or applications."

Frank concludes that, notwithstanding what he calls "vivid episodes," such as Doug Flutie's last-second touchdown pass for Boston College against Miami (Fla.) in 1984, "the existing empirical literature suggests success in big-time athletics has little, if any, systematic effect on the quality of incoming freshmen an institution attracts (as measured by SAT scores)."

Knight Commission chairman William Friday says Frank's study points up the need to "stand down" in the athletic spending spree and says conferences should take the lead in encouraging member schools to curb expenditures.

http://www.usatoday.com/sports/college/200...ommission_x.htm

I believe one of Chapmans selling points on the D1aa move was that it would result in more/larger alumni donations. If this study is accurate regarding big-time programs, what does it say about unsuccessful small-time D1aa programs?

[The Sicatoka]

That seems to gel with the results of an NCAA study released on August 18, 2003.

From the NCAA News report on the study:

A recently released eight-year study of Division I athletics operating budgets conducted by independent researchers implies that the relationships between spending and athletics success may not be as reciprocal as most people think. In fact, results of the study commissioned by the NCAA run counter to enough hypotheses associated with spending in college sports that the Mellon Foundation has agreed to fund further investigation.

The study is the result of a Division I Board of Directors Task Force decision two years ago to embark on a two-pronged reform effort to enhance student-athlete academic performance and fortify fiscal integrity in intercollegiate athletics. With academic reform firmly under way, the task force commissioned independent researchers to complete an economic baseline study to better understand the financial aspects of intercollegiate athletics. ...

The study looked at 10 hypotheses about college athletics, focusing primarily on Division I-A institutions, and relied on data rather than anecdotes to assess the validity of those hypotheses. The research is based in large part on a comprehensive database from school-specific information collected as part of the Equity in Athletics Disclosure Act (EADA) merged with data from other sources. The study also relies on a detailed survey of chief financial officers from 17 Division I institutions.

Findings refute two primary assumptions about college sports: that investing in athletics is the road to riches, and that the athletics "arms race" is eroding higher education. Based on analysis of current data, there is no compelling evidence to support either statement. ...

The study looked at the following 10 hypotheses about college athletics, focusing primarily on Division I-A institutions, and relied on data rather than anecdotes to assess the validity of different hypotheses.

No. 1: Operating athletics expenditures are a relatively small share of overall academic spending. Confirmed. Data show athletics spending is roughly 3.5 percent of total higher education spending in Division I-A.

No. 2: Football and basketball markets exhibit increased levels of inequality. Confirmed. Data show an increase in the spending gap between the "haves" and the "have-nots" during the eight-year period.

No. 3: Football and basketball markets exhibit mobility in expenditures, revenue and winning percentages. Confirmed. The top spenders aren't always the same from year to year, nor are the top winners.

No. 4: Increased operating expenditures on football or basketball, on average, produce no medium-term increase or decrease in operating net revenue. Confirmed. In other words, a dollar spent means a dollar gained.

No. 5: Increased operating expenditures on football or basketball do not produce medium-term increases in winning percentages, and higher winning percentages do not produce medium-term increases in operating net revenue. Confirmed. Over the eight years in the study, there doesn't seem to be a connection between spending more and winning more.

No. 6: The relationship between spending and revenue varies significantly by subgroups of schools (for example, conferences, schools with high SAT scores, etc.). Not proven. The study shows no indication that increased spending under a specific set of characteristics will increase revenues or increase winning.

No. 7: Increased operating expenditures on big-time sports affect operating expenditures on other sports. Not proven. The study suggests that each dollar increase in operating expenditures on football among Division I-A programs may be associated with a $0.21 increase in spending on women's sports (excluding basketball) and a $0.35 increase (including basketball).

No. 8: Increased operating expenditures on sports affect measurable academic quality in the medium term (such as SAT scores of incoming students). Not proven. There is some connection between increased spending in football and an increase in applications for admission, though no connection to the quality of those applications.

No. 9: Increased operating expenditures on sports affect other measurable indicators, including alumni giving. Not proven. Data show no robust relationship between increased spending and alumni giving either to the sports program or to the university itself.

No. 10: The football and basketball markets exhibit an "arms race" in which increased operating expenditures at one school are associated with increases at other schools. Not proven. Some analysis suggests this phenomenon exists among schools within the same conference, but other specifications suggest no relationship. The existence of an arms race may be concentrated in capital expenditures, which are not adequately recorded in this research, rather than in operating expenditures.

I find No. 10 rather interesting: The real race is in terms of 'capital expenditures', commonly called facilities.

[IowaBison]

that's a very good point, and one that most opponents who work in academia refer too, but many of these individuals think sports should be eliminated as a whole

also, while there is definitely some truth to this using examples doesn't prove anything

some alumni will only donate to athletics

there are a lot of non-alumni/sports fans who donate for better seats at events and give nothing to the university itself

and there are those who shift donations that would have gone to the university, but instead send it to athletics

as far as enrollment, that's not that big of a deal, i knew a few kids who went to UND and were influenced by the success of its hockey program, but they probably would have gone there anyway

it feels pretty good as a senior to be walking around high school with a national championship t-shirt of the university you will be attending, but the effects are still marginal

[Bisonfan1234]

New facilities are a pretty big deal at some universities these days.

[BigGame]

I think the only major affect athletics can have on schools like UND and NDSU is getting the name of the institutions out to other areas of the country. It gives the schools more name recognition so if someone from say Texas decides to go to school at UND, their is a better chance for people around them to have a general idea of what the University is like. Basically you wouldn't have as many people going, What! NORTH DAKOTA isn't that in Canada? If the University is known through athletics, at least they are getting some publicity. As sad as it is, if you live in another area of the country you most likely will not have a clue about the acedemics of those schools and without athletics and a few other programs these people wouldn't even consider checking it out.

[The Sicatoka]

New facilities are a pretty big deal at some universities these days.

Yup, they are.

There's a good reason why too:

"The dynamic in our business is with facilities. That's where the arms race is." -- Ohio State University Athletics Director Andy Geiger

Geiger says the race isn't what you spend on athletics per year, but in facilities. And that's coming from the man with the highest annual department (expense) budget in the NCAA.

[bisonguy]

Geiger says the race isn't what you spend on athletics per year, but in facilities. And that's coming from the man with the highest annual department (expense) budget in the NCAA.

I have to question the validity of that statement.

What else would a university with the largest athletic budget, with profits exceeding $20 million a year spend the money on. "The race" for a university with an $80 million budget isn't the same as a university with a $10 million dollar budget.

[OETKB]

I can't speak for others, but the reason I went to UND is because both my parents went to UND. Both of them are huge Sioux sports fans. I grew up with season tickets to hockey, basketball, & football.

If not for the love of the school that was instilled in me through pride in the sports programs, I might very well have wanted to go somewhere else. I'm sure that is true for many others as well.

By the way, the lack of evidence in hand doesn't mean that no evidence would exist if it was sought with the same vigor these people seem to have for their political agenda. That's a logical fallacy called "Argument from Ignorance."

[The Sicatoka]

Questions:

- What if a $10 MM annual budget school was able, somehow, to have facilities comparable to a school with an $80 MM annual budget? Would they be in the race? As the logical follow-on:

- Do people know the annual budgets of schools or do they know about the facilities they see on campus or television?

If athletics is the "front porch" of the university as some have purported, that porch should have some sturdy construction, pretty rails, and new paint. And some good sturdy rockin' chairs on it wouldn't hurt either.

Facilities are a major portion of the collegiate "arms race".

[bisonguy]

Questions:

- What if a $10 MM annual budget school was able, somehow, to have facilities comparable to a school with an $80 MM annual budget? Would they be in the race? As the logical follow-on:

- Do people know the annual budgets of schools or do they know about the facilities they see on campus or television?

If athletics is the "front porch" of the university as some have purported, that porch should have some sturdy construction, pretty rails, and new paint. And some good sturdy rockin' chairs on it wouldn't hurt either.

Facilities are a major portion of the collegiate "arms race".

I'd like to see a school with a $10MM athletic budget that has a football stadium that seats over 100k (and is sold out at every game). That's a facility that generates revenue, the larger part of the "college athletics arms race".

Geiger's quote is akin to Bill Gates saying, "I don't care about money. Creating great software that doesn't crash is where the technology race is."

[The Sicatoka]

This Geiger quote comes from the same NCAA news story:

"At Ohio State," he (Geiger) said, "there's a massive effort to make an 80-year-old stadium last another 80 years. That costs us $197 million, which is an obscene amount of money, but amortized over 30 years, it's a $14 million annual cost and the facilities we put in the stadium pay for it. So our revenue goes up commensurate with the expense side because of the way we amortized the bond."

But remember the findings of that report:

No. 4: Increased operating expenditures on football or basketball, on average, produce no medium-term increase or decrease in operating net revenue. Confirmed. In other words, a dollar spent means a dollar gained.

A dollar spent means a dollar gained: They're at a net wash. If it's a budgetary wash, why do it?

Because of the need for the facility. Why do they need the facility?

"The dynamic in our business is with facilities. That's where the arms race is." -- Ohio State University Athletics Director Andy Geiger

[bigmrg74]

So, what you saying is that they have to spend the money just to keep from losing it???

[bisonguy]

I'm still looking for the school with a $10MM budget that has over $50MM in profits from one sport.

IF a school's athletic program generates positive revenue, IF they can afford good coaches to keep their program winning, etc., etc., etc., THEN they should look at upgrading facilities to increase revenue potential (Geiger's goal for spending money on facilities).

If a school with a $10MM budget builds a $300MM stadium but doesn't have the successful team, finances, or a potential fanbase to fill the seats, it's not a smart idea to be part of the "arms race". A "Build it and they will come" mentality is better left to Hollywood .

[Bisonfan1234]

There are different levels of the arms race.

NDSU vs. UND would be an arms race to attract students of ND and MN (and other places).

Obviously NDSU vs. OHSU isn't going to be very competitive.

[dakotadan]

This "arms race" is just like in the business world. A company has to decide what products they want to invest money in. Hopefully the public loves the product and purchases alot of it. It is all a risk taking business but when you make the right move, it all pays off. You just don't know if it will pay off until you make the commitment.

[bisonguy]

This "arms race" is just like in the business world. A company has to decide what products they want to invest money in. Hopefully the public loves the product and purchases alot of it. It is all a risk taking business but when you make the right move, it all pays off. You just don't know if it will pay off until you make the commitment.

As long as it is within the means of the university. A football stadium with 100k seating wouldn't make much sense in the state of ND.

Would a $100MM+ hockey arena have made sense for UND if it had not been donated to UND?

[Cratter]

As long as it is within the means of the university. A football stadium with 100k seating wouldn't make much sense in the state of ND.

No one ever mentioned a 100K arena. That is not the point here.

[bisonguy]

A facilities "arms race" was- and it was started with a quote from the Ohio State University AD, whose program has a 100k seat football stadium.

[Bisonfan1234]

I think his quote applies to all levels of races so long as both schools are somewhat equal.

[The Sicatoka]

"So, what you saying is that they have to spend the money just to keep from losing it???" -- bigmrg74

No, quite the opposite. They spent the money and hope to get it back (to pay off the bonds). They had to spend the money to save the stadium, to keep their 'weapon' in the "arms race" but they spent it in a way such that they'd have a chance at recouping it.

Would REA have made sense for UND if they would have built it for themself? No.

Does UND have a major 'weapon' in the "arms race" (for hockey, volleyball, and basketball) now that they have the REA complex (meaning The Ralph, The Betty, The Olympic Rink, and the included training facilities)? Yes.

[IowaBison]

Sicatoka, I don't think you get the 'arms race' analogy, bigmgr has it right. If your definition were correct it would be a simple 'investment strategy'.

They are not spending money to make money, they are spending money to stop from losing it. If a school falls to far behind, in terms of facilities and quality of teams they risk losing far more than if they spent money up front and still incurred annual loses.

A simple game theory representation would be as follows:

Two groups A and B

Both Build Up (-1,-1)

A Builds Up, B doesn't (2,-5)

B Builds Up, A doesn't (-5,2)

Neither Build Up (0,0)

where the value in parenthesis are (payoff to A, payoff to B)

This structure, results with both groups 'building up' even though they would be better off if they both didn't (a Nash Equilibrium). This is an 'arms race'.

[Bisonfan1234]

I don't really agree with Nash's idea that all parties are better off not competing with each other simply because the definition for "better off" differs from person to person and in each situation.

[The Sicatoka]

"If a school falls to far behind, in terms of facilities and quality of teams they risk losing far more than if they spent money up front and still incurred annual loses."

Exactly.

Hence the "arms race" of building facilities: You have to keep building more and better just to stay in the race.

If you don't have the facilities you're not even in the race.

Hence the statement:

"The dynamic in our business is with facilities," said Ohio State University Athletics Director Andy Geiger. "That's where the arms race is."

On a lighter note, Geiger making that statement echos of the Soviets (with their past massive arsenal) talking about the nuclear arms race.