The U.S. Senate passed the “Protect College Sports Act” last Monday. If laws had truth in labeling, it would be called the “Protect Colleges from Themselves When It Comes to Sports Act.” The bill, which provides antitrust exemptions to allow colleges, conferences, and the NCAA to set rules, now goes to the House, which will take it up later this fall. This is a research column, so let’s do a little research into the data behind college athletics.
A report was released this summer by an entity you wouldn’t typically associate with sports: the U.S. Government Accountability Office (GAO). Read “College Athletics: Most Programs Spend More Than They Generate in Revenue“. The GAO looked at the 2023-24 academic year for all 352 DI schools, including the Power 4 conferences, the non-Power conferences, the FCS (Football Championship Subdivision), and the Basketball Subdivision (DI schools that don’t play football). The GAO also measured 297 DII schools, both football and non-football.
The Numbers: Red Ink Across College Athletics
Here’s the headline: 94% of the 352 DI schools lost money on athletics, with a median gap (half above and half below) of $20.8 million. All DII schools lost money on athletics. Read those results, and you may believe the U.S. radio industry isn’t in such bad shape.
Here’s another fun fact. The GAO compared athletic spending for the 2014-15 and 2023-24 academic years. The Power 4 schools increased spending by 81%, while the other DI subdivisions reported spending increases between 51% and 58%.
For perspective, the inflation rate over that time was 31%. That means spending increases for athletics among Power 4 schools were over 2½ times the rate of inflation across a decade.
Where the Money Goes
We’ve all watched enough Power 4 college football and basketball games to wonder how this can happen. After all, football crowds exceed 100,000 for some schools (Michigan, Tennessee, Penn State, USC, etc.). Donors throw money at athletic departments. Media outlets outbid each other to lock up conferences for years, whether ESPN, Fox, CBS, or NBC. Beyond that, the conferences and the NCAA have revenue-sharing arrangements. If some of your conference’s best teams make the College Football Playoff or go on a run to the Final Four, the last-place school gets a piece of the action. How can you lose money in that setup? Somehow, athletic departments find a way.
When young people need money, they often go to the First National Bank of Mom and Dad. The athletic department goes to the First National Bank of the University. According to the GAO, the median contribution in 2023-24 by DI universities to cover shortfalls was $19.9 million. Yep, universities ponied up around $20 million each to cover expenses when the athletic departments’ taps ran dry.
Overall, DI athletic programs received $7.2 billion in university contributions. The GAO report estimated that the average undergraduate student contributed between $3,200 and $10,800 to their school’s athletic department over the course of a four-year degree. If you’re paying for a kid in college, how does that stat make you feel?
If you’re interested in how your favorite school’s or alma mater’s athletic department is doing, someone has done the work for you. Check out the Knight-Newhouse College Athletics Database at Syracuse University. You can review individual schools, conferences, or custom runs, with no registration required. The database covers 2005-2025.
Is the Brand Worth the Bill?
While some might argue that universities should not lose money on sports, even the GAO report mentioned “brand building.” Major sports teams, especially in football and men’s basketball, draw attention, and winning teams may lead to more and better applicants, improving the quality of the student body. In that world, the term is the “Flutie Effect,” named for Doug Flutie and how his success on the field, especially after the 1984 game at Miami, raised the profile of Boston College.
A more recent example is the “Prime Effect,” which followed Deion Sanders’ arrival as head football coach at Colorado. According to a Ph.D. candidate’s note on LinkedIn, applications to the Boulder campus increased by 20% the year after Coach Prime was hired. This included an 18% increase from out-of-state students. Further, applications from Black/African American students increased by 50.5%.
So far, so good: win more and get more applications. However, a 2013 study by Doug Chung of Harvard Business School, “The Dynamic Advertising Effect of Collegiate Athletics,” took a deeper, statistically driven dive. And if you assume Harvard isn’t an athletic powerhouse, the school is the answer to a wonderful trivia question: Harvard has the most varsity sports of any DI school (42).
Chung’s summary was simple: “…students with lower than average SAT scores tend to have a stronger preference for athletic success, while students with higher SAT scores have a greater preference for academic quality.” Chung also stated, “the goodwill created by intercollegiate athletics resides more extensively with low-ability students than with high-ability counterparts.” Still, “athletic success impacts applications even among academically stronger students.”
The bottom line: if State U. has great football and basketball teams, more applications will follow, especially from potential students the school probably doesn’t want. However, more good students may apply as well. Is that worth $20 million a year or thousands of dollars per student? What do you think?
Let’s meet again next week.
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