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Chapter 8: End the “Athletics Arms Race”

There is remarkably little evidence that the massive subsidies to intercollegiate athletics (ICA) have had significant positive spillover effects for universities in the form of greater financial support, improved recruitment of students, higher national rankings, etc. There is abundant evidence, however, that only a handful of ICA programs break even, and that subsidies for these programs have grown rapidly—as much as 15 percent in some years—fueled by soaring costs for coaches, more elaborate facilities, etc. Using generally accepted accounting principles (that, for example, include all capital costs), it is doubtful that any programs are truly profitable. Many programs actually lose significant sums of $10 million or more annually. Since the schools where these subsidies are greatest often have relatively lower-income students, it can be argued that there is a regressive “athletics tax” that burdens students and taxpayers alike. Indeed, even the profitable, or nearly profitable, programs should probably pay a tax (i.e., make payments) to the rest of the university to cover indirect resource costs associated with their operations, such as the time the president spends dealing with athletic matters.

Like arms races in the world of geopolitics, athletic arms races probably require a joint agreement in order to end—in this case a mutually agreeable means of cutting expenses. Whether this is done through the existing arrangements (especially the National Collegiate Athletics Association) or through other means (e.g., a presidential summit conference involving most leading schools), unified action is necessary.

By far the largest expense item is salaries. Football coaches command multi-million dollar salaries because successful teams add millions of dollars to university coffers. Salaries, however, are inflated because players are “paid” trivial amounts relative to their contribution to earnings, so coaches largely capture the income that normally would go to the student athletes.  Limiting football coach salaries to that of the university president would dramatically reduce salaries (or, perversely, increase them for the presidents!) Scholarships for students might legitimately be viewed as wages for student employment, but even here team sizes are excessively large –why, for example, does a sport that fields teams with 11 players need a playing squad of more than 60 players (allowing for multiple persons in each positions in both offensive and defensive units)? The median school in Division 1 of the NCAA spent $2.5 million annually on team travel in 2006. Why can’t distance limits be placed on travel to all but a few special games?  Is the practice of having teams stay in hotels before home games necessary? Why can’t playing seasons be shortened, both for academic and financial reasons?

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Download a summary of the full report, 25 Ways to Reduce the Cost of College (pdf)

View the full report here