19.10.15

WHO WILL OPT OUT FIRST?

It's college football season, and you can count on University Diaries to chronicle the business follies that accompany it, with a little help from the economists.
Econ professors are a seriously weak link in the American jock school chain. This blog has covered tons of economists who, with their specialized knowledge, subject their athletics departments to withering critique and then tell everyone about it. Here are some instances of professors, who, like Shulman (‘“Of course it sucks resources out of the academic side of the university,” Shulman said. “And it’s dishonest to deny that it does that… We are a land-grant university, and our mission is grounded in service to the citizens of Colorado. And to me what that means is keeping tuition low and affordable.”’), go after the game boys.
So far, though, nobody has gone so far as to suggest that opting out of the positional arms race in college sports is the superior strategy.  The spin out of the athletic directors' offices is that following the dominant strategy is still the way to go.  Take Colorado State (or as occasional source Historiann calls it, Baa Ram U.)
The asking price for college football and basketball coaches has increased significantly in recent years, Cottingham said. Bobo’s annual salary of $1.35 million ranks 64th among the 121 schools in the NCAA’s Football Bowl Subdivision included in a USA TODAY Sports report released last week.

Bobo is the second-highest paid coach in the Mountain West, behind the $1.49 million of Fresno State’s Tim DeRuyter. Sonny Lubick, CSU’s coach from 1993 to 2007, made $530,000 in his final season.

For comparison, Alabama’s Nick Saban is the nation’s highest paid coach at $7.09 million per year, according to the USA Today report. Louisana-Monroe’s Todd Berry makes the least, at $360,000.

“We live in a free-market economy, where if you’re going to compete at the national level, you’ve to pay national salary rates to be competitive,” Cottingham said. “We don’t control what the pay scale is for head football coaches or head basketball coaches or volleyball coaches.”
No, but your scheduling practices enable it.
Coaches’ pay isn’t the only reason CSU’s athletics budget has skyrocketed, Cottingham said. The costs of scholarships, recruiting, team travel, game guarantees and day-to-day operation of each of the school’s 16 varsity sports programs has increased, too.

CSU spent $7.1 million on athletics scholarships in 2013-14, an increase of nearly 92 percent from the $3.7 million it spent in 2004-05 because of the rising cost of tuition and fees. They have have increased 279 percent, from $3,790 in 2004-05, to $10,590 this year for in-state students, and 189 percent, from $14,413 in 2004-05 to $27,258 this year, for out-of-state students.
I suppose, somewhere, there's an analysis to the effect that raising the profile by way of sports brings in more full-fare-paying out-of-state students.  But in the "game guarantees" is an interesting dynamic.  Football program on the make hires highly regarded coach, then buys the coach wins. But I'm not persuaded.

Then there's Rutgers.  Rut-roh!
These deficits have been funded with subsidies from student fees (students have no say about that, of course) and university general funds. As even the university president concedes, athletics is "siphoning dollars from the academic mission."

Subsidizing deficits only leads to bigger deficits, and to bigger subsidies.

Athletics actually plans on getting 2 percent more each year from student fees (at most other Big Ten schools, there are no student fees for athletics). Since athletics can simply tap student fees and the academic program to pay its bills, it doesn't need to work hard to raise money. So it is no surprise that sports teams generate only $8 million in contributions, only half what a Big Ten school such as Purdue manages to raise. (Purdue!)

Athletics isn't just a public-relations disaster and a financial disaster. It's also a management disaster.
But someone has to opt out. The Christian Science Monitor dares go where the athletic directors would rather not.
College sports may be a culprit for the student debt crisis.

A new documentary short is highlighting the exorbitant amount of money colleges and universities are spending on athletics while tuition continuously grows for students and faculty positions slowly diminish.
It may take trustees, or a legislature, to direct the president to abolish the Division I sports, as no director of athletics is likely to ask to have his department, financial failure notwithstanding, to be shut down.  It has been over twenty years since the Illinois Board of Higher Education recommended that Northern Illinois University drop out of Division I.  The trustees (in common with much of the Mid-American Conference) imposed athletics fees on students (free admission to the games, in exchange for, in most of the conference, not much) and went on with business as usual.

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