The Monkey Cage

I've been thinking about this, as my school is poised to start a football program in 2010. Is there evidence that sports programs -- especially football and basketball -- act as loss leaders for their school in the same way that news divisions often do (or did) for TV networks? That is, even though these programs lose money, do they generate positive externalities through the publicity they generate?

Some of the biggest benefits of big time sports on these schools might be hard to measure. I mean, isn't every nationally broadcast football game something like 2 hours of free advertising for the two universities competing? I don't know the literature at all, but I seem to remember reading about big application effects of final-four appearance.

Also, I really do believe in an acculturation effect. Sure self-identified "boosters" give money to the athletic dept.That's what it means to be a booster. But aren't there also a lot of people who follow their alma mater's sports teams, give money to the university, but aren't "boosters"? It seems like seeing your team on TV and rooting for them could only increase your identification with them. So when the university comes calling, might that not increase the chance of you giving?

Jeff and PLW: You're both asking essentially the same question or making essentially the same point.

Highly successful, high-visibility teams _can_ generate positive externalities. The classic example is, of course, Notre Dame -- an otherwise unexceptional, small school in a not especially desirable location that became nationally and internationally famous via football and over the years has soared well above most similar schools in terms of quality. That's the happy side of the story. However, for every Notre Dame there are dozens of others with no real hope of scoring success in the foreseeable future. When I see a University of South Florida or a SUNY Albany go into big-time football, I just cringe. Alumni may like the idea of having a big-time team, but there's little glory to bask in when the team is getting slaughtered every week as some football factory's hand-picked homecoming opponent. For most schools, research shows that the programs are big money drains on the university, and donations to the university (as distinct from to the athletics program) are trivial in comparison to the internal (i.e., central-administration-supplied) money that has to be used to keep the big-time athletics program afloat.

As for broader visibility and its benefits, there's plenty of conventional wisdom, a load of anecdotes, and little hard evidence. Okay, maybe George Mason had an applications blip after its Final Four run a season ago. But what makes the George Mason story so nice and attracted so much notice is precisely that it's so rare. If you build and maintain a "non-elite" big-time team, your chances of scoring a resounding one-time success like Mason's are extremely small. You can bank on it.

P.S. to my previous reponse:

Here's a somewhat different way to think about these issues:

Make yourself a list of the top schools in the country. Not just Harvard and Yale, but the leading public schools as well.

Now make yourself another list of the perennial football and men's basketball powers.

You'll see some overlap between the two lists. But not all that much. If the Big 12 is the top football conference, how many Big 12 schools were on your first list? If the SEC is the top basketball conference, how many SEC schools were on your second list?

That's a crude, first-cut sort of analysis. But if running successful big-time sports programs has all the positive externalities for the school itself that we keep hearing about, shouldn't all those externalities eventually forge a closer positive connection betwen the academic quality of a school and the quality of its teams?

re: academic quality

Pope and Pope (http://www.aaec.vt.edu/aaec/working%20papers/2008_05.pdf) do pretty much exactly what you suggests and compare application rates of schools with teams that do very well in football and basketball to those who don't, and find a fairly large (about 2-8 percent) increase in quantity. The increase is across the board, quality wise, so it's not just a worthless increase in bad applicants.

On the giving side, I couldn't find much. I'm not surprised, though, because if the acculturation story above is correct it would be a long-term process and, therefore, much hard to identify in the data. Sounds like it might be worth a shot, though.

PLW:

That's a brand-new study and I hadn't seen it -- thanks for the reference. It's definitely on-point, so I'll pull my horns in a little.

But only a little. The joker in the deck is that this effect is confined to the schools that _do well_ in football or basketball. For better (if you're at one of those schools) or worse (if you're not), there's relatively little moement into and out of the ranks of the top 25 or 30, especially in football. There's some, of course, but for the most part it's the same schools moving up and down _within_ the ranks of the football elite. This means that those other schools that are spending big bucks out of central administration resources for teams that consistently finish in the middle or at the bottom of the pack, i.e., the great majority of the schools that are competing, don't reap this advantage. When a USF or SUNY-Albany takes up football and hopes for some sort of quick success, it's likely to be kidding itself. When a Middle Tennessee or Bowling Green dreams of a breakthrough, it is, too. (A Boise State seems to happen once every blue moon, or a Gonzaga in basketball.) Spending large on big-time sports in hopes of attracting more top students just isn't realistic for most schools.

It isn't clear to me form the summary whether the numbers (revenue, deficit) are for football-only, just the "big time sports," or the entire athletic program (and I'm too lazy to look a the report!).

But if, as I suspect, the numbers are for the entire athletics programs at these schools, then another "external" benefit not yet mentioned may be ... other sports. In other words, unless I miss my guess, more than 16-19 schools make money on football and/or basketball, but then almost all lose even more than that on crew, gymnastics, etc.

You do make passing reference to this possibility, but I think it bears more attention. Because even if all football does is make possible a broader athletics program at a school, surely that has some value to the quality of life and education available to that school's students.

Or, it could just be that I'm writing this at Texas, one of the Big-12 schools of which you disapprove.

Joel:

Your working assumption is correct: The figures quoted in the text are for all sports, not just football, basketball, and some selected others. I don't think the more refined sort of breakdown that you suggest would be possible, given that donations are, I think, typically recorded to the athletics department rather than to a specific portion thereof. (Of course, the donations themselves may be targeted: beef for the football training table, a boathouse for crew, etc.) But that level of detail doesn't show up in the reporting.

I think you're right, too, that some of these "minor" sports have positive externalities for the school. At GW, which has a very good women's basketball program, the recruits tend to be top-notch students/great role models/etc. (By the way, every day when I pick up the paper, I learn again that recruits in the "major" sports, at GW just as, more famously, at the University of Texas, don't always turn out to be top-notch students and great role models. So maybe a major function of these minor sports is to offset some of the damage that the major ones do.)

Having agreed with you to this point, I have to disagree with you about the vital role of the major sports in offsetting the deficits that the minor ones incur. The fact is that the budgets for the "non-revenue-generating" sports tend to be tiny. Imagine a system in which the "revenue-generating" ones didn't even exist (though this may be hard to imagine for you, given your institutional location :-) ). In that case, the budgets for the minor sports could easily be picked up by the central university administration, at a far lower price than they're currently paying, on average, to get the major sports out of the hole. Yes, there are more than 16-19 schols that make money on the major sports, but the ones that do are still the exceptions. And the ones that don't are supporting a major drain on their institutional resources.

On a somewhat related note, it also occurs to me that football could do a much better job of supporting minor sports if it weren't taken for granted that a team has to have -- what is it now? -- 85 or so scholarship players. Teams could go three deep at every position and still add up to only 66, plus a couple of kickers. When hockey teams or wrestling teams get dropped, the blame often gets put on Title IX-mandated funding for women's sports. But if schools were willing to make reasonable cutbacks in what they spend on football alone, they could easily pay for the programs they're having to drop (and in so doing they'd open up the slots needed to provide scholarships in the sports they're dropping). But that's a rant for another day.

Lee, Joel, PLW, Jeff,

A new version of a relevant working paper was just released: it's by Jonathan Meer and Harvey Rosen, and it's about the connection between athletic performance and alumni giving. They study only one university—they don't tell you which one—but they do have information on each graduate’s donations over a 27-year span. I gather that it's rare to have data this fine. They find surprisingly weak connections between athletic performance and donations.

Lee, Joel, PLW, Jeff,

A new version of a relevant working paper was just released: it’s by Jonathan Meer and Harvey Rosen, and it’s about the connection between athletic performance and alumni giving. They study only one university—they don't tell you which one—but they do have information on each graduate’s donations over a 27-year span. I gather that it’s rare to have data this fine. They find surprisingly weak connections between athletic performance and donations.

John: Thanks for the reference; that's a neat-sounding data set. The problem with prior studies (including my own) as been the availability of just cross-sectional data, or, at best, data over a very brief period. So this is a nice addition. I don't, however, consider the observed weak connection to be at all surprising, even though it flies in the face of conventional wisdom (which in turn is based on a few selected anecdotes).

I love the blog, but I'm going to have to strongly disagree with ya...

America, in general, is retardedly sports-crazy. I think this is sad, and yet, the implication of this fact is that universities benefit enormously from having strong sports programs. The year Northwestern went to the Rose Bowl, their apps were up like 20%... The reason a Duke degree has appreciated and a U of Chicago degree hasn't is b/c of sports and nothing else. Just making the NCAA tournament bracket for a small school can do for exposure what millions of dollars in marketing cannot... This doesn't go into any accounting studies of sports at the university...

If I were a university president, I would dole out 10-20 million for a big name basketball or football coach, thereby putting my school on the map. It's money well spent.

Another thing you didn't consider is that in a place like Indiana, it is the basketball team -- the Hoosiers -- which make people from Indiana identify with the basketball team and the university... The university, via sports, becomes part of Hoosiers' identity and cultural heritage. The university is a source of pride... and as such, it receives lots of donations, and has higher-ranked graduate schools than all but a few institutions outside of the US, where sports are rarely tied to universities.

Co-oping sports was the smartest thing US of American uni's have ever done...

Another point about the budgeting... At Indiana University, for example, a ticket to a front row seat at Assembly Hall only costs about $30. Of course, those tickets are only sold to large donors... You need to pony up at least six figs just to get on the lower level... Once you do that, the uni "gives" you back the right to buy cheap season tickets close to the floor... That's how things work pretty much everywhere. Looking at the net revenue will tell you nothing...

Justin:

Thanks for your nice words about "The Monkey Cage."

Having spent seven years on the faculty of the University of Kentucky, I'm well aware of the role that athletics can have on the image that a school projects to the world (for better or for worse). The words of a former president of the University of Oklahoma come to mind: "We need to give the football team a school to be proud of."

The good folks of Indiana, buoyed by IU's hardcourt success of the years, identify with the school, and its name gets bandied about in the nation's press. Okay, fine.

Success stories are heart-warming, even if they tend to breed the, er, occasional embarassment like having to fire basketball coach Kelvin Sampson at IU. Or, for that matter, like IU historically pathetic football team. Those sorts of things aren't exactly PR triumphs.

But let me simply concede, for the sake of argument, that having a successful X "program" (basketball, football, women's basketball at a few schools, lacrosse at a few places, baseball at a few places -- whatever) is a big institutional plus, a rallying point for alums and the general public, a magnet for applicants, etc. The problem is that most places don't experience anything like the year-in, year-out success of an IU or a UK in basketball. Directional State U throws big bucks into trying to compete, compiles a lousy or generally mediocre record doing it, and somehow becomes a better educational institution because of it? I don't think so.

Case in point: Back when the University of Houston was riding high in football (running up huge victory margins in football, being top-ranked in basketball), total alumni donations were laughably small, and certainly the school didn't step up substantially in terms of the quality of its student body during that period. And this was a school that was experiencing great athletic success. I mention this for two reasons. (1) It's just a single case -- an anecdote. But so is IU, and I'll bet that for every IU you can name, I can come up with another UH. (2) Most schools don't experience anything like the athletic success that UH had. Maybe, just maybe, if, say, the University of Minnesota ever regains the football prowess it displayed during the 1960s, that will become a rallying point for Minnesotans, UofM alums, prospective students, etc. Meanwhile, there've been decade upon decade of lousy performance, scandals, and so on, at what great benefit to the school?