Inside American Education (38 page)

If deans “love peace and hate trouble,” as Barzun said,
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they can also buy peace with someone else’s money and reap the benefits of avoiding trouble. They can, for example, avoid being called racist, sexist, or homophobic by subsidizing new programs demanded by campus activists, and pass the costs along to the taxpayers at a state university or to parents in higher tuition at a private college in a tuition-setting cartel. Institutional non-accountability makes such self-indulgences possible.

CHAPTER 9
Athletic Support

W
HERE CAN YOU
take in more than nine and a half million dollars annually and still be classified as “amateur”? In Division I-A college athletics, where the average annual revenue is nearly $9.7 million per institution.
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More than 20 colleges have received a million dollars or more on a single day—New Year’s day—led by the two Rose Bowl colleges, eligible for $6 million each.
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In basketball, television receipts alone for Division I conferences totaled nearly $70 million in academic year 1990-91.
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College athletics are a big-money operation—except for the players, whose exploits, aches and pains, and risks to life and limb, make it all possible.

Coaches and athletic directors are by far the biggest individual financial beneficiaries of college athletics. While the average athletic director had an official salary of about $47,000 in academic year 1989-90—about the same as the average faculty member
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—top coaches in Division I football and basketball had incomes more than ten times as high as that, and greater than the salary of any professor, college president, or President of the United States. Typically, this income comes under various labels from the college, so that “salary” is only
one form of institutional compensation, quite aside from outside sources of income from endorsements, media shows, and numerous other lucrative activities, any one of which may bring in five- or six-figure sums. At least 50 college football and basketball coaches each earn a quarter of a million dollars or more annually, and several make well over half a million
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—all this in “amateur” sports.

Ironically, in view of the pay, perks, and privileges of athletic coaches, even the top-rated sports teams seldom bring in enough money to cover their costs. “Creative accounting” is often necessary, just to make them appear on paper to be self-supporting. Some states have laws forbidding the use of taxpayers’ money to subsidize athletic programs, but these laws are easily circumvented by having coaches and their staff appointed as instructors in physical education, and their salaries charged as academic expenses.
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Athletic scholarships are likewise often charged to the college’s general scholarship fund, rather than to the athletic department’s budget.
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Medical personnel serving the athletic team may be charged to general student health services,
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and legal problems may be handled by the college’s attorney rather than being charged to the athletic department’s budget.
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Stadiums and sports complexes can be financed by student fees or tax-free bonds—again, without appearing in the athletic department’s budget.
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Even with all these diversions of costs, a survey by the National Collegiate Athletic Association (NCAA) found that the vast majority of athletic programs lose money.
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Colleges in all divisions of the NCAA had higher costs than revenues from athletics, except for the big-time sports programs in Division I-A, where revenues exceeded expenses—by less than one percent—in fiscal year 1989.
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Independent estimates are that only 10 to 20 athletic programs make a consistent profit, however small, and another 20 to 30 break even—out of more than 2,000 programs in the country.
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Whatever money is brought in by college sports, even when it is millions of dollars at some institutions, is almost invariably spent entirely on college sports. The late A. Bartlett Giamatti, Commissioner of Baseball and before that president of Yale University, summed up the situation succinctly: “I have yet to see the laboratory or library or dormitory built with football or basketball revenues.”
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Like so much else in academia, intercollegiate sports programs
survive on myths and dogmas which facilitate the extraction of money from students and taxpayers, and the diversion of money from donors seeking to support academic programs, but in fact supporting lavish spending on coaches and an athletic empire. These myths and dogmas are related not only to the economics of intercollegiate sports but also to the effects of these sports on the young people who participate in them—the so-called “student-athletes,” more accurately described as semi-pro players hoping for a rare shot at professional athletics after completing their “education.”

THE ECONOMICS OF ATHLETICS

If the economics of athletics seem crazy—for example, paying enormous salaries to coaches running money-losing operations—that is partly because the usual competitive marketplace does riot exist. However competitive intercollegiate sports may be on the playing field, their financial operations are those of a tightly controlled cartel, the National Collegiate Athletic Association, nominally composed of hundreds of academic institutions but in reality controlled by the athletic directors of those institutions. The NCAA makes the rules for athletic competition among its member colleges, including the rules for bowl games and basketball tournaments, negotiates multi-million dollar contracts with television networks, and prescribes rules for coaches and players.

It is the NCAA which forbids players from being openly paid salaries and which, in collusion with professional sports leagues, has kept them tied to NCAA programs for four years, even after their skills would otherwise make them eligible for the National Football League, the National Basketball Association, and the like. In exchange, the NFL, NBA, and other professional sports leagues benefit from a minor league farm system which is free to them, though costly to colleges, students, and the taxpayers. Above all, this cartel is financially beneficial to the coaches and athletic directors who run the NCAA.

Another major factor which prevents intercollegiate sports from operating like any other multi-million dollar business in a competitive marketplace is that athletic programs are heavily
subsidized by institutions which themselves have no “bottom line” to control their own economic activities. State institutions simply go to the legislature with their red ink to plead their “needs” and private institutions appeal to alumni and other donors. Moreover, the elite private institutions have their own cartel, enabling them to extract all that the traffic will bear from parents’ income and assets, including the equity in their homes.

Internal as well as external sources are raided when necessary to cover athletic department deficits. At the University of Nevada at Reno, $175,000 was taken out of the student union fund to help cover a deficit from athletics, with the university president explaining, “we had to find the money somewhere.” The same explanation was used at the University of Houston, when the athletics department’s share of students’ fees rose from $400,000 in 1985 to $900,000 in 1987 and then to $1,720,000 in 1988.
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At Utah State University, there was a half-million dollar reduction in medical insurance benefits for faculty and staff while the athletics department ran up an $800,000 deficit.
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As a University of Massachusetts professor specializing in sports management has said, athletics directors “know that the universities are going to come in at the end of the year and make up their deficits by raising student fees by siphoning off profits from other places.”
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In short, in athletics as in other areas, colleges and universities tend to run up bills for whatever they want and then scrounge the money from wherever they can, claiming that “costs” have risen. Between 1985 and 1989, for example, the cost of living rose 15 percent but the expenses of athletic programs at NCAA colleges and universities rose by at least double that rate in all divisions, and by more than three times that rate in two divisions.
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In an academic context, the phrase “costs have risen” often has exactly the same meaning as the phrase, “we chose to spend more money.” Meanwhile, college administrators try to make it seem almost immoral for donors to earmark their donations, as this will “tie the hands” of the institution. Unfortunately, the real problem is that their hands are not tied securely enough, for money contributed for academic purposes is readily diverted to athletics, administrators’ perks, and other purposes by verbal sleight of hand and “creative accounting.”

Even with all due allowance for the difference between the inherent discipline of a competitive marketplace and the looser and more self-indulgent practices of academia, the question still remains: Why are coaches in such demand that their salaries are bid up to enormous levels, when they are usually in charge of money-losing operations? Indeed, why do athletic programs survive at all? Most of the usual explanations do not stand up under scrutiny.

The grand myth of all, that students are engaging in a recreational activity as amateurs, is believed only by the most naive. This myth serves as a formal justification for not paying college athletes, thereby leaving more money for coaches and athletic directors. Almost as unbelievable is the claim that college athletes are students who receive a free education in exchange for their services. Most big-time varsity athletes in football or basketball do not receive even a degree, much less an education. Exceptions do exist—athletes who not only graduate but who do so in a serious subject. The NCAA gives maximum publicity to such “student-athletes” but their scarcity is perhaps epitomized by the fact that Byron “Whizzer” White is still being cited as an example, decades after he became a Supreme Court Justice.

A more plausible-sounding claim is that athletic programs give visibility to a college or university, and that this visibility translates into academic prestige, alumni donations, and student applications. But the evidence not only fails to support this dogma; it suggests that the opposite is at least equally likely—that academic prestige may be overshadowed by an institution’s image as a “football school.”

The University of Notre Dame, for example, is far better known for its “fighting Irish” football teams and “win one for the Gipper” than it is for having a chemical engineering department ranked among the top ten in the nation for its faculty’s research publications. The University of Southern California has likewise been better known as a football power than because it has graduate departments ranked among the top ten in the nation in computer sciences and electrical engineering.
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Conversely, schools like Cal Tech and Columbia University have suffered no visible loss of prestige from having had monumental losing streaks in football, nor did the University
of Chicago suffer any loss of prestige from having no football team at all for decades.

As for donations to colleges and universities, these seem to come from two sharply different groups for sharply different purposes. Athletic “boosters”—typically not alumni—contribute heavily to athletic programs and have often been involved in scandals about under-the-table payments to college athletes. These boosters seldom support academic programs, however, and because their support perpetuates a program which usually loses money over all, they are no net addition to a college or university’s financial ability to engage in academic pursuits.

The actual alumni, on the other hand, tend to donate to academic programs or general funds, and various studies indicate that this support is little affected by whether the college’s sports teams are winning or losing.
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During UCLA’s glory days as a basketball power, its alumni contributed less than the alumni of other institutions in the same conference. Conversely, after Tulane University discontinued basketball entirely, alumni donations rose by $5 million the following year. When Wichita State University suspended its football program, alumni donations doubled the next year.
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Individual examples are not conclusive evidence, but the dogmas so widely believed seldom offer any evidence at all.

All this does not mean that it is wholly irrational for a college or university administration to maintain an athletic program which is losing money. Economists have long known that it is perfectly rational—as well as common—for a commercial business to continue in operation during periods of financial losses, not only where there is some prospect of red ink turning to black in the future, but even where there are only more losses to look forward to. Sometimes the only alternative to a given loss from continuing to operate is an even larger loss from shutting down—especially where there are large fixed costs which goon, regardless of whether the business produces anything or not.

An athletic stadium or a basketball arena represents a large, fixed cost: The debt incurred to build it must be repaid, even if not a living soul ever goes in there to see a game again. In purely financial terms, it may pay the college or university not only to keep playing games but also to spend heavily for a coach
who can field the kind of team that will keep the turnstiles turning to minimize the losses. For example, when attendance at Stanford Stadium declined between 1989 and 1990, the university lost $568,000 in ticket sales.
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A coach who could have eliminated that loss—or cut it in half, or prevented it from doubling—would have been worth paying a considerable salary.