There’s a saying that I’ve heard quite a bit while covering business and policy issues in college athletics. College sports generally isn’t the reason why anybody gets hired for university administration jobs….but it absolutely can be why you get fired.
And it makes sense! If you work in higher education, it’s because you have important skills in development, research, resource management or any number of other departments that have little direct connection to college sports. And that’s the way it should be! “Front Porch” of the university or not, it’s rare that athletics represents more than a few percent of a school’s budget.
But when things go wrong, boy it can really go wrong, and not just for university presidents. College sports can be what drives congressional hearings, alumni engagement (or lack thereof), faculty battles, pesky FOIA requests, and sometimes, even the existential future of a university.
Even if you never go to a football game or teach a student, if you work in higher education, it pays to know what’s going on in college sports. Thankfully, that’s what Extra Points is for!
A few specific things that everybody in higher education really needs to understand about college sports right now….
Governance belongs more to congress than the NCAA. Make sure your governmental affairs team knows that
After the NCAA’s defeat in Alston, the settlement in House and the near-daily eligibility related lawsuits across the country, one thing is certain. The NCAA does not enjoy the legal ability to make and enforce rules for its own membership that it enjoyed over the last several decades. If membership decides to vote in favor of a restrictive eligibility policy, new athlete compensation regulations, cost control measures or transfer windows, there’s a real risk that the policy could be struck down in court on antitrust grounds.
That means that while the NCAA governance process still matters, the ultimate lasting regulatory authority increasingly sits with the court system and with state and federal lawmakers. And you probably don’t need me to tell you that state and federal lawmakers are usually not experts in higher education or college athletics.
Your institution almost assuredly already has a governmental affairs team to help educate lawmakers about your institution’s mission and your various appropriation needs. If that person isn’t actively also trying to educate lawmakers and staffers about your athletic realities, that should change quickly. If the only schools lawmakers hear from are massive state flagships and P4 private schools, then they will craft and support policy with those institutions in mind. Your representatives need to know what athlete compensation, eligibility reform, athlete employment and other major issues means for regional public schools, HBCUs, tuition-dependent private schools, D-II and D-III institutions, and everywhere in between.
Your faculty probably don’t know what goes on with athletics…and that can create problems over time.
You don’t need me to tell you that this is a challenging time in higher education. Between the enrollment cliff making domestic enrollment more challenging, international student recruitment becoming more expensive and politically fraught, state appropriations declining and operating costs going up, there’s a good chance that your institution is dealing with the tough questions on how to manage limited resources.
That situation is hard on everybody, and it’s only natural for groups (faculty, alumni, lawmakers, the community, etc) to look for somebody to blame. In our professional experience, athletics is often an easy scapegoat. This is especially true because athletic departments generally do not do a good job of building bridges with other departments on campus.
This dynamic can become toxic, but it’s entirely fixable. All faculty and staff should be able to understand exactly where athletics fits into the mission of the university, what kind of resources are allocated to athletics, and how athletics is measured. Massive departments like Ohio State and Texas may get the biggest headlines across the country, but chances are, your athletic department isn’t Ohio State or Texas. Is the athletic department mostly there for enrollment management? To improve community and political engagement? To facilitate the recruitment and retention of minority students? A mixture of all of the above?
Whatever the answer is, make sure it’s being communicated across campus. Or other messages will be instead.
Your athletic department budget doesn’t tell the full story. So you better tell it
We do extensive analysis of athletic department budgets via the NCAA MFRS Reports. While these reports show revenues and expenses, we know they’re not to be read as profit and loss statements. But most people don’t know that…including on campus.
Your university probably doesn’t publish profit/loss statements for say, the English department, or the Human Resources department, or any number of other campus auxiliaries. If you don’t want the athletic department to be subject to a different source of analysis, you need to understand what message the MFRS report sends, what it tracks, and what is missing.
One important revenue item that doesn’t show up on these reports, for example, is tuition revenue from college athletes. If you have 15 men on your golf team roster, and only three are on full scholarship, then chances are, you’re generating new tuition revenue from 12 male students who wouldn’t otherwise be on your campus. That may very well be more revenue than the entire golf team operating budget. But that won’t show up on the MFRS report. Instead, it will only list revenue from ticket sales, donations, endowment income, NCAA distributions, etc.
Make sure you know what your MFRS report says (we have almost all of the public school reports in our Extra Points Library), and if you don’t think it represents a completely accurate depiction of the budget and the rest of the university, you need to make sure you’re communicating the bigger picture.
There are lots of ways to earn more revenue
Many of the larger athletic departments are openly courting investments from private equity and private capital groups. While this can work, our reporting shows that this is often a very risky investment category for universities. Private capital generally wants returns quickly, and since leadership changes so often in higher education, and the law limits what kind of control can be given to PE, selling equity shares can end up becoming a governance nightmare.
Thankfully, there are other solutions. Beyond the traditional funding models of student fees, broadcast media rights and institutional subsidies, there is promising growth in licensing university IP, turning athletic facilities into multi-purpose venues, dynamic ticket pricing, and other, less dramatic and invasive strategies.
Athletic departments regularly hire expensive consultants or third-party sales organizations to handle revenue growth and corporate sponsorships. Many of those companies (called MMR sales, or Multimedia Rights sales) have years of experience and valuable perspectives. But so does the rest of a college campus!
By tapping into the expert knowledge on marketing, sales, engineering, software development, business and more, we believe there are often better strategies for balancing the athletic department books than outsourcing or selling off important assets.
Now, this isn’t an exhaustive list. But it’s a start.
Obviously, your school’s relationship with athletics will look a little different in the Big Ten than it might in the NCAC. Enrollment-challenged private schools don’t have the same objectives and cost pressures as massive land-grant research schools. But understanding how decisions are made, who they impact on campus, how the money is earned, and where that money is spent are all important things for campus leaders to know, from faculty to central administration.
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