Here's what those athletic department financial numbers mean...and don't mean
Good morning! There are a lot of newsletters out there. Some of them are even kinda about college football. Thanks for deciding to read this one.
Let’s talk about money.
The USA TODAY athletic finances database has been updated, and folks, I’m hearing there might be money in this sport
One of the most useful resources for anybody who writes about college football, or even reads about it a lot, is the USA TODAY athletic department financial database. Every year, USA TODAY and their army of lawyers and accountants collects some baseline financial data for every FOIA-able school in D1, from Texas all the way down to Coppin State. Then they throw it all into a sortable table for everybody to reference over the course of the year.
They do this for coaching salaries too, which is also useful. There aren’t many other references I check more over the course of an entire season than the athletic department financial data.
If I want to broadly understand how much more one school may be investing in athletics than another, how much money a department makes selling tickets, or how a school’s spending compares, broadly, with conference peers, the database is a great one-stop shop.
But if you were trying to figure how which athletic departments carried the most university subsidies, or which athletic departments were “profitable”, or even do close comparisons between two similar schools…there usually isn’t enough data.
I’ve made mistakes here, and I see other smart fans, bloggers and journalists getting tripped a bit here too. Here’s a few #tips that might help make sense of all this:
1) The term “school funds”, or “subsidy” can mean a LOT of different things. USA TODAY defines that category as:
both direct and indirect support from the university, including state funds, tuition, tuition waivers etc., as well as federal Work Study amounts for student workers employed by athletics department. It also includes the value of university-provided support such as administrative services, facilities and grounds maintenance, security, risk management, utilities, depreciation and debt service that is not charged to the athletics department.
The database doesn’t provide an itemized breakdown here, so an apples to apples comparison from school to school is almost impossible. Different schools might categorize debt service or facility expenses in completely different ways. Some of that direct or indirect support from a university might only be support “on paper”, rather than say, the general endowment fund cutting a check to cover debt from a stadium expansion. If you’re curious as to what some of those examples might look like, Forbes has a few here. Even the revenue numbers, which you would think would be a bit more straightforward, may not be completely what they appear.
2) What schools say they spend on scholarships is usually inflated in some way. I’ve written about this before on SBNation, and plenty of commentators, like economist Andy Schwarz, or Jay Billas, have brought this up too. The argument about scholarship spending is similar to this:
If only there were enough money...Remember, scholarship costs are paid to the school, by the school. It’s just an on-campus money transfer, followed by a cry of poverty. twitter.com/ByBerkowitz/st…
— Jay Bilas (@JayBilas)
Aug 13, 2019
On paper, a school might say they’re spending $50,000 on a football scholarship. But that’s fundamentally just the school paying the school. The *true* cost of the scholarship is the opportunity cost of replacing a seat in the building that might go to a “paying” customer. For some schools, that’s going to be close to zero. At every D1 school, it isn’t $50,000.
There are accounting reasons for counting on-campus money transfers as various revenues or expenses. But if a school is pleading poverty for any number of reasons, and reports a huge number in the scholarship spend department, there’s reason to be skeptical.
In a perfect world, every school would have a PDF attachment that would allow the reader to get into the nitty-gritty details, but we don’t live in that world, and I don’t have enough money to pay all the open records fees to build one myself. Public records, folks…it turns out they aren’t always so public!
But TL;DR, the more specific you try to get with this data, you more you risk misinterpreting it. Very little of this stuff is standardized, after all.
Which sort of brings us to the next storyline from this data.
Flush with cash, schools now lavish raises on golf coaches and other sports you don’t watch
During the Ed O’Bannon trial, sports economist Dan Rascher testified:
Rascher: What looks like schools aren't making money on sports is actually schools spending $$ because there’s nothing else to do with it.
— Jon Solomon (@JonSolomonAspen)
Jun 13, 2014
Here’s a good example. We already knew football and basketball coaches are seeing their salaries skyrocket. Even college baseball coaches are getting paid big money. And according to our friends at USA TODAY, even coaches for sports that don’t attract heavy fan or broadcast interest are enjoying big salary spikes.
USA TODAY Sports examined the total compensation each of the Power Five public schools reported paying head coaches in 23 sports other than football, men’s basketball and women’s basketball in 2013 and 2018. Including salaries, benefits and bonuses, the combined compensation for those coaches grew by about 43% over that time.
The rate of increase those schools reported for their football head coaches over that time was almost 51%
I intellectually understand the argument for making big investments in football and men’s basketball. A successful team may galvanize fans and donors, generate revenue needed to support the rest of the department, give a marketing boost, and even (sometimes) attract a higher caliber of student applicant. I think schools generally oversell those benefits relative to their costs, but the argument isn’t crazy.
Some Olympic sports at certain schools can make that argument, too. If you’re Utah, and your fans really care and respond to gymnastics, you should make an investment and commitment to that program. That’s true for Penn State or Iowa wrestling, Hopkins lacrosse, Oregon track, Long Beach baseball, etc.
But if a program doesn’t attract fan interest, or move any of those other department goals, why increase their salary 40% over five years? Just because you don’t want to deal with a coaching search? Friends, that’s part of an AD’s job!
A lot of fans and commentators look at these trends and get angry that even the swimming or golf coaches are getting huge raises, while athletes do not. But even if you were a hardcore supporter of amateurism, how is this an efficient use of money?
Regular readers of this newsletter know that there are some headwinds coming to higher ed. It isn’t clear how long massive TV rights fees will keep coming in. Your next generation of donors is mired in student debt, attendance is down almost everywhere, and lots of schools are wondering what future state support, or international student enrollment, will look like. If these are boom times, they’re not likely to last forever.
So if you have extra cash, cut student fees. Use it on infrastructure. Send it to a general student scholarship fund. Lobby for more equitable spending in Olympic sports (by allowing to hire more assistants, or to fund more athlete scholarships). And if you have an elite, championship level coach, by all means, pay them.
But if salaries are going up 40% over five years, without revenue or interest rising anywhere near that much, and with other places around the department or university community needing the money, giving a tennis coach a raise seems wasteful to me.
Of course, you know what might help that “oh no we have too much money that we have to spend” problem?
By sharing more of the money with the folks actually doing the labor.
To paraphrase my colleague, Spencer Hall….pay them their goddamn money.
Thanks for reading and supporting Extra Points. I’m hoping to do a mailbag/Q&A type issue, so if you have a question about college football history, politics, business or anything off the field that might impact on the field results, lets talk about it. I’m at @MattSBN on Twitter, and [email protected] And if you’d like to syndicate, contribute to, or partner with Extra Points, hit me up at [email protected]
A few folks have asked about podcasts. I am working on writing a script now for one about the history of the Orange Bowl, and what it means for the current Bowl System, that I think you’ll enjoy. The first episode, on the Black 14 protests, can be found here.