Click to read to read High Hopes, High Stakes…
On October 13th, President Pinto informed the University community that Richard Spencer would be allowed to speak on campus. As most of you know, Mr. Spencer is a white supremacist whose rallies have resulted in violence and, in Charlottesville, in a tragic death. Spencer has recently begun targeting public universities as a platform to spew his brand of hate and vileness.
The AAUP-UC Chapter condemns and rejects in the strongest possible terms Mr. Spencer’s dehumanizing views and racist ideology. He is not welcome at the University of Cincinnati and it is our hope that he cancels his visit.
Some faculty have contacted AAUP-UC about advocating for the administration to prohibit Spencer from coming to UC. Some public universities—including Auburn, Michigan State, Penn State, and most recently Ohio State—are attempting to take that route. Had UC done so, the very likely outcome would be a lawsuit by Spencer and his supporters, including Michigan-based white supremacist attorney Kyle Bristow. Auburn University lost a legal challenge in federal court to its attempt to prevent Spencer from speaking. Lawsuits are now pending against Michigan State, Penn State, and Ohio State. Moreover, in 2012 UC lost a legal challenge to its “free speech zone” policy, which attempted to severely restrict all demonstrations, pickets and rallies on campus to a very small area.
The result of this is that UC made the determination that it must allow access to campus facilities on equal terms to all individuals or organizations and cannot discriminate against a group or individual because of that group or individual’s viewpoint, no matter how abhorrent it might be, such as the case with white supremacists and neo-Nazis like Richard Spencer.
The focus must be on countering Spencer’s message of hate. It is obviously part of a larger campaign to harass, intimidate, and silence faculty and students. The AAUP nationally and here at UC must and will act vigorously to defend and preserve universities as bastions of understanding and thought, as well as safe spaces for those against whom Spencer and his allies discriminate.
The Chapter will be coordinating with other organizations and concerned citizens, including student groups, on solidarity events and opposition protests if/when Spencer appears on campus. A formal statement is also being drafted.
There are a number or resources on thoughtful response to the challenges we face. I encourage you to review the following resources:
- Southern Law Poverty Center, Ten ways to fight hate
- Joan W. Scott, On Free Speech and Academic Freedom
- Tiya Miles, Fighting Racism Is Not Just a War of Words
The Southern Law Poverty Center offers great advice on developing a response, personally and collectively, to combat hate in our communities. Professor Scott looks at the assault on Universities in the name of free speech and academic freedom as vital to our fight against anti-intellectualism. Finally, Professor Miles states that “Ceaseless statement-writing is sucking us dry. We need daring action.”
If you have thoughts or are interested in supporting the Chapter’s response to Spencer, do not hesitate to contact me or the AAUP-UC Chapter office. More information will be forthcoming as the situation develops.
Division I Athletics at UC & the Never-ending Quest for the Big Payday
Intercollegiate athletics at UC is an expensive proposition. In recent years, UC Administration has subsidized UC Athletics to the tune of over $20 million annually, and incurred significant debt on massive building projects, including renovations of Nippert Stadium and Fifth Third Arena. Given that UC has the second highest tuition for public universities in Ohio—a dubious honor it has held for almost two decades, at least—it is important to investigate how UC Administration spends UC’s money, not only on its academic and administrative units, as we have done in the past, but also on athletics. It is likewise important to avoid recycling the same popular misconceptions that appear to have driven some of UC Administration’s decisions with respect to athletics.
This series is a four-part exploration of intercollegiate athletics at UC. In Part I, we provide an overview of the impetuses that drive institutions to invest millions in their athletics programs, given the limited odds that they will ever break even, much less turn a profit. In Part II, we will look at the recent history of UC Athletics, starting from the Varsity Village project in 2002 through the present. Part III will examine in detail UC Athletics’ finances, and Part IV will take a close look at the increasingly expensive contracts for the head football coaches, men’s basketball coach, and UC Athletics Directors.
We are mindful that intercollegiate athletics can impact student-athletes positively, affording them scholarships and fostering opportunities to learn lessons in team-building and leadership development. We are respectful of the student-athletes and their contributions to our community. What this series does, in various ways, is pose the question as to whether we can accomplish these same goals without incurring the same level of expense, including the enrichment of coaches and, to a lesser extent, athletics directors, that UC currently does as it plays the very risky game of Division I intercollegiate athletics.
Part I: The Stakes
Division I intercollegiate athletics is big business. The Power Five conferences (the SEC, Big Ten, Big Twelve, Pac-12, and ACC) raked in a combined total of $1.9 billion dollars from football playoff and bowl payouts, NCAA basketball tournament earnings, and TV deals in academic year 2015-2016.[i] In that year, Power Five schools received payouts ranging from a high of $36.8 million each (in the SEC) to $21.9 million per school (in the ACC), with an overall Power Five per-school average of nearly $30 million dollars.[ii]
While the lure of big money is irresistible for many schools, the reality is that the vast majority of athletics programs at schools within the Football Bowl Subdivision (“FBS”) of Division I lose money. In the 2014-2015 fiscal year (“FY2015”), athletic programs at only 24 out of 128 schools in Division I-FBS generated revenues (not including institutional support and student fees) in excess of expenditures.[iii] In other words, only 19% of the Division I-FBS schools had “profitable” athletics programs. FY2015 was not an aberration, but rather “business as usual” for Division I-FBS, and only a slight improvement over FY2004 (the earliest year in which the NCAA employed the data collection and reporting procedures that it uses today), when 16% of Division I-FBS schools reported profitable athletics programs. [iv]
While the Power Five conferences earn enormous revenues, membership in a Power Five conference does not in itself guarantee profitability, much less an athletics program that at least breaks even. Keep in mind that 65 schools are full members in a Power Five conference, while only 24 Division I-FBS schools have profitable athletics programs,[v] which means that just over 1/3 of the Power Five schools at most are themselves profitable.
The odds are long for schools that hope to join the rarefied ranks of the Power Five, but that does not deter schools such as UC from seeking admission to this exclusive club. However, UC Administration would do well to consider the example of Rutgers University, its former co-member of the Big East, before it spends even more money in pursuit of its Power Five dreams.
What Makes the Power Five So Powerful?
“[I]nequality is deeply entrenched in college football and is likely to remain that way. What passes for an equitable system is essentially a plutocracy ruled by the five power football conferences and their very smart and extremely rich commissioners. At least for now, they have no incentive to change or share their riches.”[i]
Part of this inequality is reflected in the governance structure of the NCAA, which was revised significantly in 1997 to give the Division I-FBS schools control over the Division I Board of Directors, through having majority representation on that Board, and giving Division I “control of the lion’s share of the NCAA’s revenue distribution (with “Division II’s and Division III’s joint share of NCAA of championship and organization revenues to no more than 8-11 percent.”[ii] According to one commentator, however, “the reality is that only the athletes at the 65 Power Five institutions will be provided with these benefits because the other FBS schools or non-FBS members of Division I cannot afford to match these promises because of more limited resources. It is abundantly clear that the overriding goal of the Power Five conference is to keep as much revenue as they can so that they gain the greatest advantage in attracting prospective athletes, winning football and basketball games, and generating revenues.”[iii]
[i] Gaul, Gilbert M. Billion-Dollar Ball: A Journey Through the Big-Money Culture of College Football. Penguin; New York. 2014.
[iii] Ridpath, supra.
Rutgers Enters the Big Ten, Athletics Deficit Deepens
In the middle of the last decade, Rutgers began making “the huge financial commitment necessary to support major college football,” including a $120 million football stadium expansion.[vi] Rutgers achieved its goal of entering a Power Five conference when it joined the Big Ten in 2014,
on the promise that it would vault Rutgers into big-time academics as well as athletics. With televised games beaming into millions of homes across the country, Rutgers could draw top students and top athletes, rake in revenue to make up for money the state had cut and finally achieve the prestige that the faculty and alumni have long thought it deserved.[vii]
However, between FY05 and FY13, Rutgers athletics already had racked up a cumulative deficit of $237 million.[viii] Moreover, Rutgers will not become a “full-revenue sharing partner in the Big Ten” until 2021;” until then, it receives only a gradually increasing fraction of a full-revenue share.[ix]
While it may not be earning the big money yet, Rutgers is spending as if it already is, adding to its athletics program’s already sizable deficit. For example, in FY 2016,
Rutgers spent a record $83.974 million and produced $45.392 in revenue. The $38.582 million shortfall … was made up by $27.16 million in support from the university’s operating budget and $11.42 million in student fees. In addition, […] the Rutgers athletic department is projected to take out an $18.4 million loan and spend $5.3 million in interest by the time entrance in the Big Ten pays dividends.[x]
In language reminiscent of the UC Administration’s comments about its own athletics spending, the Rutgers Administration has defended its athletics deficit spending as being necessary to “gain competitiveness now,” and by claiming that the projected future full-share payments “allow [Rutgers] to make investments today that [it will] pay off in the future.” [xi]
The Rutgers faculty leadership does not share its administration’s optimism. In March of this year, the Rutgers New Brunswick Faculty Council unanimously passed a resolution “deplor[ing] the [Rutgers] administration’s continued failure to eliminate or even reduce the athletics program’s chronic deficit spending and its continued reliance on millions of dollars in student fees and general University funds to pay for the program’s deficits.”[xii] Continuing, the Rutgers New Brunswick Faculty Council called on the Rutgers administration
to commission a fully independent external review of the athletics program that will (a) evaluate the program’s current and future finances, expenditures and revenues and (b) assist the University in developing a realistic and up-to-date financial plan for athletics that will eliminate the program’s deficits as quickly as possible.[xiii]
The Rutgers administration responded with the cheerleading and vague assurances of eventual solvency that are typical of administrators at other institutions—including UC—faced with similar criticisms. For example, Rutgers Athletics Director Pat Hobbs proclaimed, “We are writing what will be the greatest chapter in Rutgers Athletics history,” while Rutgers President Barchi stated his commitment “to ensuring the Athletics department becomes self-sufficient as soon as possible,” and assured that “Rutgers Athletics will be in a position to generate a positive cash flow for the university after we receive our full share of Big Ten revenues in 2021.”[xiv] Barchi’s response does not account for the likelihood that Rutgers’ athletics expenditures will continue to grow in tandem with—or even at a greater rate—than its revenues, begging the question as to whether the Rutgers athletics program will actually break even after it becomes a fully-vested Big Ten member. Likewise, Barchi does not indicate how, or whether, the Rutgers athletics program will ever pay back its deficit.
The Division I Football and Men’s Basketball Cost/Benefit Debate: Heavy on Feelings, Light on Facts
Given that Division I-FBS athletics is not a “winning” proposition for most schools, at least budget-wise, why do so many schools spend more and more of their limited resources on their football and men’s basketball programs, pouring millions into new stadiums, arenas, and coaches’ salaries? They do so because they believe that high profile football and men’s basketball programs provide numerous benefits, both intangible and tangible, to their schools, including:
- Building community and school spirit on campus
- Providing national exposure for their “brands”
- Increasing applications from students, especially those from out-of-state
- Increasing donations from alumni
- Bringing in more revenue that may support academic programs
Are these myths or realities? While building community and school spirit is largely a matter of perception (aside from game attendance figures), the other items above are at least to some extent quantifiable. As discussed above, the NCAA’s own data indicate that less than one-fifth of Division I-FBS schools have athletics programs that generate more revenue than they spend, which means that for the vast majority of these schools, the athletics programs likely drain money that might otherwise have been spent on academics.
We see much of this sunny optimism in a response by Rutgers President Barchi’s to a 2015 Rutgers Faculty Council report critical of the athletics’ program’s mounting deficits, and the use of money from the Rutgers’ discretionary fund and student fees to plug its budget gaps.[xv] Encouraging the Senate to “look to the future rather than the past,” Barchi asserted that “Big Ten membership provides a clear path to our goal of cost neutrality in athletics within the next 7 years.”[xvi] Barchi went on to discuss the “more nuanced aspects of the ‘costs and benefits’ of athletics in the university setting,” pointing to benefits such as “entrance into the CIC [the Committee on Institutional Cooperation] … generating unparalleled research resources and educational benefits for our faculty and students,” “increased advertising and national media exposure,” a 14% increase in applications in Rutgers’ first year in the Big Ten, and an increase in fundraising (Barchi noted that donations to athletics comprised $100 million of the $1 billion raised in Rutgers’ recent capital campaign). [xvii]
While Barchi indeed points to some quantifiable benefits, the academic literature on the impact of athletics success on donations and student applications overall is mixed. Moreover, Barchi’s own comments and the literature beg the question: are there less costly and less risky means of achieving these same goals?
Football and Basketball: The Revenue Sports?
Division I football and basketball are often referred to as the “revenue sports.”[i] This means that they are able to generate revenue from ticket sales, broadcast deals, etc., through which (at least theoretically) they can support themselves and even help subsidize the non-revenue sports (such as women’s basketball and Olympic sports like track, rowing, wrestling, etc.).
However, according to the NCAA’s own data, only about half of both football and men’s basketball programs in Division I-FBS generate revenues in excess of their own expenses. In FY 2015, 45% of Division I-FBS football programs generated revenues in excess of their own expenses, the same percentage that it was in FY 2004.[ii] Meanwhile, the “profitability” of men’s basketball has deteriorated significantly over the same time period, with the percentage of programs with positive net revenue dropping from 50% in FY2004 to 42% in FY2015.[iii]
At UC, after several years in which football and men’s basketball generated positive net revenues, both programs have fallen into the red (football has had negative net revenues since FY2014, men’s basketball since FY 2015).[iv]
[i] See, e.g., All-University Athletics Task Force Report (January 4, 2010), University of Cincinnati, p. 4 (“Football and basketball are the revenue sports.”); and Hohler, Bob (March 12, 2012), “BC’s Big Revenue Sports Hit Bottom, Stirring Scrutiny,” The Boston Globe, retrieved from https://www.bostonglobe.com/sports/2016/03/12/big-revenue-sports-hit-bottom-stirring-scrutiny/iWqaOoo6ZnIIKyksVLYSGJ/story.html.
[iv] University of Cincinnati NCAA Financial Reports, Years 2004 -2016.
Athletics Success and Donations
While earlier research found minimal impact of athletics success on donations to an institution,[xviii] some more recent studies have found some linkage between athletics success and increased donations.[xix] For example, in a study issued this year, Michael L. Anderson the University of California–Berkley identified such a linkage and noted that “a school that improves its season wins by three games … may expect alumni athletic donations to increase by $409,000.”[xx] Anderson acknowledges that the positive effects of winning on donations, as well as student applications and SAT scores, “may seem too modest to justify the additional expenditures” necessary to win more games, but notes that if such increased athletics expenditures “generate commensurate increases in athletic revenue […] then the effects estimated here represent a bonus that the school gets on top of the increased revenue.”[xxi] This conclusion does not seem to account for the likelihood that increased revenue will not keep pace with increased expenditures, much less result in a net gain for the school (as the experience of so many schools in Division I-FBS bears out). Again, we are confronted with the question: are massive expenditures on intercollegiate athletics truly the most cost-efficient, reliable, and effective means of increasing alumni donations?
Athletics Success and Applications
The notion that success on the football field (or for men’s basketball, on the courts) can translate into a significant boost in applications to the winning school originated from the experience of Boston College, which saw a 30% increase in applications two years after quarterback Doug Flutie’s legendary, Hail Mary touchdown pass in a come-from-behind victory over the University of Miami in 1984.[xxii] Over subsequent decades, there have been numerous studies as to whether and to what extent the so-called “Flutie Effect” has impacted other schools which have had successful football and men’s basketball teams. While earlier studies found relatively minimal impact,[xxiii] some more recent studies have found more significant impacts, including one by Doug J. Chung of the Harvard Business School, who found that
when a school goes from being mediocre to performing well on the football field, applications increase by 17.7%. To achieve similar effects, a school would have to either decrease its tuition by 3.8% or increase the quality of its education by recruiting higher-quality faculty who are paid 5.1% more in the academic labor market.[xxiv]
Chung’s conclusion implies that there are alternative, and arguably less costly, means of generating increases in student applications. The question left unanswered by all of these studies is: what is the impact of a losing season, or several losing seasons, on applications? Do applications in those circumstances drop? If that were the case, then it is not only conceivable but likely that the school would spend even more money on its athletic program in order to turn things around, and even then, there is no guarantee of ultimate success. Moreover, there do not seem to be publicly available post-enrollment surveys or focus group data that would indicate whether students at a particular Division I-FBS school actually learned about the school through its athletic teams’ televised games, decided to apply in whole or in part because of those teams’ success, and enrolled for the same reasons.
In his book Billion-Dollar Ball: A Journey Through the Big-Money Culture of College Football, Gilbert M. Gaul writes: “The preponderance of schools that start football programs, or that shift from lower levels of competition to higher levels, lose money[.] […] But there is no telling the presidents.”[xxv] The popular misconceptions about the benefits of high-level intercollegiate athletic competition are deeply entrenched. Even where a tangible benefit exists, there is a failure to assess whether the benefit outweighs the enormous cost involved in achieving it. These factors are tremendous obstacles to having honest conversations about whether the high stakes game of Division-I FBS competition is really worth it. For a vast majority of Division I-FBS universities, the consequences of not having those conversations are costly, for the schools and their students.
Look for Part II: UC Antes Up in the next issue of AAUP-UC Works, in which we will look at the recent history of UC Athletics, starting from the Varsity Village project in 2002 through the present.
[vi]Associated Press. (November 20, 2012). “Rutgers Headed to Big Ten.” Retrieved from:
[vii] Zernike, Kate. (December 8, 2015). “Few Wins but Much Chaos for Rutgers After Move to the Big Ten.” The New York Times. Retrieved from: https://www.nytimes.com/2015/12/09/nyregion/rutgerss-move-to-big-ten-brings-athletic-scandals-and-firings.html?_r=0
[viii] Report of the Ad Hoc Committee on Athletics of the New Brunswick Faculty Council on the Athletics’ Program’s Revenues, Expenditures, and Deficit (as approved by the Faculty Council on April 25, 2014). Retrieved from: http://nbfc.rutgers.edu/year13_14/Athletics_Report_04_14.pdf.
[ix] Id. For example, in FY2015, “Rutgers received $9.4 million while a full share was worth $32.4 million.”
[xi]Dunleavy,Ryan and Sargeant, Kevin. (January 25, 2017). “Rutgers Athletics Borrows Against Future Big Ten Revenue to Cover $39M Shortfall.” NJ.com. Retrieved from http://www.nj.com/rutgersfootball/index.ssf/2017/01/rutgers_athletics_borrows_against_future_big_ten_r.html.
[xiv] Sargeant, Keith. (March 31, 2017). “Rutgers Faculty Group ‘Deplores’ Athletics Deficit, Calls for Independent Review of Spending.” www.nJ.com.
[xv] Barchi, Robert L. July 30, 2015 letter to Rutgers University Senate, and Budget and Finance Committee, Rutgers University Senate, “The Rutgers Athletics Program’s Income, Expenses, and Deficit: Report and Recommendations.”
[xviii] See, e.g., Frank, Robert H. “Challenging the Myth: A Review of the Links Among College Athletic Success, Student Quality, and Donations.” 2004. Prepared for the John S. and James L. Knight Commission on Intercollegiate Athletics.
[xix] See, e.g., Walker, A. G. (2015). Division I intercollegiate Athletics Success and the Financial Impact on Universities. SAGE Open, 5(4), 2158244015611186, and Koo, Gi-Yong and DIttmore, Stephen W. “Effects of Intercollegiate Athletics on Private Giving in Higher Education.” Journal of Issues in Intercollegiate Athletics. 2014, 7, 1-16.
[xx] “The Benefits of College Athletic Success: An Application of the Propensity Score Design.” The Review of Economics and Statistics. March 2017, 99(1); 119-134.
[xxi] Id. at 131, 132.
[xxiii] See, e.g. Frank, supra.
[xxiv] Chung, Doug J. “The Dynamic Advertising Effect of Collegiate Athletics.” 2013. Marketing Science.32(5): 679-698, at 696. https://doi.org/10.1287/mksc.2013.0795. See also Pope, Devin G. and Pope, Jaren C. “Understanding College Application Decisions: Why College Sports Success Matters.” Journal of Sports Economics. 2014, Vol. 15(2), 107-131, and Anderson, supra.
[xxv] Penguin, New York, at xxi.
—Stephanie Spanja, J.D.
Director of Research, UC Chapter AAUP