MYTH DEBUNKED: UNC System Athletics ARE subsidized by…

Carter Stadium
BobLee
December14/ 2015

A New Report DEBUNKS THE MYTH that Big Time College Athletics is self-sustaining…. financed via (1) ticket sales and (2) Fat Cat boosters.   For all but a small handful of REALLY Big Time programs, “student fees” are used to cover a % of Athletics operating costs. …. UNC-CH – 11% …. NCState – 9%.

This amounts to an increase in every student’s tuition costs as “student fees” are across the board regardless of whether a student attends or supports athletic events.

NOTE: It can be argued that more students “enjoy” intercollegiate athletics as fans than 97% of the other “crap” that is also subsidized by “student fees”.

This report examines programs within the UNC System.

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UNC System Athletics Subsidized With Student Fees

 

http://www.carolinajournal.com/exclusives/display_exclusive.html?id=12639

RALEIGH — While the athletic departments at UNC-Chapel Hill, N.C. State University, and Appalachian State University prepare to collect extra revenue from the college football bowl games they’ll play, a recent study by The Chronicle of Higher Education and the Huffington Post, “Sports At Any Cost,” reveals that athletic programs do more to empty UNC students’ pockets than they do to beef up university bank accounts.

Ten of the UNC system’s 16 universities were surveyed in the study covering 2010-14, and every one spent more than it collected in revenues — often much more. Of the 10 campuses, only UNC-Chapel Hill and N.C. State covered more than 85 percent of their athletic budgets with revenues from ticket and merchandise sales, financial donations, endowment profits, broadcasting rights, or sporting-goods contracts. UNC-Chapel Hill’s athletic department required 11 percent of the budget to be covered by subsidies, while N.C. State subsidized 9 percent of its costs.

It’s a pattern repeated at public universities across the nation. Revenues cover only a sliver of athletic departments’ operating costs. The Kenan Stadiumremaining deficits are closed with subsidies, quite often using student fees — which essentially amount to a hike in tuition, because all students must pay the fees, even if they do not attend athletic events.

UNC-Greensboro’s athletics were the most heavily subsidized in the system, with 82 percent of revenues coming from subsidies and 71 percent of those subsidies covered by student fees, which are charged in addition to regular tuition, room, and board from 2010-14. In the 2014 academic year, UNC-Greensboro undergraduates picked up nearly $9 million of the $14.7 million athletics budget. Each of the 12,350 full-time undergraduates paid $708.50 to subsidize sports.

Other notable subsidies include those at UNC-Charlotte, where the athletic department has subsidized $85,854,522 of its $116,678,876 total spending (or 74 percent) since 2010. Student fees comprise nearly three-fourths of those subsidies, adding up to $64,390,891 over the last four years.

College athletic programs continue to expand as universities use a variety of justifications for sports development, says economist Richard Vedder, director of the Center for College Affordability and Productivity. One recent example is the UNC-Charlotte 49ers football program, which was established in 2008 based in part on the argument that adding Bowl Championship Series-level football would be a magnet for both donors and students.

That’s a common rationale university administrators use to beef up athletics — but it’s not necessarily realistic, Vedder said.

“As I read the empirical evidence on this, by and large that’s not a very strong argument,” Vedder said. “In most cases there is little evidence that there is an increase in the donations that sports bring in. There is no evidence at all that they bring in more money. And when they do, sometimes the … incremental amounts of money they bring in is to support the sports program itself.”

In 2014, UNC-Charlotte’s athletics department received financial contributions of $4,420,363, as well as a total endowment and investment income of $271,738, roughly $1 million more than in 2010, when it received $3,276,840 in contributions, and $317,728 in endowments and investments. But that increase in donations over the last four years may not represent any real benefit to the school, Vedder said.

“That extra [money] is going to support the operations of the athletic department,” Vedder said. “So how does that help the university in a material way?”

College sports continue growing, not because they are of true value to universities, but because they are popular, Vedder said. That popularity is driving a kind of athletic arms race, and an immediate solution looks unlikely due to peer pressure among universities, he said.

“A basic problem is that people love sports,” Vedder said. “So this assumption that you can [use sports] to buy your way into donations by prominence and high reputation doesn’t work. Because one thing everyone forgets is what I call the Iron Law of Sports: Every time someone wins a game, someone else loses, and not everyone can win in sports.”

Andrew Zimbalist, professor of economics at Smith College, and co-author of the book Sports, Jobs & Taxes: The Economic Impact of Sports Teams and Stadiums, says the problem of expansion and over-spending in university athletics is one that has been escalating for more than two decades.

“What’s going on now in college sports is that there has, since 1984, been a trend toward sharp inequality,” Zimbalist said. “And that trend has been exacerbated in recent years by the formation of the [major] five conferences” — the Atlantic Coast, the Big 10, the Big 12, the Pac 12, and the Southeastern — so “everybody is trying to keep up with the big guys.”

Only about 20 of the more than 1,000 NCAA member schools ever see any surplus in their athletic budgets, Zimbalist said, because of the unique nature of college sports in the United States.

“The structure of these departments is unlike anything we know of in the U.S. economy,” Zimbalist said. “These are enterprises that are very competitive. But they don’t have any stockholders. And it’s a very competitive environment, so when one school upgrades [its] stadium with luxury suites, or when one school gets a new arena with a scoreboard, or when Duke decides to spend … $3 million [instead of] $1 million recruiting” for its basketball program, “then UNC feels like it’s got to do that.”

Before UNC deals with overspending and dependency on student fees, it first must change how it oversees the athletics operations of the university system as a whole, said former North Carolina Supreme Court Justice Bob Orr, who represented former UNC-Chapel Hill athletes in litigation claiming that the university committed academic fraud and the NCAA ignored it.

“There is not much transparency,” Orr said. “I think you’ve got to have transparency. The public needs to know where the money’s coming from. I think … the [UNC] Board of Governors … needs to have full access to see how these monies are being generated and spent. And then once you really understand the cash flow, you can start talking about reforming the system, whether it’s in the context of eliminating student fees to fund athletics … or actually sharing some of the profits with the people who are generating the money.”

Joni Worthington, spokeswoman for the UNC Board of Governors, said the board does offer oversight to the process of setting student fees, and that the BOG’s current four-year tuition plan for 2015-19 caps increases in tuition and fees at 5 percent.

Worthington also said that proposed increases for a particular fee may be revised downward after a review by the board’s members of staff, but that no review is underway at this time. Discussions of fees begin on each campus and must involve significant student input, she said.

On-campus complaints about high student fees haven’t been prominent in the past because they haven’t drawn much scrutiny, Zimbalist said. And while cutting student fees may not be practical for UNC right now, the schools would perform a public service by admitting the limitations of sports as a real investment in academic growth, he said.

“The point of it all is that there is no easy solution here,” Zimbalist said. “You can say that your school is going to opt-out, [that] you’re going to stop facing the Holy Grail. That’s the wise thing to do. Drop down to a lower division, and play [other] colleges the way that they’re supposed to be played — which is as part of the educational experience.”

Kari Travis (@karilynntravis) is an associate editor of Carolina Journal.

 

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BobLee
  • 58 Wolf Kennel Reply
    1 year ago

    Will probably get in some trouble for posting this statement because I don’t have any precise figures. First I don’t trust the background philosophy of Carolina Journal (long standing reader :>))
    Second I do know their push toward public school privatization (should love Spellings).
    Then there is a question not addressed of how large the Student fees are (lower at NC State than other schools). Finally the % going to support athletics is not that large.
    At a $60M total athletic budget, that’s around $6M from student fees. Assuming 30,000+ students, that’s around $200 per student. Given current college costs that’s around 1% of the cost of attending ($20K per year). I don’t think $200 is too high a cost for the opportunities given students for a significant part of their student life. Admittedly all those numbers are rounded off. I’m open to someone poking holes in the argument.
    PS: the last specific I’m aware of is that Lee Fowler got a new baseball scoreboard for Doak Field specifically from student fees some 8-10 years ago.

    • BobLee Reply
      1 year ago

      I’m SHOCKED that you take issue with pretty much anything you read in CJ. ?…. If they said you were better than Yogi AND Bill Dickey you would still snarl at’em. Its how you’re wired BK. …. I cannot validate any of their data nor any of yours.

  • Ed Reply
    1 year ago

    There is some obscuring going on here. The same folks (by and large) constantly decrying the commercialization of college athletics and its affect on academic institutions are the same ones pushing Title IX which makes so many departments run deficits. What would this author say if you treated each sport as it’s own product line and eliminated all the ones that don’t at least break even. I think I can guess.

    • BobLee Reply
      1 year ago

      Valid point. Eliminating all the $$$ losers sports would eliminate ALL of’em except FB and MBB at Big Time Schools. Putting all others on a “club basis” with participants paying to play is one oft-discussed solution. …. Not sure the Title IX crowd is exactly the same ones decrying the commercialization. The Title IX bunch are the hard-core FemiNazis.

      • TheCowdog Reply
        1 year ago

        From what I can tell, the Equivalency Sports have managed to survive just fine over a half century.

        Head Count sports are the dough eaters, and of course, sometimes the bread winners.

        Head Counts (Full schols required):
        Men- Football and Basketball
        Women- Basketball, Volleyball, Tennis and Gymnastics.

        Equivalancies are limited schols, spread out to cover a whole team in any other program the school wishes to field, subsidized mainly by gov’t loans, and Moms and Pops.

        That said, outside of benefactors, I have no idea where the money comes from for facililty upkeep regarding the Equivalency Sports.

        However, to entertain the idea that Title IX, in and of itself as an albatross, might require deeper delving.

        • BobLee Reply
          1 year ago

          I don’t pretend to know how college sports accounting is done.

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