The Cost of Prestige II: The Case of Southern Indiana

Welcome to Division I Screaming Eagles! The University of Southern Indiana (USI) is movin'-on-up from NCAA Division II to Division I, joining the Ohio Valley Conference (without football).?There is a four-year probationary period for USI, and the NCAA is also going through a constitutional crisis.?Conceivably, USI will be on track to compete for a spot in March Madness in 2025 (if it still exists in its current form). With the sparkling new 4,800-seat Screaming Eagles Arena, USI can create a rivalry on the same level with nearby DI University of?Evansville.

USI had better bring a bank of money to join the club. ?It will be expensive. How so you may ask?

First off, in its approval process, USI leaders admitted they will need to double their annual athletics budget from $6.6 million to about $12 million.?There are concerns. ?In a survey, 49% of all respondents were against the move, 62% of retirees didn't think it was a wise idea, 60% of faculty thought it was not prudent, and 48% of the student body voted against it.

Still, Division I is coming to USI. Why? Prestige. The type of prestige that comes with March Madness (not football, which is even more expensive).?Cinderella prestige through men's basketball is the potential to be associated with the likes of previous Cinderella's Gonzaga, Butler, George Mason, Virginia Commonwealth, Loyola-Chicago, Florida Gulf Coast, and Wichita State.?But, how long does this basketball prestige last? Is it viable??Is the cost of prestige from basketball worth it?

The Knight-Newhouse College Athletics database provides publicly available financial data for NCAA Division I schools.??This data is reported annually by each NCAA DI member institution to the NCAA as required by membership and is also used to help comply with EADA (US Dept of Education) Title IX requirements.?

Compare and contrast USI athletics finances with a profile of public Division I schools' without football (NFS) athletics revenues and expenses.?Let's look at a median public school's finances in NFS.?The median is chosen because it is in the middle, and it is reasonable to assume one must be at least in the middle of many to be competitive. There are 46 public NFS schools with data available, ranging from a low total expense budget of $4.1 million (Coppin State) in 2020 to a high of $34.5 million (Virginia Commonwealth).

For instance, below is an EXPENSE snapshot of the median public NFS school (adjusted for inflation), with a 10-year growth rate in various categories from 2011 to 2020 :

Below is a REVENUE snapshot (adjusted for inflation) of the median public NFS school. It demonstrates a heavy, and growing, dependency of NFS schools’ reliance on subsidization from the institution’s general fund (red, 38% of the budget in 2020) as well as from student fees (orange, 44% of the budget in 2020) to help pay the bills for a typical NFS school's athletics department.

Next, is a comparison over 10 years of REVENUE TO EXPENSES of the median public NFS school (adjusted for inflation).?And, the median athletic department expenses are $15.0 million (as of 2020), with subsidization making up 82% of the revenue (as noted in the REVENUE table) to pay those bills.??

Long-term investments in athletics mean debt, particularly to build facilities to compete on a grand scale. See the comparison of ATHLETICS DEBT and DEBT SERVICE expenses. The median growth rate of athletics debt of public NFS schools, adjusted for inflation, is up 262% from 2015-2020 to $5.3 million.??The median growth rate of athletics debt service (like an annual credit card payment) for median public NFS schools, adjusted to inflation, increased 157% to $658k.?

Finally, link to the data and compare growth rates in ATHLETICS SPENDING to ACADEMIC SPENDING (from the US Department of Education's IPEDS database).??The median Division I NFS publics' growth rate of total athletics expenses rose 27% from 2011-2020, THREE TIMES AS MUCH as?the growth in overall academic spending of 9%, after adjusting for inflation.? Spending more on athletics may be a greater priority for greater prestige than spending on academics.

IN OTHER WORDS, moving up to DI is a long-term, financial investment heavily relying upon subsidization from the general fund and students to help pay the athletics bills, due to the lack of any consistent significant revenue generated by athletics.??In the end, regardless of the size or stature of the institution, it’s an expensive proposition to use athletics for institutional prestige.

In America, our institutions of higher education are for the most part autonomous, independent in their leaders' ability to make decisions without any significant accountability, particularly for financial decisions.?And, leaders of our institutions are mesmerized by the visibility from the fun of March Madness, if they can reach it. To be Cinderella takes money. A whole lot of it. The Kool-Aid of March Madness provides a buzz, like a couple of shots of tequila. Expensive tequila.?If it works, it's fun while it lasts. But, most get a headache when the bottle is empty, and most find their wallets empty when the buzz wears off.?March Madness is an expensive cost for prestige, if you can make it, and if you can make it last. ?