Top 5 worst college sports financial decisions in 2023

Happy New Year.? I’ve spent the last two years developing this newsletter using institutionally-published data from athletics programs to help people understand the huge expenses in college sports, often unknowingly at the expense of college students through tuition or student fees.? So, I considered many of the issues of college sports in the past year and decided to comment on five of the WORST financial decisions by athletics departments.? Many could have made the list, but these five bubbled to the top as far as wasteful or poor financial stewardship.? Read on, and I encourage your thoughts.?

(1) Jimbo Fischer and Texas A&M.?

This was easily #1.? When Texas A&M decided to fire Jimbo Fisher for lack of productivity in exchange for Jimbo to sail off in the sunset with $75 million to never coach another down - well it made me realize I’m in the wrong profession.? It is offensive, and breeds of everything wrong in college sports.? Let’s put it this way: in football, Texas A&M is historically stuck in a tornado of their own demise. It has never won any football national championship since World War II - not even close.? Their best coach, RC Slocum, who was the last to win a conference title for the Aggies when they were in their first year of the Big Twelve conference in 1998, was forced out for not winning enough.?

This is a university that is near the top of revenue generation every year for its athletics program, and spent $485 million on upgrades to its football stadium…?And, for you Aggie naysayers that it was all private money… in reality, TAM didn’t raise enough for the stadium upgrade. As noted, “about $220 million was raised through private donations. The rest was generated through bonds, $20 million in city funds, and $74 million in student fees.”? So, the taxpayers and students helped to fund the stadium.? Texas A&M has reported since 2005 donations to its athletics program of $849.0 MILLION.? Nearly $1 BILLION to athletics.? Not a single football championship of any kind over that time.? Compared that money raised to the median of the Power 5 of $352.4 million over those 18 years.? Texas A&M has spent 141% greater than the FBS median, and their performance on the football field is nothing spectacular for the $1 billion investment.?

Look here:

Source: Knight-Newhouse College Athletics Database, https://knightnewhousedata.org/reports/3a09bb42

The point I am making is Texas A&M has its priorities completely backward, yet has complete support from the President, its Board of Trustees, alumni, and all the rest of Aggie Nation to raise and spend money on an exercise that is 100% based on a pointy ball.? Sports is a zero-sum game: you win, great, but over time the chances are equal you lose, and that’s a terrible waste of money… Texas A&M is the single best example of spending money hand over fist with the prayer of championships but instead sustaining mediocrity.? Is mediocrity that expensive?? It should not be so expensive to be average but don’t tell that to wasteful A&M donors and football-crazed Texas taxpayers.?

(2) Nebraska’s $450 million planned upgrade of its football stadium

Nebraska AD Trev Alberts could have used better timing than the fall with interest rates up and after the COVID-19 outbreak to propose an upgrade to the Nebraska football stadium. The University of Nebraska’s total spending for the institution was $759 million in 2022 (that includes athletics).? The academic investment at Nebraska has increased about 7% in total since 2006, compared to the 17% median on academic spending in its conference, the Big Ten. So, in academics, Nebraska is already behind its peers. Yet, Alberts wants to refurbish its stadium at the one-year level of 60% of its total academic enterprise.?

Source: Knight-Newhouse College Athletics Database, https://knightnewhousedata.org/reports/fbe7a778

No wonder the faculty are upset. ?Poor priorities and the data show it.? Nebraska is one of the least efficient football programs in the country when comparing amount spent and the total amount of wins. ?

Source: https://www.dhirubhai.net/pulse/football-financial-efficiency-since-cfp-app-state-ok-win-scott/?

“If you build it, they will come”?? Nebraska has sold out every football game for 60 years - they are already coming.? What’s the need?

At Nebraska, this proposal is a waste of money for mediocrity (see Texas A&M above).? Spend more to win?? It doesn’t work that way.? It’s a zero-sum game. You win or you lose, and it’s been about equal of wins and losses since Nebraska joined the Big Ten.? If anyone should know this, Nebraska administrators, faculty, students, and fans should know their mediocrity.? Maybe Alberts should instead consider their athletics successes and invest just a portion of that amount on their outstanding women’s volleyball team.

(3) Delaware joining CUSA

So, Delaware is joining Conference USA, beginning in 2025.?

They better start raising money.? A whole lot of it.? Maybe Joe Biden can chip in.?

Delaware has not been forthcoming with sharing its financial data, even upon request.? It’s a FOIA violation, but they don’t seem to care, for obvious reasons: in 2019 (last reported year), a whopping 87% of their revenue came from institutional and government support:?

Source: Knight-Newhouse College Athletics Database, https://knightnewhousedata.org/fcs/university-of-delaware#!quicktabs-tab-where_the_money-1?

Delaware’s financial mess smells much like Rutgers: Rutgers has spent the last decade relying on institutional support and student fees to try to get out of a spending hole it dug for itself and praying for Big Ten revenues to come in to save it.? The problem is this for Delaware:? Conference USA doesn’t have major conference media contracts like the Big Ten (upwards of $70 million per year), big stadiums for ticket sales, or a huge alumni following for donations. ?

The Hens’ athletics finances are actually closer to UMass. Per the graph below, you can see Delaware’s revenues where the Hens are heavily dependent on institutional support (in red, also known as using tuition dollars), just like UMass (which also has student fees, in orange).? It’s almost a mirror image in where they get their money.

Source: Knight-Newhouse College Athletics Database, https://knightnewhousedata.org/reports/e1db9a92?

Delaware generates just 13% of its funding for athletics, and UMass athletics generates 21%. UMass has received $198 MILLION in institutional support (tuition) since 2016 for its athletics programs.? Results? UMass has not been in a bowl game since 1978, has not been to the NCAA men’s basketball championship tournament since 2014, and has only one appearance in the NCAA women’s basketball championship in the past two decades (in 2021).?

Now, Delaware is already spending more than the median of Conference USA teams.

Source: Knight-Newhouse College Athletics Database, https://knightnewhousedata.org/reports/610ea23d

Is Delaware justifying its move up a Division to justify why it is already relying more on students to fund its athletics programs (87% as a percentage of total revenues from both institutional support and student fees) than any other Division I athletics programs?

Possibly, but this move by Delaware seems to instead reflect its belief in a “Flutie Effect” tuition driver. Delaware hopes to improve its name recognition enough for young future students to recognize the value of athletics’ prestige and association with others to get more students to attend.? This is an expensive gamble.?

Delaware should be content with where they are, instead of joining the wannabes. It’s a $200+ million hole they are diving into for the next decade, and they will likely never reap the benefits.? Delaware has never reaped the benefits before, and never will. The Hens should just ask UMass. ?

(4) Arizona & Arizona State outrageous spending

Arizona and Arizona State have spent the last decade pouring money into athletics facilities, with poor results.? The president of Arizona is disappointed in the lack of revenue generation from athletics to pay back its $55 million COVID loan, may cut athletics teams, and is proposing cuts across the board to the entire institution.? As noted in a previous post, Arizona and ASU asked for a handout from the institution’s general fund to balance their athletics accounts - so how are they supposed to pay back the loan in the first place if they are not generating enough money their own??

The following graphics below show Arizona, Arizona State, and the Power 5 Median for 2022, but the links expand it to a comparison from?2017-2022.

Revenues: (look at institutional support in red and student fees in orange).

Source: Knight-Newhouse College Athletics Database, https://knightnewhousedata.org/reports/f5e6d8d0

Expenses:?

Source: Knight-Newhouse College Athletics Database, https://knightnewhousedata.org/reports/678ccdca

Debt Service:?

Source: Knight-Newhouse College Athletics Database, https://knightnewhousedata.org/reports/206ad118

In 2022, subsidization from student fees and institutional support was 25% at Arizona and 16% at Arizona State 16%.? Arizona and Arizona State rely more on subsidies than most of their Power 5 peers to pay their expenses because their media revenues (light blue) and ticket sales (purple) are less than those at their Power 5 peers (per the aforementioned article), as well as here:

Source: Knight-Newhouse College Athletics Database, https://knightnewhousedata.org/reports/68a97823

This analysis shows Arizona and Arizona State have athletics debt service payments for facility improvements that stretch their expenses.? These Pac-12 schools do not have the same amount of media revenue to help pay for it compared to other Power 5 programs - and moving to the Big 12 will provide a little bit of relief, but not enough. ?

(5) Lindenwood wakes up to reality. ?

In 2022, Lindenwood transitioned to Division 1 from Divison 2.?

As a result, in just one year, it realized it couldn’t afford the increased cost.? So, after all the years of providing educational opportunities based on athletics merit, it decided to eliminate 10 teams (which includes scholarships).? It’s a complete elimination of the stated philosophy statement of the athletics program, to “advance learning, enliven campus life, develop leadership skills, and foster the personal growth.”? Dear Lindenwood, you can’t advance learning and foster personal growth by eliminating opportunities to receive that learning and growth.?

Data on Lindenwood is not available because it won’t share its athletics financial data.? However, we can look at similar schools, with serious words of caution about their move up to Division 1.? See Delaware (above) or my previous article bemoaning the similar move by Southern Indiana

Summary

These five stood out to me, but there are many others (some of which I have chronicled in my newsletter) in which revenue generation is not keeping up with the mission of a broad-based athletics program serving athletes with educational opportunities.? Football and basketball make a lot of money, but for most, it is not enough because much of the revenue flows back into those sports despite their lack of success, and all the other sports and their educational opportunities are dependent on subsidization. I’d argue, these five examples show how NOT to make long-term financial decisions that bleed college students to first fund mediocre football and basketball that, in the end, lead to decisions that can cost the educational welfare of college athletes by cutting sports and scholarships in efforts to keep football and basketball alive (and, not necessarily profitable).