Study Commissioned by the Knight Foundation Commission on Intercollegiate Athletics Has Broad Implications for Funding PolicyStudy Commissioned by the Knight Foundation Commission on Intercollegiate Athletics Has Broad Implications for Funding Policy
MIAMI, FLORIDA — Success in big-time athletics has little if any effect on a college’s alumni donations or on the academic quality of its applicants, a leading economist concludes in a new study commissioned by the Knight Foundation Commission on Intercollegiate Athletics.
Robert H. Frank, H. J. Louis Professor of Management and Economics at Cornell University and author of the study notes: “Individual institutions that decide to invest more money in their sports programs in the hope of raising more funds or improving their applicant pools may be throwing good money after bad, and would be wiser to spend the money in other ways.” In response to these findings, Dr. Frank suggests that “groups of institutions that compete against each other in sports could jointly agree to cut back on sports spending – to abandon the ‘arms race’ in which they are now engaged – without reducing either donations by alumni or applications by prospective students.”
According to NCAA reports, costs for college sports programs are on the rise, and most athletic departments spend more than they take in. Why then, Frank asks, are colleges willing to keep spending more and more money to support programs that, on average, lose money?
One explanation Frank offers is that most believe they will receive indirect benefits from their teams’ success, like increased donations from alumni or a better pool of applicants that will help them move up in the national college rankings. After a review of existing research conducted between 1981 and 2003, however, Frank found that the empirical literature did not support that view.
Frank examined two series of existing studies, including the August 2003 study commissioned by the NCAA. In the first series of studies, which addressed the link between athletic success and student applications, Frank examined the common assumption that bigger athletic programs attract more students because of the universal appeal of sports as well as the national advertising that successful sports programs receive.
Frank concluded “the existing empirical literature suggests that success in big-time athletics has little, if any, systematic effect on the quality of incoming freshmen an institution is able to attract (as measured by average SAT scores).” Based on the empirical literature, he found that even if the overall net effect of athletic success on student recruitment is positive, it is likely to be small. He adds, “If expanding its applicant pool is an institution’s goal, it faces many more attractive investment opportunities than those it confronts in the domain of big-time college athletics.”
Frank also explored a second set of studies examining the link between teams’ performance and donations. College officials commonly cite the flow of alumni and other donations as a reason for sustaining or expanding their sports programs (or they cite the fear of losing those donations as a reason not to curtail or shrink their programs.) He concluded that the empirical literature indicated that if the overall net effect of athletic success on giving was positive, it was likely to be small.
According to William Friday, chairman of the Knight Commission and president emeritus of the University of North Carolina, “Dr. Frank’s conclusion that athletic success does not meaningfully increase either the amount of alumni donations nor the quality of student applicants has broad policy considerations for both individual institutions and athletic alliances like the NCAA. His study points to the need for an overall ‘stand down’ in the athletic funding ‘arms race.’”
Dr. R. Gerald Turner, a Commission Member and President of Southern Methodist University, added, "This review of the literature assesses the results of previous studies and provides a succinct analysis that will be an asset to those of us who must evaluate the expected benefits from expenditures for our athletic programs. Institutions deciding to increase
significantly expenditures in pursuit of big-time athletic success should have reasons other than an anticipation of increased alumni donations for academic programs or enhancement in the quality of their applicants."
Frank explains that big-time college athletics is a classic winner-take-all market in which success is defined by relative performance. “No matter how many hundreds of millions of dollars institutions spend, only 20 teams will finish in the AP’s top 20 in football every year, and only four teams will reach the final four in the NCAA basketball tournament.”
In Frank’s view, then, there will be winners and losers in college sports no matter how much the teams spend. No institution can cut back unilaterally without damaging its teams’ competitive abilities, but “if all institutions cut back in tandem, competitive balance would be maintained.” He advocates greater “arms control” in college sports, in which governing bodies such as the NCAA (if permitted by the antitrust authorities) would create incentives for each program to limit its expenditures. Doing so would allow colleges to divert resources to meet other pressing needs “without sacrificing any of the real benefits that college athletic programs generate,” and as his paper concludes, with no sacrifice to the mostly mythical indirect benefits, like alumni donations or stronger applicants, that supporters of college sports sometimes subscribe to athletic success.
About the Author
Robert Frank is the H. J. Louis Professor of Economics at Cornell's Johnson Graduate School of Management. He served as chief economist for the Civil Aeronautics Board from 1978-80, a Fellow at the Center for Advanced Study in the Behavioral Sciences in 1992-93, and the Professor of American Civilization at the Ecole des Hautes Etudes en Sciences Sociales in Paris in 2000-01. Frank is the author or co-author of eight books, including Luxury Fever (2000). The Winner-Take-All Society, co-authored with Philip Cook, received a Critic's Choice Award, was named a Notable Book of the Year by The New York Times, and was included in Business Week's list of the ten best books of 1995. Frank earned his Ph.D. in economics at the University of California at Berkeley and has taught at Cornell since 1972.
About the Knight Foundation Commission on Intercollegiate Athletics
The Knight Foundation Commission on Intercollegiate Athletics was formed by the John S. and James L. Knight Foundation in October 1989 in response to more than a decade of highly visible scandals in college sports. The goal of the Commission was to recommend a reform agenda that emphasized academic values in an arena where commercialization of college sports often overshadowed the underlying goals of higher education. The Commission, which presented a series of recommendations in a 1991 report, and A Call to Action in 2001, will continue to monitor and report on progress in increasing presidential control, academic integrity, financial integrity and independent certification of athletics programs.
About the John S. and James L. Knight Foundation
The John S. and James L. Knight Foundation promotes excellence in journalism worldwide and invests in the vitality of 26 U.S. communities.
Attn Media: Change in Meeting Location: Please note that the October 27th meeting of the Knight Foundation Commission on Intercollegiate Athletics will take place in Indianapolis, at the Hyatt Regency. Times and agenda to be announced at a later date.