The $10-Billion Sports Tab

Deep within the stadium, the team gathered for a college football ritual. The marching band gave its cue, and the players bounded through a long tunnel, a blue-and-white blur, pumping fists and high-fiving students who had gathered to cheer.

For a few moments, it was possible to believe that the team’s enthusiasm would be met by the roar of spectators and the full pageantry of game day in the Deep South. But then the tunnel ended and the team, the Georgia State Panthers, emerged into the largely empty 70,000-seat Georgia Dome, home of the NFL’s Atlanta Falcons.

An announced crowd of 10,252, clustered at midfield, clapped politely. But a few minutes after kickoff of this season-opening game, after the home team had fumbled the ball on its opening possession, all the energy had left the building.

The Panthers, now in their sixth season, haven’t given fans much reason to celebrate. In the 2013 and 2014 seasons, competing at the highest level of the National Collegiate Athletic Association, the team recorded just a single victory. Average attendance last year was among the 10 worst in the NCAA’s top level. Yet Georgia State’s 32,000 students are still required to cover much of the cost. Over the past five years, students have paid nearly $90 million in mandatory athletic fees to support football and other intercollegiate athletics — one of the highest contributions in the country.

A river of cash is flowing into college sports, financing a spending spree among elite universities that has sent coaches’ salaries soaring and spurred new discussions about whether athletes should be paid. But most of that revenue is going to a handful of elite sports programs, leaving colleges like Georgia State to rely heavily on students to finance their athletic ambitions.

In the past five years, public universities pumped more than $10.3 billion in mandatory student fees and other subsidies into their sports programs, according to an examination by The Chronicle of Higher Education and The Huffington Post. The review included an inflation-adjusted analysis of financial reports provided to the NCAA by 201 public universities competing in Division I, information that was obtained through public-records requests.

The average athletic subsidy that these colleges and their students have paid to their athletic departments increased 16 percent during that time. Student fees, which accounted for nearly half of all subsidies, increased by 10 percent.

Student-fee increases have sparked campus protests at some institutions, including the University of New Mexico, and have drawn criticism from lawmakers in some states. A few elite athletic programs bring in so much revenue that they do not require student fees or other subsidies, and some even return cash to their universities. At the other end of the spectrum are five institutions in Virginia, including the College of William & Mary, that charged students an athletics fee that exceeded $1,500 a year during 2014-15, more than most students spend on their annual cell-phone bill.

The Chronicle/HuffPost analysis found that subsidy rates tend to be highest at colleges where ticket sales and other revenue are the lowest — meaning that students who have the least interest in their college’s sports teams are often required to pay the most to support them.

Many colleges that heavily subsidize their athletic departments also serve poorer populations than colleges that can depend more on outside revenue for sports. The 50 institutions with the highest athletic subsidies averaged 44 percent more Pell Grant recipients than the 50 institutions with the lowest subsidies during 2012-13, the most recent year for which statistics are available.

At Georgia State, athletic fees totaled $17.6 million in 2014, from a student population in which nearly 60 percent qualify for Pell Grants, the federal aid program for low-income students. The university contributed an additional $3 million in direct support to its sports programs. All told, those subsidies represented about three-fourths of the athletics budget.

Georgia State is far from an outlier. Last year, sports programs at 47 other public colleges reviewed by The Chronicle and HuffPost were even more dependent on fees and other institutional support as a percentage of their athletic budget.

The growing schism between have and have-not colleges, and the reluctance of universities that rely heavily on subsidies to scale back their spending, has alarmed professors, presidents, and even college coaches, who are raising new questions about the long-term viability of major college athletics.

Georgia State, an urban commuter college located in a largely vacant stretch of downtown Atlanta, had long resisted a move into big-time athletics. Carl Patton, a former president of the university, says students began asking him to add football soon after he took the job, in the early 1990s. For years he told them: “Not in my lifetime.”

At the time, the university had a set of aging classroom buildings and no on-campus housing. Mr. Patton, who retired from the presidency in 2008, oversaw the addition of a student recreation center, a library renovation, and the construction of the first dormitories.

As the university evolved into a more traditional campus, Mr. Patton reconsidered his earlier opposition to football and commissioned a feasibility study from outside consultants. The study found that the addition of a football program could yield “many intangible benefits,” such as building a sense of community for students.

But the report also cautioned that adding football was a gamble, requiring a near doubling of the student athletic fee and straining the university’s finances. “Budget issues raise serious concerns about the feasibility of a successful, self-sustaining program,” the report concluded.

One big problem: Georgia State had almost no history of philanthropy, with donations accounting for just 1 percent of its athletics budget.

Before greenlighting football, the university secured a $1-million commitment from donors to help start a program. The team started playing in 2010 in the Colonial Athletic Association, which competes in the Football Championship Subdivision, the lower of the two Division I football tiers. Soon after, during a wave of conference realignments, Georgia State got an invitation to move into the big leagues.

Bill Curry is a former head football coach at the University of Alabama and Georgia Tech. He led Georgia State’s football team in its first three seasons. Mr. Curry says that his fledgling team was not ready to move, but that he eventually agreed to the change and generally supports the university’s investment in the sport. In 2013, Georgia State joined the NCAA’s Football Bowl Subdivision, a group that includes elite powers like Ohio State University, which won the national championship last season.

Since joining the NCAA’s top level, the Panthers have gone 3-29. Mr. Curry says he feels bad for the players, but he understands the university’s motivation: Colleges like Georgia State feel tremendous pressure to seize opportunities to enhance their status. As much as anything, he says, it was a play for prestige.

“In America, and especially in sports, you’re not allowed an intelligent timeline,” he says. “You’ve got to take one that launches you so you’re on [ESPN’s] GameDay sooner.”

Mr. Curry says his experience at Georgia State led him to believe that some colleges are making “fundamentally flawed” business decisions in a desire to compete at the highest level.

At many midtier and smaller institutions, these decisions are fueled by a pressure to keep up with better-financed peers, even though the colleges are unable to tap into the same television and licensing money. Just two dozen universities collect nearly half of the $26 billion in revenue that has flowed into the athletic departments of Division I public colleges in the past five years, according to the Chronicle/HuffPost analysis.

Hundreds of colleges are vying to join this rarified group. In the past two decades, 32 universities have made the leap to Division I. Like Georgia State, the University of North Carolina at Charlotte and the University of Texas at San Antonio, among others, have added football — the sport with the most potential to lead to big paydays. College leaders say such investments help attract prospective students and build connections with donors and other supporters.

More recently, efforts by the wealthiest universities to take better care of their athletes have put new financial pressures on other colleges. In January the NCAA approved a change allowing Division I programs to offer athletes aid up to the full cost of attendance, which can amount to thousands of dollars a year to help them pay for living expenses.

Many programs in the five most powerful conferences — the Atlantic Coast, Big Ten, Big 12, Pac-12, and Southeastern — have agreed to pay out $1 million or more in additional aid each year to finance scholarships.

Colleges have rarely dropped sports or moved to a lower, less-expensive, NCAA level in response to added financial pressures. Those few that have considered reducing their athletic commitment have faced a backlash.

Late last year, the president of the University of Alabama at Birmingham announced that his institution planned to drop football, citing the escalating costs of big-time sports and a $20-million budget shortfall.

Six months later, following a public outcry, the university reversed its decision.

UAB plans to bring back its team in 2017, with renewed support from donors. But the athletic department is still projected to have operating deficits through at least 2020, according to a consultant’s report. And its reliance on subsidies is only growing. This year, the university is expected to subsidize more than two-thirds of the athletics budget.

“There’s this illusion that you can wave a magic wand, build all these fabulous stadiums and facilities, and the money’s going to roll in,” Mr. Curry says. But the reality is that without consistent success on the field, donors will not write the big checks that colleges need to sustain their programs.

“You’ve got this problem all over the country,” he says. “It really is an epidemic.”

The driving force behind Georgia State football is Mark Becker, who took over as president in 2009. A self-described adrenaline junkie whose hobbies include ice climbing, he was a graduate student at Penn State in the 1980s when it won a national championship in football, and he later worked at the University of Michigan during a Final Four run in basketball. He has seen how sports success can unite alumni and spark interest in a university.

He has big plans for Georgia State, and football is only part of them. During his seven years there, the university has helped revitalize a dormant part of downtown, buying up abandoned buildings and converting them into high-end spaces to support its growing academic programs, including a law school ranked among the best values in the country.

Georgia State has nearly doubled its research spending in the past few years, to $100 million. Its hands-on approach to student retention has made it a leader in graduating low-income and underrepresented minorities. And its in-state tuition and fees, totaling around $10,000 a year, are about average among public universities.

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Mark Becker, Georgia State’s president, talks about his vision for sports programs there.

Its student body, though, is especially sensitive to any extra costs. The proportion of Pell-eligible students has nearly doubled since 2007, from 32 percent to 59 percent. And in 2012, more than 14,000 Georgia State students had unmet financial need, in some cases more than $15,000 a year. Despite efforts to create a more traditional college atmosphere, about three-fourths of Georgia State students still commute to campus, including many who attend part time at night. (All fees, including those for athletics, are prorated for students who take less than six credit hours.)

While athletic fees have gone up during Mr. Becker’s tenure, the overall fee burden for the typical student has not increased. That is partly because the university has retired some other charges that students formerly paid. However, because of a sharp increase in enrollment, overall fee revenue has continued to climb.

Mr. Becker says the subsidies are crucial to building a vibrant athletics department and turning Georgia State into a destination campus.

“Great research universities tend to have great athletic programs,” says Mr. Becker. With the additions, he says, “the university is now complete.”

The argument that elite universities need elite sports programs is “bogus,” says Nathan Tublitz, a University of Oregon professor and former head of the Coalition on Intercollegiate Athletics, a faculty-led sports watchdog group. “Schools without teams don’t have any problem getting applications.”

The Chronicle/HuffPost analysis of Division I finances suggests that Mr. Becker’s dream will be hard to realize. Very few strivers ever reach the upper echelon.

In 2010, 127 universities subsidized more than half of all costs incurred by their athletic departments. By 2014, only five of those institutions had managed to increase outside revenue beyond 50 percent.

On campus, views are mixed about what constitutes a reasonable subsidy and whether students should foot the bill. Subsidies make possible thousands of athletic scholarships, which often go to low-income students who might otherwise not attend college. Without subsidies, many nonrevenue sports like track and field and swimming would probably be cut.

Of the more than 100 faculty leaders at public colleges who responded to an online survey conducted by The Chronicle/HuffPost, a majority said they believe college sports benefit all university students. But they were divided about whether students should pay fees to support their college teams.

“Students are our biggest donors,” says Matthew J. Streb, a political-science professor and the faculty athletics representative at Northern Illinois University, where subsidies account for more than two-thirds of the athletic department’s revenue. (About one-third of the department’s revenue comes from student fees specifically.) Without that money, he says, universities couldn’t offer as many sports or scholarships as they do.

David Hughes is a Rutgers anthropology professor who has sparred with his administration over ballooning subsidies. His university has spent $172 million in the past five years to underwrite intercollegiate sports, more than any other college in the country during that time.

The two major forms of subsidies, he says, undermine universities in separate ways. Increases in student fees make college more expensive, while rising institutional support of athletics threatens the academic mission. “Add these things together,” he says, “and you have students paying more for a lower-quality education.”

Research published in January in the Journal of Sport found that students themselves are often unaware of athletic fees or what they are used to support. A study of 3,500 students in the Mid-American Conference found that more than 40 percent of respondents either didn’t know, or were highly uncertain about, whether they paid athletics fees. Many said they were willing to pay fees for student centers or health care, but in general did not support fees for athletics.

Brea Woods, a 20-year-old junior at Georgia State, said she didn’t know she paid an athletics fee, which costs full-time students $554 a year. “That makes me mad because I’m not an athlete,” says Ms. Woods, who has taken out $19,000 to finance her education.

The Drake Group, a faculty-led reform organization, has encouraged colleges to adopt restraints on the use of student fees and other institutional subsidies, proposing that colleges establish a dollar limit on what students must pay.

Some states have also waded into the debate. In July the state auditor’s office in Utah released a report detailing subsidies at the state’s eight public universities. The report, which found subsidies of 50 percent or greater at all but one institution, stopped short of recommending regulations but raised questions about the extent to which NCAA athletics should be subsidized and how responsible students should be for covering those costs.

Earlier this year, responding to concerns that many of the state’s public universities were putting too much of a financial strain on students, the governor of Virginia signed into law a bill that sets limits on the percentage of athletics budgets that can be funded through student fees. The changes, which don’t go into effect until July 2016, vary by NCAA level.

Back at the Georgia Dome, in September, Georgia State’s season began on a sour note. The team turned the ball over three times in the first half. In a box high above the field, the university’s president watched with growing discomfort.

Mr. Becker faces the same dilemma as administrators of other striving programs. He says he wants to reduce the university’s financial support for athletics to less than half of its budget. But doing so requires a big boost in outside revenue, and there is no easy path to get there.

Mr. Becker has had some modest success at fund raising: Two years before he started, the athletic department was raising just $100,000 a year in private donations. Last year it brought in more than $1.5 million.

But less than $70,000 was earmarked for football. And the team still spends $4.2 million more than it brings in.

The men’s basketball team had a brief moment in the spotlight in the spring, after it knocked off heavily favored Baylor University in the NCAA tournament, and a clip of its coach falling out of his chair in excitement went viral. But converting such an achievement into sustained success — and more revenue — remains a tall hurdle.

Hank M. Huckaby, chancellor of the University System of Georgia, was seated near the president in his suite. He said he remains skeptical about the viability of the football program.

He has two degrees from Georgia State and was not a proponent of adding football. His biggest concern is the financial burden on students. He says he fields as many complaints about overall student fees as about any other issue.

Mr. Becker’s bold idea to reduce the subsidy: Spend even more on athletics. He wants to build a football stadium for his team about a mile from the campus. He envisions a modern, 25,000- to 30,000-seat facility that offers a lively game-day environment. He also wants a baseball field and a soccer field, retail shops, and student housing. He believes he can secure investments from local real-estate developers and finance more through bonds, a strategy that wouldn’t require a student-fee increase.

It might sound crazy — pumping more money into what has been a losing venture — but Mr. Becker says students and faculty members will get behind him. “As a striving institution,” he says, “taking risk is something people embrace.”

But selling students on the idea of risk is problematic, says William Serrano-Franklin, a master’s student in public administration, because many students won’t be around to see a return on that plan.

“It’s like throwing your chips down on a roulette game,” he says, “and leaving before the ball stops rolling.”

Down on the field, Georgia State mounted a comeback, but ultimately lost 23-20. Mr. Becker shook it off.

“At least,” he said, “we won the second half.”

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Interactive Table: Who Foots the Bill in College Sports?

The table below shows how much Division I colleges depend on student fees and other subsidies for athletics. Click on an institution to see details about its funding or to download its NCAA financial reports.

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Portion of funding from subsidies and revenue

 Adjust for inflation

Total subsidies

Earned revenue

Correction (11/16/2015, 7:00 p.m.): Because of an error in data entry, the unadjusted total figures for Alabama State University were incorrect. The figures have been updated.

^* Northern Kentucky University did not compete in Division I until 2012, so prior year information was not available.

^* Kansas State University did not respond to multiple requests for its 2014 report.

^* Eastern Illinois University did not respond to multiple requests for its 2011 report.

^* The University of Missouri at Kansas City provided the wrong report for 2012 and did not respond to requests for an updated version.

^* The University of Tennessee at Knoxville did not respond to multiple requests for its 2014 report.

^* Southern Utah University did not respond to multiple requests for its 2010 report.

^* Missouri State University provided the wrong report for 2010 and did not respond to multiple requests for an updated version.

^* West Virginia University sent incomplete 2013 and 2014 reports and did not respond to multiple requests for updated versions.

Sources: NCAA Revenue and Expense Reports, 2010-2014 and the Department of Education’s Integrated Postsecondary Education Data System (Ipeds), 2010-2014

Methodology

The Chronicle of Higher Education and The Huffington Post requested athletic revenue-and-expense reports for the years 2010 through 2014 from 234 public universities that compete in Division I conferences. Private institutions and public colleges in Pennsylvania aren’t subject to public records laws, so they were excluded from our research.

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Of the 234 institutions we contacted, four provided reports too late to be included in our analysis, though their data are included in our table. The remaining 29 did not provide reports before publication.

Our analysis focused primarily on subsidies — how much a university effectively “donates” or invests in its athletics department to make up for a lack of earned revenue. Subsidies can come from three sources: student fees, funds allocated by the school, and government support. Earned revenue includes any income generated through ticket sales, endowments, royalties, and TV and conference distributions, among others.

Colleges were grouped by conference according to their 2013-2014 men’s basketball conference memberships.

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A collaboration with the Huffington Post