ESSAYS ON THE COSTS AND BENEFITS OF COLLEGIATE ATHLETICS

Abstract

ABSTRACT

This dissertation is composed of three separate empirical analyses. Each analysis is a separate article. Collegiate athletics are a significant aspect of many universities in the United States. The costs for running such programs are vast and the total benefits associated with athletic programs are not easily identifiable. In the following analyses, I seek to analyze the costs and benefits associated with collegiate athletics. Chapter I builds on previous work on the effect of athletic success on the university that has found estimates that suggest both basketball and football success can have a positive effect on student quantity. I utilize university data from the Integrated Postsecondary Education Data System as well as athletics data from Equity in Athletics Data Analysis to analyze how athletic success impacts university growth. I utilize a panel fixed effect model to estimate the impact of having a successful basketball or football season on forthcoming applications, undergraduate enrollment, and tuition revenue. I find that while the basketball champion has a significant impact on applications sent to the university, basketball has no significant effect on tuition revenue. However, results suggest that having a top 25 ranked football program increased tuition revenue by approximately 2% for two years following the successful season. The magnitude of this effect is estimated to be around $3 million in the subsequent academic year. The effect is found to be around 8% for the top football program, which would coincide with an increase of over $11 million in tuition revenue for the average university. When using top conference revenue figures, the magnitude rises to over $22 million. Chapter II analyzes how athletic subsidies differ among teams that compete in football at the NCAA Division I level. The primary comparisons are made between the top 5 conferences, also known as the Power 5 conferences, and the remaining Division I conferences. University-level data from 2005 to 2015 on ticket sale revenue, rights and licensing revenue, and university subsidies are obtained from USA Today's public records requests. The key findings indicate that ticket sale revenues increase by around 1.5% for each additional football win for all Division I programs. For rights revenue, conference champions are found to generate the most significant increases in revenue, ranging from 3 to 7%, which would correspond to an increase between $500,000 and two million dollars. Regarding university subsidies, a significant decrease in university subsidies of around 37%, approximately two million dollars, is estimated for top performing teams in the Power 5 conferences. Results also suggest that non-Power 5 conferences increase university subsidies as a method for keeping up with increasing advertising revenues observed at Power 5 conferences. Chapter III builds on findings of prior studies that have analyzed the relationship between recruiting and team performance. Prior findings indicate that high-quality recruits are associated with better on-field performance. In this paper, I determine the key factors associated with successful recruiting. I utilize panel fixed effect and negative binomial models to identify the university and athletic department indicators that bring about successful recruiting. Team performance is found to be significant in the recruiting process. However, I find that universities may signal their athletic department quality by increasing coaching salaries and by replacing underperforming coaches. These quality signals through spending on coaching staff are found to positively impact subsequent recruiting.