Special report: Why are athletics largely immune to higher education budget cuts?

Nicholls State University’s sports teams cost the school more money each year than the university spends on many individual academic departments, including petroleum engineering and the college’s celebrated Chef John Folse Culinary Institute.

As at most campuses, the lion’s share of the spending is on football, a sport the Colonels have played in Thibodaux since the 1970s — without making much of a mark on the NCAA landscape. But administrators figure that even without ostentatious trophies lining the hallways, football helps to lure students.

But the attention it brings is hardly free. If Nicholls were to stop subsidizing sports, the university could boost spending on academics by almost a tenth.

Getting rid of athletics also would theoretically offset a quarter of the cuts in state aid that Nicholls has absorbed since 2008. And it would put the total budget on par with what it was in 2008 — the rest of the deficit having been made up through increases in tuition.

But school officials see sports as vital to the university’s profile.

“We’re not down here pouring money into an athletics program because we like to sit at a game and eat popcorn,” said Neal Weaver, Nicholls’ vice president for university advancement. “We believe it’s valuable, and we try to be as efficient and respectful of everybody’s money as possible.”

Nicholls’ subsidy of sports is the largest, as a percentage of the school’s budget, of any of Louisiana’s 14 public universities. But all of them, save LSU, are taking substantial amounts of money that could be going to academic instruction and funneling it into sports.

At most of Louisiana’s universities, athletic subsidies amount to between 5 percent and 9 percent of the overall budget. The University of New Orleans, which has no football team, is the lone exception: UNO’s sports subsidy amounts to just 1.6 percent of the campus budget.

Most universities around the country, public and private, also lose big money on athletics. They all rely on similar logic, figuring that high-profile sports programs boost applications and drive alumni giving. They are a loss leader, in a sense.

Is it affordable?

But betting so heavily on sports comes with a cost. It’s one many observers say is unaffordable, especially at a time when universities everywhere — and especially in Louisiana — are short on money.

“Although schools are losing huge amounts of money and are cutting back on departments, cutting back on hiring faculty ... there doesn’t seem to be any real attempts to get athletics department financing under control,” said Murray Sperber, a visiting professor at the University of California, Berkeley, who has authored multiple books about college sports funding.

Of Louisiana’s hundreds of collegiate athletics teams, only two routinely make money, and both wear purple and gold.

LSU’s football program alone generated about $19.7 million in net profits for the year ending in June — close to the entire revenue for athletics at the University of Louisiana at Lafayette, or the combined athletic budgets of Southeastern Louisiana and Southern universities. LSU’s baseball program is the state’s only other profitable team, usually paying for itself with a bit of money left over.

Experts say schools enter the athletics arms race because they see the success of places like LSU, where football both makes money and gives a huge boost to the school’s profile. But the reality is that the LSUs of the world are few and far between.

State universities thus find themselves in a chicken-egg riddle. They need to spend heavily to build successful athletics teams in order to tap the revenue and private dollars that might one day allow the programs to function without university money. For most, that day never comes.

Still, many cannot imagine choosing not to compete. Former UNO Chancellor Tim Ryan has no doubt that his 2009 move to downgrade the school’s athletics department from Division I to Division III was the decision that earned him the most enemies. The action was undone after Ryan left, and UNO is back to competing in Division I.

“In times of budget crunches ... you have to put everything on the table,” Ryan said. “And if you don’t put athletics on the table, then I don’t think you’re doing your job.”

Borne by students

Students often end up bearing the financial burden of their money-losing sports programs.

Some state schools collect student fees earmarked for athletics departments. Others move money from their “unrestricted education and general fund” — which includes student tuition and state appropriations — into their athletics budgets.

In some cases, students have voted to assess the athletic fees on themselves, which at least affords college administrators some cover because such fees aren’t taking money away from the classroom.

“All these costs — there’s all kinds of ways that they hide them,” said Jeff Smith, a professor at University of South Carolina Upstate and a prominent researcher of college sports subsidies. “But technically, it’s legal.”

For a university, administrators like to say, athletics programs — especially football teams — are like a “front porch.” They envision high schoolers catching a football game on ESPN one Saturday and sending off a college application to the winner the next day.

There’s some validity to the notion. In fact, the phenomenon is sometimes called the “Flutie Factor,” coined after Boston College’s Doug Flutie completed a last-second Hail Mary pass to beat the University of Miami in a celebrated 1984 showdown.

Flutie won the Heisman Trophy that year, and Boston College experienced a dramatic upswing in applications.

LSU has enjoyed its own Flutie-style bump after LSU won national championships in the 2003 and 2007 football seasons.

LSU experienced about a 9 percent increase in applications the year after the first championship. After the second one, applications shot up by 31 percent, though David Kurpius, the former vice chancellor for enrollment services, said other factors affected the spike. Even so, he attributes an increase of about 15 percentage points to the Flutie Factor.

LSU thus has some basis for believing in the power of national exposure. That’s one reason coach Les Miles is, by a large margin, the highest-paid employee of the university and the state — though much of his $4.4 million salary is paid through television contracts and private funds, which also help the program stay in the black.

But there’s not much room on the big stage with LSU. Other state universities are nonetheless trying to crowd their way onto it, charging students mandatory fees or pulling academic money to boost athletics.

Though no other team in the state has won a national football championship — or, realistically, has a chance to anytime soon — officials from those universities still believe fielding competitive sports teams is important.

“You think about sports doing well, you get exposure there that you otherwise couldn’t pay to get,” said Sam Domiano, vice president of administration and finance at Southeastern. “The university might not otherwise be receiving some of that.”

Weaver said Nicholls can see spikes in the university’s Web traffic when the Colonels play a nationally televised football game.

Joseph Savoie, president of UL-Lafayette, says his school has seen an increase in New Orleanians applying to the university since the Ragin’ Cajuns began a winning streak at the R+L Carriers New Orleans Bowl — a streak that stood at four before it ended this season. However, he acknowledged the uptick also could simply be the result of more-intense recruiting efforts in the city.

Money plus exposure

When they play big-time football teams, lesser-known schools get more than prime television exposure. They make hundreds of thousands of dollars, and sometimes millions, in “game guarantees,” fees paid by the big dogs for what usually amounts to an automatic win.

LSU, for example, paid McNeese State $500,000 for their fall matchup, even though the game wound up being canceled because of bad weather. Southern collected $650,000 for playing the University of Georgia on Sept. 26, a game the Jaguars lost by six touchdowns.

Smith, the sports subsidies researcher, isn’t a fan of the practice. He argues that football giants like LSU use smaller schools to pencil in easy wins. Smaller schools take the bait because of the money and exposure, even though playing the titans can be dangerous and is almost always embarrassing — and still usually doesn’t get their programs out of the red.

“Everybody does it because they think, ‘We’re on ESPN,’ but we’re on ESPN because we got paid to play somebody who beat us by 40 points,” Smith said.

The state’s powerhouse in athletics, LSU is one of only seven universities nationwide that does not need a university subsidy or student fee to prop up athletics, according to an analysis of NCAA records by USA Today.

The school’s wildly popular football program — which routinely fills Tiger Stadium with more than 100,000 fans — usually makes enough money to cover the costs of dozens of money-losing sports, like soccer.

And while most other universities rely on private foundation money for day-to-day operations, the Tiger Athletic Foundation’s money is dedicated to big capital projects, like a new gymnastics facility slated for a grand opening in February.

Despite the financial success of LSU sports, university officials are sensitive to the notion that people might question eye-popping athletic spending at a time when administrators are crying poverty.

At the end of LSU’s 2015 football season, for instance, there was wide speculation the school was going to pay Miles $15 million to simply go away. It didn’t happen. In part, that’s because President F. King Alexander said it would have looked unseemly for the university to spend so much money on a buyout — even if the money came from private sources — at a time when LSU officials are pleading with the state to reverse recent funding cuts.

Unlike most of its peers, LSU’s athletics department actually gives money to the academic side of campus. The university receives at least $7.2 million each year from athletics as part of an agreement from 2012 to help offset budget cuts.

In 2015, LSU athletics paid more than $10 million to the university.

Most of the profits come from football, which generated $42.9 million in 2015, versus $23 million in expenses. LSU baseball generated $3.2 million in 2014, covering its $2.9 million in expenses. (In 2015, baseball ran a small deficit.)

Despite their success on the field, including recent national championships, elite LSU teams like track and golf rely on revenue from the cash cow that is football. That’s even true of some of the teams that draw big crowds, like women’s gymnastics.

“LSU’s a big, bad boy,” Smith said. “If you’re an LSU student, you’re getting a deal. If you go there, you’re getting great athletics; you’re not paying for it.”

But Sperber argues that large universities like LSU also can use their successful athletics program to paper over some of their weaknesses in academics.

“It is true at certain schools like LSU that it is so much part of the culture,” Sperber said. “But in (my book), part of my argument is schools use this as a way of hiding that they’re not providing very much in the way of education.”

UNO weighs change

Long before many other athletics programs in the state were seeing success, the University of New Orleans’ baseball team traveled to Omaha, Nebraska, in the 1970s to play in the College World Series.

But student interest in the Privateers dwindled, perhaps because the school never fielded a football team. And then, when UNO saw steep enrollment declines and declared a state of financial crisis, allowing layoffs of tenured faculty after Hurricane Katrina wreaked havoc in the Crescent City, the former chancellor knew the school needed a change.

Students rejected a proposed fee for their athletics program.

But Ryan and a committee wanted to keep athletics in some form, so they started the process of moving UNO’s athletics program down to Division III, where the school would not have to provide any athletic scholarships. Ryan still can’t believe how much grief he took.

“We fired 29 tenured faculty members,” Ryan said. “That didn’t cause nearly as much controversy as going to a Division III athletics program, when only 500 people a game were watching our Division I athletics program.”

In 2012, when Ryan was no longer chancellor, university leaders announced UNO would remain in Division I.

Ryan stands by his decision, citing the urban environment of UNO and the preponderance of less-traditional and older students attending the university as reasons why athletics there are superfluous.

“I know how important athletics are,” Ryan said. “However, it’s not the purpose of a university. The purpose of a university is to educate students. There are clearly cases — ours was one of them — and I think there are a lot of them around our country and state, where that comes into conflict with having an athletics program. You don’t have the dollars.”

As universities around the state scramble to stay afloat, Ryan said administrators need to be brave enough to ask themselves whether it’s worth pouring so much money into athletics.

“They’re not doing their job if they don’t consider those things,” Ryan said. “Our job as an administrator of a major university is to shepherd that university toward fulfilling its mission. How important is athletics?”

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