Value of Athletics in Higher Education March Prepared by Edward J. Ray, President Oregon State University

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1 Materials linked from the 5/12/09 OSU Faculty Senate agenda 1. Who Participates Value of Athletics in Higher Education March 2009 Prepared by Edward J. Ray, President Oregon State University Today, more than 380,000 male and female student-athletes participate in as many as three dozen sports at many levels of competition at more than a thousand colleges and universities. Athletics can and does add to the knowledge and skills that develop young people into productive citizens in a wide range of careers beyond sports. Very few student-athletes become professional athletes. Many more become doctors, lawyers, engineers, teachers or even Members of Congress (Brand, 2006, page 2). At Oregon State University, there are 481 student-athletes as of fall Of which, 284 are male and 197 are female. Oregon State University football and men s basketball student-athletes account for 24% of the total for student-athletes. In addition to student-athletes another 500+ students are involved in marching band, cheer, internships, assistantships, and part-time positions within the department of athletics. In total over 1000 students are involved in intercollegiate athletics either as a student athlete or in some form of support role. Additionally, many students involved in support roles are receiving stipends, scholarships, or wages that enable them to help finance their educations and are receiving valuable experience that they will use to enhance their career opportunities in the future. The department of athletics payroll for student workers is close to $500, Success and Diversity of Student-Athletes Using the Graduation Success Rate (GSR), a new metric that counts transfer students (as well as students whose education takes place at only one institution) who both succeed and fail academically, the latest average graduation rate for student-athletes in Division I is 81 percent. There is no way to compare this figure to the federal rate, because the U.S. Department of Education does not track transfer students. However, even if the more inaccurate federal rates are used, student-athletes in Division I graduate at 63 percent, two points better than the general student population. Of note, African-American male student-athletes graduate 10 percentage points higher than African-American males in the student body, and African-American female student-athletes graduate at a rate 15 points higher than their counterparts in the general student population based on a four year rolling average. Clearly, the reform measures of the last 15 years are working (Brand, 2006, page 3). The six year graduation rate at Oregon State University for the fall 2000 cohort was 60.0% and for the fall 2001 cohort was 60.4%. The GSR for student-athletes from the 2001 cohort is 81% up from 75% in the previous cohort. At Oregon State University 15% of the undergraduate population are ethnic minorities while 34% of the student athlete populations are ethnic minorities making intercollegiate athletics the most culturally diverse group of students on campus. Of the 200+ African American undergraduate students at Oregon State almost 30% are student-athletes. 3. Scholarships Athletics has also been the ticket for many student-athletes to attend college. Division I and II intercollegiate sports provide $1.5 billion annually in athletics scholarships to help pay the cost of education including for many low-income students who would otherwise have to forgo the college experience. The range and scale of intercollegiate athletics in America are as diverse as higher education itself. Often, the scale alone distorts perceptions about the purpose for which athletics are conducted by those who observe it, as well as Page 1

2 occasionally those who are engaged in the enterprise (Brand, 2006, page 1). Oregon State University provides $7.32 million in scholarships for student-athletes in fiscal year 2008, of which $5.98 million in scholarships were awarded to non-resident student-athletes. At Oregon State University many of its student-athletes are receiving partial or no aid which means that the actual cost of attendance for the 481 student-athletes in our program is $12.5 million of which $5.2 million in academic costs are student funded. 4. Skills Higher education also imparts knowledge and skills in various other ways. Participation in a symphony orchestra, working on student newspapers and participation in theater productions are all examples of ways in which students go beyond the classroom to develop educational skills that will serve them throughout their lives in the same way as traditional classroom learning. Development of these skills is integral to the educational experience students take with them from the campus. Participation in varsity athletics programs is another key way in which young men and women enrich their educational experience beyond the classroom. What they learn on the playing field or court is integral to their educational experience as well. Lessons on leadership and how to follow, on self-discipline and self-sacrifice, on teamwork and hard work, and learning to pursue excellence are all values imparted through participation in athletics (Brand, 2006, page 4). Oregon State University has a structured leadership development program called Everyday Champions. The mission of the Everyday Champions program is to develop student-athletes into individuals ready to excel in today s competitive environment. It is the goal of the program that upon graduation our student-athletes will leave Oregon State University educated, confident, connected, and well prepared for the personal and professional challenges they may face throughout their lives. This past year this program has resulted in over 4000 hours of community service being performed by our student athletes, who include a Fulbright Scholar, a Rhodes Scholar Finalist, students who attain acceptance to various graduate schools, overseas study, and leadership roles on campus within ASOSU, the Greek System, and Weatherford Hall. 5. Profiles As noted earlier, the NCAA has collected and analyzed data for the last 20 years to observe the behavior of hundreds of thousands of successful student-athletes and modeled our standards on that behavior. Any studies that assume student-athletes enter Division I colleges and universities less well prepared than non-student-athletes are either out of date or erroneous. Data from 2004 entering freshmen, the latest available information, show that Division I scholarship student-athletes averaged a score of 1096 on the SAT. This is higher than the national average of 1026 for all college-bound test takers. Similarly, the athletes averaged a core grade point average (GPA) of 3.400, which exceeds the national average GPA of reported by the College Board for all students (Brand, 2006, page 10). The average SAT score and GPA at Oregon State University for entering freshman student-athletes for 2008 were 1031 (math and verbal composite) and 3.35 (based on a 4.0 cumulative GPA scale) compared to the average SAT and GPA scores of 1079 and 3.48 for all entering freshman. 6. Finances Total annual operating revenues for all NCAA divisions are approximately $7.8 billion. Of this amount, $4.2 Page 2

3 billion is generated from athletics sources such as ticket revenues, contributions and the like. The remaining $3.6 billion are funds allocated by the institution, state or other governmental entities for the benefit of studentathletes (Brand, 2006, page 16). Allocated funds for Intercollegiate Athletics at Oregon State University represented 14.3% in fiscal year 2006, 10.1% in fiscal year 2007, and 9.8% in fiscal year In addition to scholarship funds paid to the institution in the form of tuition and fees, as an auxiliary the Department of Athletics also pays over $1 million per year in assessments. Intercollegiate athletics is not offered to generate a profit. That is the fundamental difference in purpose between intercollegiate athletics and professional sports. If profitability were the standard for college sports, fewer than 20 Division I institutions (based on data reported for FY04, FY05, and FY06) would conduct athletics programs. Furthermore, if profit were the motive, even those programs (of more than 1000 member institutions) would likely only conduct football and men s basketball programs (Brand, 2006, page 18). National Trends NCAA Division I Proportion of Allocated Funds Public vs. Private Institutions Various Sources FY2003 Student Activity Fee Government Support Institutional Support Group A Group B Group C Public Private Public Private Public Private 7% 2% 29% 4% 39% 6% 2% 0% 4% 0% 10% 2% 8% 25% 35% 68% 25% 67% Total 17% 27% 68% 72% 74% 75% Table 1 Group A Schools with football in Bowl Subdivision (formerly Division I-A) Group B Schools with Football in Championship Subdivision (formerly Division I-AA) Group C Schools without football (formerly Division I-AAA) Source: NCAA, The Second-Century Imperatives: Presidential Leadership Institutional Accountability FY06 19 of 119 Football Bowl Subdivision Schools had a positive net profit without institutional subsidy. FY05 18 of 119 Football Bowl Subdivision Schools had a positive net profit without institutional subsidy. FY04 18 of 119 Football Bowl Subdivision Schools had a positive net profit without institutional subsidy. 3 Year Period 16 of 119 Football Bowl Subdivision Schools had a positive net profit without institutional subsidy. FY06 67 of 119 Division 1A schools had positive net profit from Football. FY06 68 of 119 Division 1A schools had positive net profit from Men s Basketball. FY06 Institutional Support for Division 1A Athletics Programs averaged 26%. FY04 Institutional Support for Division 1A Athletics Programs averaged 19%. 3 Year Period Institutional Support for Division 1AA (FCS Football) Athletics Programs averaged 76%. 3 Year Period Institutional Support for Division 1AAA (no Football) Athletics Programs averaged 80%. FY06 Football Programs with a Surplus = 67 of 119 FY06 Football Programs with a Deficit = 52 of 119 Average Surplus = $8.8 million Average Deficit = $2.5 million FY06 Division 1A Athletic Programs with a Surplus = 19 FY06 Division 1A Athletic Programs with a Deficit = 99 Average Surplus = $4.3 million Average Deficit = $8.9 million Source: USA Today May 16, 2008 Page 3

4 NCAA Division I Proportion of Revenue From Various Sources FY2003 Group A Group B Group C Ticket Sales 27% 6% 7% Marketing/ TV etc. Alumni Contributions Postseason and Bowls Allocated Funds* 26% 11% 10% 18% 8% 7% 12% 4% 4% 18% 70% 71% *Allocated funds include institutional support, student activity fees and direct government support. Table 2 Group A Schools with football in Bowl Subdivision (formerly Division I-A) Group B Schools with Football in Championship Subdivision (formerly Division I-AA) Group C Schools without football (formerly Division I-AAA) Source: NCAA, The Second-Century Imperatives: Presidential Leadership Institutional Accountability The data identifying the two dozen institutions with net revenues do so without accounting for depreciation. Under generally accepted accounting principles, however, depreciation of athletics facilities should be deducted to determine a true profit. While we do not have data to know the exact number that would still report net revenues if depreciation were included, we estimate it would be fewer than 10 institutions of more than 1,000 member colleges and universities (Brand, 2006, page 18). It is important to note that academic units at Oregon State University benefit from fund raising for athletics. From fiscal years 2001 to 2008, Oregon State University donors gave over $125 million to intercollegiate athletics. During this same period, over half (55%) of those Athletics donors made gifts to academic units within the institution totaling $106 million. In addition, we estimate that Oregon State University athletic events brought $27 million to the Corvallis community in fiscal year While the Task Force recognizes that institutional investment in athletics is completely appropriate, there is a limit to how much can be subsidized without threatening the academic mission and values of the university. Indeed, the Task Force recommends elimination of the Division I philosophy statement that encourages athletics to be self-sustaining. While the language of the philosophy is mild and one could argue even sound policy for athletics as well as other departments on campus the effect has been an unrealistic expectation for athletics to meet its own bottom line in a manner that has pushed the enterprise away from the university, created an unhealthy atmosphere of autonomy and in some cases activated a level of commercial collaboration outside the values of higher education (NCAA, 2006, page 11). 7. Financial Controls Dashboard indicators may be used for a general comparison of performance and, in the case of university presidents and governing boards, as an early warning system to indicate emerging difficulties in program performance and management. While the indicators may not lead to specific institutional actions, they may help presidents and boards view athletics more broadly and strategically. Among the dashboard indicators to be provided are: - Athletics expenditures as a percent of institutional expenditures; - Total athletics revenues and percent change from the previous year; - Allocated revenues as a percent of total athletics revenues; - Allocated revenue increase as a percent of university revenue increase; - Athletics debt service as a percent of total athletics expenditures; and - Athletics expenditures for salary and benefits, participation and game expenses, facilities and administrative support, debt service and other as a percent of total expenditures (NCAA, 2006, page 26) Page 4

5 Intercollegiate athletics must be fully integrated into the academic mission of universities and colleges. Academics must come first, and the success of student-athletes, both on and off the field, must be the defining characteristic of college sports (NCAA, 2006, page 32-33). Primary control over all academic advising should be vested in the institution s chief academic officer. While institutions may choose different means to that end, in general, academic advisors should report directly to the university office of academic affairs, which provides for direct control of academic advising of athletes on campus (NCAA, 2006, page 33). In many respects, intercollegiate athletics has played a primary role in hurdling racial and gender barriers for students on the fields and courts (NCAA, 2006, page 36). The mission of universities is education, broadly understood, and college sports must serve that mission. Intercollegiate athletics is not a freestanding, autonomous enterprise located in close physical proximity to a university. It must be both in principle and in fact as richly integrated with the rest of the campus as each of the other components. The overarching mission that unites all institutions is a desire to provide students (student-athletes and others alike) with the most complete, well-rounded and comprehensive education possible (NCAA, 2006, page 37). See Appendix A for unpublished Oregon State University Dashboard Indicator information. Page 5

6 APPENDIX A DASHBOARD INDICATOR SUMMARY OSU PAC %TILE PAC %TILE PAC %TILE COMMENTS NCAA SPONSORED SPORTS NCAA GSR 75% 76.50% NCAA APR TOTAL ATHLETICS REVENUE 52,471,427 49,747,118 57,191,942 62,352,299 GENERATED REVENUE/TOTAL REVENUE % 73% 75.30% 88.50% 97.80% ALLOCATED REVENUES/TOTAL REVENUE % 27% 2.30% 11.50% 24.80% REVENUE SELF SUFFICIENCY 70% 78.30% 92% % NET REVENUE ($2,439,261) ($24,247) $252,872 $2,711,555 RELIANCE ON FOOTBALL REVENUE 71% 39% 45.50% 59% RELIANCE ON MBB & WBB REVENUE 9% 10.50% 13% 16.30% TOTAL EXPENDITURES $ 54,910,688 47,965, ,871,549 62,225, ATHLETIC STUDENT AID % 12% 13% 15% 17% SALARIES AND BENEFITS % 26% 29.80% 33% 37.50% COACHES COMPENSATION % 14% 14.80% 16% 18.50% ADMINISTRATIVE COMPENSATION % 12% 12% 16.50% 18.30% SEVERANCE PAYMENTS % 0% 0% 0% 1.30% PARTICIPATION AND GAME EXPENSES % 22% 18% 23% 25.30% FACILITIES MAINTENANCE/ADMIN SUPPORT % 27% 9% 11% 16.30% MISCELLANEOUS EXPENSES % 13% 12.50% 16.50% 19% ATHLETICS EXPENSES / STUDENT-ATHLETE $ 123, , , , ATH. EXPEND./INSTITUTIONAL EXPEND. % 8% 2% 4% 5% ATHL. EXP. RATE OF CHANGE VS. EXP. RATE OF CHANGE % -9% -3.80% 3% 38.30% ATHLETICS DEBT/ATHLETICS EXPENDITURES % 158% 6% 22.50% 80% ATH. DEBT SERVICE/ATH. EXPEND. % 10% 0.80% 2% 4.50% ATHLETICS DEBT/UNIVERSITY DEBT % 31% 0% 1% 11% RETURN ON CAPITAL % 17% INCLUDES DEPRECIATION/DEBT SERVICE/CAPITAL GIFTS INCLUDES STUDENT FEES & DEPRECIATION Page 6

7 References & Notes Brand, Myles. (2006, November 13). Response letter from NCAA President to Congressman William Thomas. National Collegiate Athletic Association (NCAA), Presidential Task Force on the Future of Division I Intercollegiate Athletics. (October 2006). The Second-Century Imperatives: Presidential Leadership Institutional Accountability. Oregon State University. (October 2008). Department of Intercollegiate Athletics. Oregon State University. (October 2007). Office of Institutional Research. Cohort fall 2001 graduation rates, average SAT scores, and average GPA are unofficial estimates. Page 7