How Much Do Football Wins Pay Off for a College?

(Photo: Matthew Tosh)

An NBER paper by Michael L. Anderson looks into the how a university’s football performance affects its academic performance:

Spending on big-time college athletics is often justified on the grounds that athletic success attracts students and raises donations. Testing this claim has proven difficult because success is not randomly assigned. We exploit data on bookmaker spreads to estimate the probability of winning each game for college football teams. We then condition on these probabilities using a propensity score design to estimate the effects of winning on donations, applications, and enrollment. The resulting estimates represent causal effects under the assumption that, conditional on bookmaker spreads, winning is uncorrelated with potential outcomes. Two complications arise in our design. First, team wins evolve dynamically throughout the season. Second, winning a game early in the season reveals that a team is better than anticipated and thus increases expected season wins by more than one-for-one. We address these complications by combining an instrumental variables-type estimator with the propensity score design. We find that winning reduces acceptance rates and increases donations, applications, academic reputation, in-state enrollment, and incoming SAT scores.

By winning five games, Anderson estimates that a school could expect donations to increase by as much as $682,000:

For FBS schools, winning football games increases alumni athletic donations, enhances a school’s academic reputation, increases the number of applicants and in-state students, reduces acceptance rates, and raises average incoming SAT scores. The estimates imply that large increases in team performance can have economically significant effects, particularly in the area of athletic donations. Consider a school that improves its season wins by 5 games (the approximate difference between a 25th percentile season and a 75th percentile season). Changes of this magnitude occur approximately 8% of the time over a one-year period and 13% of the time over a two-year period. This school may expect alumni athletic donations to increase by $682,000 (28%), applications to increase by 677 (5%), the acceptance rate to drop by 1.5 percentage points (2%), in-state enrollment to increase by 76 students (3%), and incoming 25th percentile SAT scores to increase by 9 points (1%). These estimates are equal to or larger than comparable estimates from the existing literature.


Steve

I would like to see if there is any evidence that going to a school with a successful athletics program will increase your chances in obtaining a job. My hypothesis would be that if an applicant attended an Ohio State-type school with a big name and big athletics program that they might have a better chance in obtaining a job than someone that attended an unknown school.

As there been a study done on this topic?

Elvis

My entirely unscientific answer is yes. I got my current job based on nothing more than sharing an alma mater with my boss, and the fact that it is a big time football program certainly fuels the sense of pride among alumni. I've known a few other people who have worked out similar deals.

Mattski

The authors wisely draw no moral from their data. :)

Lars

What about the other side? How much more money is spent on facilities, coaching staffs, recruitment, etc. in order to increase a team's season win total by 5 games?

gevin shaw

There are reasons to have an athletic program at university. Making money is not one of them and footbal is the most expensive of them all. This article mentions that 43% of NCAA school lose money on their football programs.

http://online.wsj.com/article/SB10001424052702304743704577382292376194220.html

Almar Scump

Amen to that! Great article. It was time for somebody to spell it out.

Scott

I'd like to see data on the financial impact of a successful athletic program on academic fundraising... when donations go back into athletics, it doesn't necessarily follow that monies are freed up to support the academic mission of the host institution.

Additional data on the impact of athletic success on financial factors such as the discount rate offered to students would also be interesting to see.

Caleb B

It could work to hurt the reputation of a school too. The old Convict U - Miami Hurricane football comes to mind.

I think this really applies to state schools. Vanderbilt doesn't need winning football to have national respect, but a school like Alabama does.

James

Err... Does Alabama in fact have national respect? Outside of the college football universe, that is. Seems to me that having a serious athletic program actually detracts from a school's academic reputation.

caleb b

Echoing Erik Dallas - by national respect, I mean, when you apply for a job, people have at least heard of your school.

If I went to the city of Boston with a degree from Tabor College, well, no one has ever heard of that school, so my resume goes in the trash. But Boise State? Well, at least they can talk about football in the interview, right?

Since the biggest football programs are net money winners (by a long shot), it doesn't matter what the academics are. Some can balance both though: Stanford, USC, Notre Dame (jokes aside), Texas, Michigan, etc.... not all, but some.

Mitchell

Is the inverse true: do additional losses result in academic losses?

JSN

Heisman Trophy winners vs Nobel prize winners might be relevant.

Counselor

Wish I could see this entire paper without having to purchase it. I wouldn't mind seeing the research with how they came up with these numbers. Of course applications will go up when a school (any school) receives national attention. It is the best form of marketing. I've seen it happen first-hand. Athletic donations will go up as well, as alums and donors want to reward a job well done.

In saying that, the acceptance rate dropping, in-state enrollment increasing, and SAT scores increasing are all things that I would argue have no noticeable tie to a winning season. Anytime application numbers go up (for any reason), of course the acceptance rate will drop slightly. That has nothing to do with football wins, but rather being able to house students on campus. In-state enrollment increases can be attributed to several things, the most noticeable being in-state tuition incentives versus students leaving the state and paying an arm and a leg. And finally, SAT scores increasing by 9 points? I can't even attempt to figure out how to make that connection to college football wins.

Read more...

E

What are the additional costs that need to be incurred to win an additional 5 games, as asked before? I suppose in order to tell if these costs are worthwhile, the non-monetary benefits (lower acceptance rates, higher enrollment, higher incoming SAT scores, etc) would have to be monetized. Has/can this be done?

Bill Ogorodny

Football should not factor into a students desire to attend a university. Look at what happened at Penn State when football became top priority.

David

$682,000, total, for 5 wins? That's nothing! It costs millions upon millions to go from stinking to being a winning college football team. The head coach's salary alone is going to millions of dollars different; nevermind, facilities, training, coaching staff, scouting...

DeAndra

Hi can i speak with you in a private setting? Looking to get some education on how you came up with those figures. I'm looking to figure out how much money universities loose when student athletes become in-eligible or when they fall below the academic guidelines and get sanctioned of fined.

Can you shoot me and email?