Monday, December 23, 2013

Tangibles and Intangibles: Weighing a move to FBS

This from Kristi Dosh at the Business of College Sports:

Indirect Benefits of UMass Football Moving to FBS

Yesterday, I wrote a piece for The Motley Fool (below) about a recent report delivered to the UMass Faculty Senate about the football program’s move to FBS and the related expenses. One of the things I didn’t delve into fully in that piece are the indirect benefits a move to FBS could afford UMass in the future.

Studies have found any number of indirect benefits from increased applications to the ability to grow enrollment to the “advertising effect” of playing football on national television. In my book, Saturday Millionaires, I devote an entire chapter to the intersection of athletics and academics and the studies that have focused on the indirect benefits. Briefly, here’s a rundown of some of the indirect benefits, quoted directly from my book….

Merely having a football team was found by one economist to increase enrollment:
Brian Goff, a professor of economics at Western Kentucky University, included the impact of adding or dropping football on student enrollment in his 2000 study by looking at three schools which added or dropped football. The three schools were Wichita State University and University of Texas-Arlington who dropped football in the mid-80s and Georgia Southern University who added football.
Examining the years 1960-1993, Goff found an average decline of 600 students per year during “no football” years at Wichita State and UT Arlington. In contrast, he found an average increase of 500 students at Georgia Southern after adding football.
Then there’s the “advertising effect,” or rather coverage of the football team that amounts to an advertisement without the athletic department or university having to buy an advertisement:
Goff explores the advertising effect in his study, focusing on instances of coverage in eight leading newspapers. He focuses on Northwestern University and Western Kentucky University during the time period of 1991-1996, which saw Northwestern go to the Rose Bowl and WKU men’s basketball make the Sweet Sixteen and women’s basketball make the Final Four.
Articles about Northwestern increased by a whopping 185 percent during 1995, the football season which ended with a Rose Bowl invite. WKU had a similar experience with articles about the university jumping from “2 or 3 in typical years to 13 and 30 in 1992 and 1993 when the men’s and women’s basketball programs enjoyed atypical successes.”
The study showed it wasn’t athletic success driving the coverage, it was athletics in general. In 1992, 70 percent of the articles written about Northwestern in those publications were about athletics. In contrast, articles related to university research accounted for a mere 5 percent. Fascinating when you consider Northwestern is a leading academic institution.
Of course, success on the football field at the FBS level can an even greater impact:
In a study by brothers and economists Devin G. Pope and Jaren C. Pope, football success in the form of being ranked in the top 20 in the AP Poll was found to increase the quantity of applications to a school by 2-8 percent. In order to achieve that same increase by lowering tuition or increasing financial aid, an adjustment of anywhere from 2-24 percent would have to be made. The study also found finishing in the top ten produced increased applications approximately equivalent to a school’s rank being improved by half in US News and World Report (e.g. 20th to 10th or 8th to 4th).
Other studies have shown increases in applications that allowed universities to either enroll larger classes or become more selective and improve their academic profile. Again, much of that success was predicated upon fielding a winning football team, but some studies did show small benefits from the mere existence of a football program.

Without the benefit of a comprehensive study, and acknowledging it is probably too early in the FBS transition to estimate the impact playing football at a higher level is having on the university, I did find some interesting data on UMass’s incoming classes during the football transition.

For performance measurements, universities measure themselves against “peer institutions.” UMass lists the following as its peer institutions: Indiana University-Bloomington, Iowa State University, Rutgers University-New Brunswick, Stony Brook University, University of California-Santa Barbara, University of Colorado Boulder, University of Connecticut, University of Delaware, University of Maryland-College Park, and University of Oregon.

I pulled admissions data on UMass and its peer institutions from the past couple of years from the IPEDS database. UMass received 5.88 percent more applications last year than the previous year. By itself, that might not mean much, as many universities experience increasing applications each year. However, UMass outperformed its peer group, which had an average increase of 5.29 percent. UMass also saw 22 percent of those students enroll. Although that was static compared to the previous application cycle, it was ahead of the 1 percent downward trend its peer institutions experienced.

Does this mean UMass moving its football program to the FBS level has positively impacted the university through admissions and enrollment? No, it’s far too early to say. However, it’s definitely something UMass and the Ad Hoc Committee on FBS Football will be keeping an eye on as the football program continues to (hopefully) grow.

Next year, UMass will host half of its home schedule at the on-campus McGuirk Stadium, which you would anticipate will increase attendance. For the past two season all home games have been at Gillette Stadium, approximately 95 miles away.

Winning on the field would help, of course. The Minutemen have won just one game in each of the last two years. However, it’s important to note that most schools who have made the transition from FCS to FBS have seen their on-the-field performance decrease.
Below are all of the programs who made the transition from 1978-2010 and their performance through the 2012 season:

School  FCS FBS
Year Transitioned Winning % Wins/Year Winning % Wins/Years
Akron 1987 0.525 5.89
0.346 3.96

UAB 1996 0.615 6.4
0.38 4.42

Arkansas State 1992 0.488 5.71
0.417 4.91

Boise State 1996 0.641 7.44
0.801 10.16

Buffalo 1999 0.363 4
0.243 2.875

Central Florida 1996 0.638 7.33
0.524 6.37

Connecticut 2002 0.487 5.33
0.535 6.54

Florida Atlantic 2006 0.483 5.6
0.336 4.11

Florida International 2006 0.341 3.75
0.342 4.22

Idaho 2006 0.629 7.44
0.313 3.68

Lousiana-Monroe 1994 0.598 6.88
0.371 4.33

Lousiana Tech 1989 0.517 5.64
0.511 6

Marshall 1997 0.579 7.26
0.589 7.33

Middle Tennessee St 1999 0.589 6.71
0.458 5.44

Nevada 1992 0.722 8.71
0.555 6.74

North Texas 1995 0.463 5.18
0.336 3.95

South Florida 2001 0.614 6.75
0.544 6.57

Troy 2002 0.757 9.33
0.491 6

Western Kentucky 2009 0.547 6.16
0.419 5.17

Only Boise State, Connecticut, Florida International, Louisiana Tech, Marshall and South Florida have averaged more wins per year in FBS than in FCS through the 2012 season, proving it’s a, “tough row to hoe,” as my grandmother would say. However, I wouldn’t let that discourage me just yet if I were UMass….

Check back tomorrow as I look at an advantage to playing at the FBS level that UMass can (hopefully) look forward to in the future.

This from the Motley Fool:

Switch to Top Tier a Costly Decision for UMass Football

This season, the University of Massachusetts completed its second season at the Football Bowl Subdivision level, college football's highest classification. It was an important season because it was the Minutemen's last chance to escape probation for low attendance. While UMass did manage to exceed the 15,000 in average attendance per game required by the NCAA, it did so by a small margin (15,830). Unfortunately, it's not the end of the problems at UMass.

An FBS football program like the one in Amherst can only be successful financially if it can generate revenue from ticket sales and contributions. Between the one-win team on the field and a home schedule that had the Minutemen traveling 95 miles to Gillette Stadium for home games, UMass has struggled to generate the revenue it initially projected when it decided to make the move to FBS. Next season, it will attempt to remedy the problem by playing half of its home schedule at the on-campus McGuirk Stadium.

Last week, the UMass Faculty Senate was presented with a report from the Ad Hoc Committee on FBS Football that revealed football expenses continue to outpace projections, leaving the university on the hook for more than originally envisioned. The committee was formed two years ago to keep an eye on the football program's move to FBS and consists of 17 members, including faculty, staff, and students.

Football expenses

The most recent report by the committee highlights just how quickly football expenses are growing beyond initial projections. Those initial projections were made by the athletic department prior to the move to top tier of college football and attempted to project football budgets through fiscal year 2020. Here's a look at how each year has played out for UMass:

FY 2011 - last year before the move to FBS (2010 season)
  • Expenses: $4,379,889
  • Institutional support: $3,157,800 (direct support, student fees, and out-of-state tuition waivers)
FY2012 - first year in FBS transition
  • Projected expenses: $5,428,581
  • Projected institutional support: $4,273,764
  • Actual expenses: $5,983,990 (10% higher than projected)
  • Actual institutional support: $4,967,638 (16% higher than projected)
  • Projected expenses: $6,468,373
  • Projected institutional support: $4,178,794
  • Actual expenses: $6,897,021 (7% higher than projected)
  • Actual institutional support: $4,489,764 (7% higher than projected)
Projections from the athletic department also predicted revenues would exceed expenses beginning with FY2013 and continuing through FY2020. Unfortunately, that hasn't been the case.
  • Actual revenue: $1,995,633 (primarily from two guarantees: Wisconsin -- $900,000, and Kansas State -- $750,000)
FY2014 - includes the 2013 season
  • Projected expenses: $6,918,966
  • Projected institutional support: $4,509,084
  • Actual expenses (based on Nov. 2013 projections): $7,781,217 (12% higher than projected)
  • Actual institutional support (based on Nov. 2013 projections): $5,106,548 (13% higher than projected)
  • Actual revenue (from guarantees and ticket sales): $2,674,669
The football budget portion of the report concluded by saying that the football budget has grown $3.4 million in three years, with financial support from the university and the state growing by $2 million (to a total of $5.1 million when added to support previously provided).

Additional expenses

However, the expenses don't end there. The committee pointed out that other expenses have been incurred as a direct result of the move to FBS for football.

Gender equity: In addition to the expense incurred under the football budget for funding 22 additional scholarships (FBS requires 85, while FCS required just 63), the athletic department had to add additional scholarships for women's sports in order to meet gender equity requirements. Those scholarships for women added $208,470 in fiscal year 2013, is projected to grow to $427,196 this year (when all 85 scholarships for football were phased in), and is predicted to rise to $1.2 million by fiscal year 2020.

Marketing: The office of external relations spent $534,242 on marketing in fiscal year 2013 in addition to the football program's marketing expenses. No doubt much of that was used to try and boost attendance to avoid probation.

McGuirk Stadium improvements: UMass splits its home schedule between the on-campus McGuirk Stadium and Gillette Stadium in Foxboro. The report notes that McGuirk has had little renovation since its construction in 1965. The contract UMass signed when it joined the MAC included a provision about renovations, which were initially estimated to cost $30 million. The current estimate is $36.8 million. The estimated annual debt service, which will be shouldered by the university, is $2.2 million. The university will also pay for annual operating costs once improvements are finished in 2014, which is estimated to be an additional $1 million annually. Accordingly, the committee suggested any analysis of the true cost of football should include an additional $3.2 million per year.

Total cost to the university

The report from the Ad Hoc Committee on FBS Football concludes that the total amount spent on football in the current fiscal year will be $9 million, including the football budget, marketing, student buses, and gender equity scholarships. The football program is projecting revenue of $2.7 million this year from ticket sales, guarantees, contributions, and other generated revenue, leaving the total cost to the university at $6.3 million -- more than double what it spent in the final year of FCS play.

Indirect benefits

All that expense could be worth it to the university, however, if playing in the FBS provides some of the indirect benefits experienced by other programs over the years. The report says, "there remains great uncertainty about intangible benefits or costs associated with fielding an FBS program." Indeed, it is early in the process to estimate the impact playing at the FBS level will have on UMass as a university.

In my book on the business of college football, Saturday Millionaires, I devoted an entire chapter to the dozens of studies I read on the impact a football program can have on a university. While many studies as recently as 15 to 20 years ago found no direct correlation, studies conducted over the past decade increasingly find a football program can have a positive impact on the university in a number of ways, including increased applications, better quality applicants, larger enrollment, greater state appropriations, and even a higher ranking in US News and World Report.

However, most of those studies focused on programs participating in bowl games on national television, finishing in the Top 20 of the AP Poll, or competing for a national title. The Minutemen have just one win in each of the past two seasons.

Historically, schools who've transitioned from FCS to FBS have not seen their on-the-field performance improve. Nineteen teams reclassified from 1978-2010. Those programs experienced a winning season in 64.4% of their seasons in FCS. That number plummeted to 37.2% when they transitioned to FBS.

Based on those numbers, and what we've seen from the Minutemen on the field so far, it's tough to believe UMass will be getting a return on its investment any time soon.
 About Saturday Millionaires:
Last year, Football Bowl Subdivision college football programs produced over $1 billion in net revenue. Record-breaking television contracts were announced. Despite the enormous revenue, college football is in upheaval. Schools are accused of throwing their academic mission aside to fund their football teams. The media and fans are beating the drum for athletes to be paid. And the conferences are being radically revised as schools search for TV money. Saturday Millionaires shows that schools are right to fund their football teams first; that athletes will never be paid like employees; how the media skews the financial facts; and why the TV deals are so important. It follows the money to the heart of college football and shows the real game being played, covering such areas as:
Myth #1: All Athletic Departments Are Created Equal
Myth #2: Supporting Football Means Degrading Academics
Myth #3: College Football Players Could Be Paid Like Employees
Myth #4: Football Coaches Are Overpaid
Myth #5: A Playoff Will Bring Equality to College Football
Myth #6: Only A Handful of Athletic Departments are Self-Sustaining


Anonymous said...

This discussion is starting to grow tiresome. Obviously, the guy has a book to sell and he puts out some supporting info about athletics but what do we think will happen when we have even more DII and DIA teams going FCS level football competition? The pool of top level talent, revenue and fan support have limits. To me you will roll the dice and maybe end up making some more dough but in the end you will probably just end up with more mediocre teams flooding that level of competition and reducing the fiscal benefits which some currently enjoy. Kentucky gets some nice fat checks as part of the SEC football success of other teams. Adding more teams that are of marginal competitiveness would only seem to be cutting the money pie up into more and smaller pieces for less successful SEC members.

Anonymous said...

I work with high school students everyday and to be honest, when I ask the juniors and seniors about where they are going, I have yet to have any of them tell me Bama, Florida State or Michigan because they have such great football teams. I know this may sound sexist but if we take into account the rising numbers in female undergraduates and decreasing number of male undergrads currently attending college, does it really make sense to argue that football is a great marketing tool for 60% of your admissions who are female. (Again, apologies to female football fans, but I just don't here my high school girls talking about college football much in the fall, much less how it is presence on TV or success on the field is determining their decision to attend a specific university.)