The High Cost of College Athletics and Your Tuition

06/04/2015 01:11 pm ET | Updated Jun 04, 2016

You are an educated student or parent; also be an educated shopper. Be aware that part of the cost of attending college today may be paying for the athletics teams.

To complain about high college tuition is both relevant and popular. College tuition has risen faster than inflation for a generation. For many students and their families, the rise in tuition rates may put access to quality higher education in jeopardy. College tuition is therefore both a public policy issue for the country and a personal issue for students.

The rise in tuition at public universities is a result of many factors. As I discussed earlier, the main factor contributing to increases in tuition at public universities is the reduction in support of state universities by state governments. This reduction has been creating financial stress on public universities for a couple of decades or more.

However, the prospective student would do well to look a little deeper into the subject to see how to shop smartly for her/his educational choice. Since there are many factors that contribute in both large and small ways to the tuition rate, it would be at least of interest to determine how colleges and universities make major decisions that have significant impact on institutional finances.

The recent report from USA Today shines a spotlight on one such set of decisions: how colleges and universities fund athletics. In particular, how do colleges and universities make up the difference between the expenses of athletics and the revenues that athletics programs independently generate?

Raising this question may elicit surprise from students and parents. After all, the popular understanding is that college sports generate high revenue and therefore they must be self-supporting. While the former can be true, the latter is certainly not for the majority of colleges and universities. The recent report (one of a series over the last several years) reveals that all but a handful (this report about two dozen, but over past several years the number was often smaller) of athletics departments in 300 colleges and universities with major sports programs fail to raise enough revenue to operate their sports programs. The vast majority requires a subsidy from the institution.

The high athletics costs come from a number of sources, which is beyond the purpose of this writing to explore. However it is interesting to note that over 70 coaches are paid salaries are in excess of $1 million annually. In most states, coaches at state universities are the highest paid public employees in the state.

The next question is how do most athletics departments fill the gap between revenues and expenses? Students pay the athletics budget directly through special student fees (separate from tuition). Students also pay indirectly through higher tuition. Why? Some form of transfer must occur at most of these institutions from tuition revenues to athletics departments to fund those deficits in the athletics departments. Those particular tuition revenues cannot then be used to hire teachers or support student services or fix classrooms. Or other revenues are used that might otherwise support student services and educational expenses, and thus students end up paying indirectly again. In either case, students support part of the costs of the athletics department budget through their tuition and fees. The greater the deficits of those athletics departments, the higher the tuition and fees must rise.

Many who give to universities would complain that alumni giving support much of the cost of athletics. While this is partially true in some institutions, most departments are still in deficit. It is also true that the needs of the athletics budgets often drive the development offices of major public colleges and universities. What that means in practice is that athletics often gets the first opportunity to ask donors for money (other causes such as student scholarships then come as a lower priority). And when a winning team stimulates greater giving to the institution, the bulk of that giving goes to athletics (and yet athletics budget are still largely in deficit!), not to programs that directly support students like academic scholarships. Therefore, the effect of alumni giving to athletics is not what is commonly perceived. Athletics still presents a financial burden to the remainder of the institution.

For many students and alumni, the athletics teams of the college or university are a large part of their continuing interest in the institution. There is certainly nothing amiss with such enthusiasm. It is a rare person who does not like to root for their team.

However, be an educated shopper. Be aware that part of the cost of attending college is paying for the teams. For some institutions the burden is much less than others. Therefore the pressure of athletics on the tuition you will pay is less at some institutions that at others. If the teams are important to you and you are willing to pay for them (in addition to paying for your education), then may you get what you pay for!