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Topic: Football success and the trickle down impacts

Topic: Football success and the trickle down impacts

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D.A.
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Member Since: 8/6/2010
Location: Georgetown, ME
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Football success and the trickle down impacts

Posted: 7/9/2012 10:24:26 AM

Looks in Steve Hays' direction: (after all, it is only coming from someone at Cal-Berkeley, and everyone knows those guys are just plain dumb)

http://www.bostonherald.com/sports/college/football/view.bg?articleid=1061144129&format=&page=2&listingType=colfb#articleFull

The Few, The Proud, The Bobcats!

And for the record, I hate tOSU, and Ricordati and Torgerson are DB's.

"This isn't just another walkover from the MAC." Kirk Herbstreit, another DB, on College Football Gameday

Paul Graham
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RE: Football success and the trickle down impacts

Posted: 7/9/2012 1:19:30 PM

It looks like this work provides Hays as much ammunition as the athletic department. The author mentions that you "don't want to operate at a deficit" and that the results are modest but statistically significant. Also, it looks like you'll see great fluctuations in some of these metrics as results/expectations on the field begin to change.

But no doubt, Hays should read this paper and should be forced to reckon with its findings. Here's the paper btw, with lots of juicy equations :)

http://www.nber.org/papers/w18196.pdf

Last Edited: 7/9/2012 1:24:27 PM by Paul Graham

L.C.
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RE: Football success and the trickle down impacts

Posted: 7/9/2012 4:10:33 PM

I wonder if the author accounted for TV games as a factor? Clearly there is a value from TV appearances. It is advertising, after all. Would a team that goes 8-5 and is on TV once see the same impact as a team that is 8-5 and is on TV 6 times? What about the win-on-TV factor? Either way, I would presume Ohio should see some impact from last season. They did win, and they were on TV six times, and won all but one.

Ohio should be an interesting case study. If this is a strong year for applications, etc, Hays will have a harder time making his case. If it isn't, he'll have a much easier time.

Last Edited: 7/9/2012 4:38:03 PM by L.C.

�We have two ears and one mouth so that we can listen twice as much as we speak.� ― Epictetus

Paul Graham
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RE: Football success and the trickle down impacts

Posted: 7/9/2012 5:58:38 PM

Here's an interesting paragraph from the conclusion of the paper:

Orszag and Israel (2009) report that a $1 million increase in “football team expenditures” is associated with a 6.7 percentage point increase in football winning percentage

(0.8 games). If we interpret this relationship as causal, it implies that a $1 million investment in football team expenditures increases alumni athletic donations by $109,000,

increases annual applications by 108, and increases the average incoming SAT score by 1.4

points. These effects seem too modest by themselves to offset the additional expenditures.

However, if increases in team expenditures generate commensurate increases in athletic

revenue (another ﬁnding in Orszag and Israel (2009), though a portion of this relationship

is presumably due to reverse causality), then the effects estimated here represent a “bonus”

that the school gets on top of the increased athletic revenue.

This is important. It means that we cannot rely exclusively on donations, applications, etc... to justify running an athletic department at a deficit. The department needs to break even or get VERY close. The donations and the rest should only be viewed as a "bonus".

What would be really interesting is to see the ROI of athletic department expenditures vs. academic vs. facilites or anything else we can think of. Is that 1 million in athletic spending giving us the best return or could we do better?

Last Edited: 7/9/2012 6:04:24 PM by Paul Graham

L.C.
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RE: Football success and the trickle down impacts

Posted: 7/9/2012 10:02:16 PM

I read your quote from that article, and reached a few conclusions:

First Conclusion:
In Knorr's final three years the Bobcats averaged 3.33 wins. The last 3 years they averaged 9 wins. That is an increase of 5.67 wins. If $1 million is supposed to buy .8 wins, then the expected cost of 5.67 wins is $7 million. In trying to find the budgets, I was left with some confusing and incomplete data. I found that In 2008 the total Athletic budget was $20.3 million. In 2010 it was $22.9million. On the other hand, I found this old data that breaks the spending down by sport. In the year in that report $3.8 of the $15 million athletic budget was spent on football, roughly one fourth of the total budget. It doesn't say what year is it for, but with a total budget of $15 million, it may be about 2004 or so.

If that percentage of the total budget spent on football remains at about 1/4, then the budget today is probably about $5.75 million on football. Note, though, that revenue on football is also up since 2004, but let's ignore that for the moment, and just look at costs Adjusted for inflation, the $3.8 million would be $4.6 million. Thus the increased spending on football is about $1.2 million, yet it has produced as much benefit as you'd expect to see if $7 million was spent. Even if the increase is larger than the $1.2 million I calculate, obviously they have done a lot with a little.

Second Conclusion:
The data says that a $1 million addition to spending should produce $109,000 in contributions, 108 additional applications, and an increase in the average SAT score of 1.4. Note that that is for .8 wins. However, given that the football team has actually increased wins by 5.67, that should mean an increase in contributions of $763,000, an extra 756 applications, and an increase in incoming SAT score of 9.8 points. If, in fact the cost was about $1.2 million, and it really did produce these benefits, those benefits alone may justify it. After you factor in revenue increases, it may be a pretty obvious benefit because I would guess that revenue is up by at least $.5 million.

Third Conclusion:
Results matter. If the teams were winning only 4-5 games a year, it would be hard to justify any extra spending. That's obviously part of why non-performing coaches get the boot so quickly.

Final Conclusion:
Its fine to talk about what might happen. What actually has happened? That's where the rubber meets the road. What actually has happened to Ohio's applications over the last few years? To giving? To incoming SAT? How do changes in these compare to other similar institutions? If there is no difference, then those that argue that football produces benefits in these areas are going to have to explain why none is seen. If there is a big jump, then opponents of spending need to consider whether the evidence justifies toning down their views.

�We have two ears and one mouth so that we can listen twice as much as we speak.� ― Epictetus

Mike Coleman
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RE: Football success and the trickle down impacts

Posted: 7/10/2012 12:25:27 AM

L.C. wrote:

LOL. The real reason why all these studies are a joke is they fail to address the #1 reason why sports costs have increased as well as the #2 reason costs have increased at a school like Ohio. The #1 reason is the cost of scholarships. When I went to Ohio, the cost of an education was about $3,000 per year. Now it is nearing $23,000 per year. If you take 85 scholarships, that's an increase of $255,000 to about $2 million per season over the past 25 years from the years of Papa L to the Frank years. It may LOOK like we're sinking tons more money into the football program, but it's like a 800-900% jump JUST TO FIELD A FREAKING TEAM! The #2 reason is the cost of health insurance. It's the same issue that lots of Americans face. The cost of medical care for student athletes has shot through the roof as well. Funny thing is, you could've fired Frank and his staff after year one, hired some bums off the street for free, and dropped to FCS, and the costs for football would still have gone up.

L.C.
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RE: Football success and the trickle down impacts

Posted: 7/10/2012 1:39:08 AM

You are right, Mike, that discretionary spending is up even less because as you point out, most of the costs are non-discretionary.

Also, there is a lot of mis-information floating around regarding fees, and where they go. I bet if you ask students where the money goes that is taken in athletic fees, most people would blame football as a major culprit. If fact the vast majority of the fees are for minor sports, i.e. non-revenue producing sports, mostly wormen's sports, and for non-program-specific expenses, i presume meaning facilities operation. In the year with with the cost break-out, less than 20% of the fees went to football and men's basketball combined.

�We have two ears and one mouth so that we can listen twice as much as we speak.� ― Epictetus

Bobcatbob
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RE: Football success and the trickle down impacts

Posted: 7/10/2012 8:32:10 AM

MC, this same line of thinking comes to mind every time someone brings up dropping to FCS football.
If you do that and drop the cost of the football schollies from the AD's budget, what happens to the pool of funds for other sports, especially women sports under Title IX?

If we're close to being in compliance now does that mean that we could add a few more men's sports in place of football or does it mean that more women's teams get cut as the overall budget drops? Depending on the answer, dropping to FCS likely signals the beginning of a downward spiral in all OU sports..

L.C.
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RE: Football success and the trickle down impacts

Posted: 7/10/2012 11:27:34 AM

Bobcatbob wrote:

...If you do that and drop the cost of the football schollies from the AD's budget, what happens to the pool of funds for other sports, especially women sports under Title IX? ....

Take the more extreme case - suppose you gave up football entirely. If you did, you would simultaneously eliminate most women's sports, as they are no longer needed for Title IX, which would result in a huge savings. If you replaced football with other men's sports, the loss would actually increase as there would be no savings, and a loss of revenue. T

You raise a good point, though. Since the women's sports are necessary in order to have a football team, does that mean that the losses on those women's teams should be charged as a football expense?

�We have two ears and one mouth so that we can listen twice as much as we speak.� ― Epictetus

L.C.
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RE: Football success and the trickle down impacts

Posted: 7/11/2012 12:11:50 AM

The article also didn't look at one other trickle down impact. What impact does a successful football team have on the community? It seems clear that with success also comes increased attendance, and increased fan loyalty, and that is going to mean more money in the Athens economy 6 weekends a year. That in turn should lead to improved relations between town and gown, which would be another indirect benefit. I'm not sure how you value that benefit, but it is clearly beneficial.

�We have two ears and one mouth so that we can listen twice as much as we speak.� ― Epictetus

OhioCatFan
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Location: Athens, OH
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RE: Football success and the trickle down impacts

Posted: 7/11/2012 10:32:34 AM

+1

Being one of the few who is old enough to remember the Bill Hess era, I would have to say that L.C. is right on target here. Back in those days of yore, there was more solidarity between the community and the college. There was an unraveling that occurred during the Vietnam years that has never fully healed. A winning sports program -- especially football and basketball -- can go a long ways toward improving town-gown relationships and creating a sense of "We" rather than "us and them," or to put it more colloquially, "You-uns and us-uns."

Edit: Al, before you inject some political commentary because I referenced Vietnam, let me point out I was simply talking about an historical fact, not making a commentary as to whether the alienation that occurred was right or wrong in an moral sense. And, by the way, I was a student at that time at Ohio and I'm also a Vietnam Era Vet.

Last Edited: 7/11/2012 10:35:48 AM by OhioCatFan

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