Tag Archives: sports

Department of Education Athletic Program Data Continued

Posted on January 12, 2011 | Leave a comment

I’ve had way too much fun breaking down this data (even though it’s missing some break-downs that I would really like to get at).

Average Revenue for 2009-2010 for the Top 10 Revenue Athletic Programs was $112.9 million dollars (st dev $15.4 million).  Average expenses for these same top 10 programs was $94.9 million (st dev $11.3 million).  Average profit was $13.1 million dollars.  Here’s a graphic breaking down the revenue vs expenses for these top 10 programs.

Jumping back to the group that I mentioned in a previous post…I also plotted Participants vs revenue (the two that are way off the best fit line are UT Austin (high end – $256,348 per athlete) and Yale (low end – $43,424 per athlete)).  The teams that lie above the best fit line are outpacing the revenue per participant average and the ones below the line have less revenue per participant in athletics.  Average revenue per athlete is $122, 256

Also plotted participants vs expenses (theoretically the programs that are spending the money that they have well and are more efficient).  This graph should be the opposite, with the programs that are using their money well being the lowest end and the programs that are spending more per athlete being the higher end.  Incidentally, Texas ($203,486) is the highest in spending per athlete and Yale ($42,671) is the lowest.  Average expenses per athlete is $113, 577.  Average Profit per athlete is $8,679.

I have some data that I’ve crunched on revenue and expenses vs enrollment, but frankly I don’t find it that compelling.  A few take home messages from this data.

1) Aside from the truly big boys, the money that is made by the school on sports and spent on sports does have some correlation to the size of the athletic program.

2)  However, there are some outliers that follow the rule of “if the money’s there, we’re spending it.”  The outlier on the low end is Yale and Yale does not offer athletic scholarships.  It’s not clear how this is added into the data.  Most of the real outliers are on the high end.

3) To state the above differently, making money on your athletic program does not mean that money is going back into the school at a higher rate (even though this is true to a certain extent).  The data actually says that if you make more money, you’re likely to SPEND more money on athletics.  I’m not sure if this is reflective of the old axiom that you must spend money to make money, but I have read some articles that say that athletic spending is always a precursor to athletic success and pays off in the long run.

4) Going back to the Top 10 data, I think Univ of Alabama is fascinating (#2).  Their revenue is ranked 2nd, while their expenses are more in line with the 6th and 7th ranked programs in revenue (Univ of Mich Ann Arbor and Penn State, respectively).  It makes me wonder what they’re doing differently or if their data is wrong.

There are a couple things missing from this data.  They don’t break out football, but I do plan on reviewing the revenue andexpenses for men’s and women’s sports.  Also, as I talked about in several previous posts, many of these programs are receiving state money as well as student fees to support their programs (blech), but this data doesn’t make it clear (at least that i’ve seen so far) what those numbers are.  Hopefully Department of Education has shared this data somewhere (but I doubt it, damn Enron-ian accounting.)

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Book Review: Moneyball – The Art Of Winning An Unfair Game

Posted on April 24, 2010 | Leave a comment

Moneyball presents itself as a book about baseball and it is.  It’s a book about a baseball team, more specifically the Oakland Athletics.  But more importantly, it’s a book about how to make decisions and how to find an advantage in a world that is consistently unfair and unreasonable.  The unreasonable nature of this world, though, can be exploited by those who are reasonable and can use the power of information so that those individuals or groups can outperform those with more resources.  This is, in essence, the story of the Oakland Athletics.

Essentially, the Oakland Athletics used data mining, research and in-depth analysis to purchase players that other teams wouldn’t.  The other teams wouldn’t because they didn’t understand how good these players actually were.  What Oakland had discovered was a deficiency in baseball where statistics that didn’t make sense were used to measure player’s ability and scouting was largely based on subjective judgments rather than an analysis of what actually wins games.  The Oakland approach was to focus on players that got on base more often and to not squander outs with things like stealing bases or “sacrifice” hitting while other teams focused on flawed stats like RBIs and paid little attention to wasted outs.  They used this statistical approach to try to combat one glaring problem – they had no money.

Baseball is inherently a screwed up sports league because of the inherent inequity of it’s financial system.  Many leagues try to combat this inefficiency by creating a cap on team salaries or luxury taxes to allow the teams that make less money to compete financially.  Baseball doesn’t even attempt to combat the problem; in 2010, the highest payroll team in baseball, the New York Yankees is 6 times higher in payroll than the lowest salaried team, the Pittsburgh Pirates (keep in mind this is for the same number of players).

Oakland’s salary was approximately 1/5 of the Yankees during the period in which Moneyball was written, but they managed to win nearly the same amount of games because of their ability to exploit the information available.

So, here’s my question to you….we all work in different financial situations…if you find yourself in a financial situation that is more challenging than your competitors (or colleagues), what can you do to emphasize the things you can do well or to make yourself better regardless of your constraints?  Information is available in droves to those willing to work hard enough to obtain it.  There’s no reason we can’t use information to kick ass at our jobs wherever we work.  We’re only limited by our work ethic and our ingenuity in using that information.

If you need a swift kick in the ass, read Moneyball.  I guarantee it will make you think about the way you do business.

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College Athletics: Beer and Circus

Posted on November 3, 2009 | 5 Comments

Here’s the main reason I know that college athletics would never go the way of the dinosaur: schools use their athletic programs to draw students.  Someone on Facebook mentioned that they thought that schools used sports as a revenue stream; as I showed yesterday, this is not true.  It’s much more nuanced than that and it’s all about applications and thus tuition as a revenue stream.  If you know much about finance in colleges today, the revenue stream of student tuition is increasingly more powerful in the money pot.

Here are some numbers from a paper published by a VT professor: co

“College basketball teams that make this year’s cut for the Sweet 16 may boost the number of students applying to their schools by as much as 3 percent next year, while the winner of the NCAA basketball tournament, often called “March Madness,” may see a 7 percent to 8 percent jump in applications, according to a Virginia Tech researcher.

Pope combined data from the Peterson’s college guide, which records information about the incoming freshman classes of 330 NCAA Division I colleges and universities, with information on how well these schools did in football and basketball each year from 1983 to 2002. According to the study, the 64 schools that make it into the NCAA basketball championship tournament have a 1 percent increase in student applications the next year, schools in the Sweet 16 have a 3 percent increase, the Final Four have a 4 percent to 5 percent increase, and the championship winner has a 7 percent to 8 percent increase.

In addition, colleges and universities with football teams in the top 20 have a 2.5 percent gain in the number of student applications the next year while teams in the top 10 have a 3 percent gain. Schools that win a football championship see a 7 percent to 8 percent jump in applications. For each school, the spike in the number of applications due to basketball or football success continues for several years before returning to normal.

“These numbers tend to be larger for private schools than for public schools,” Pope said. “For example, private schools in the Sweet 16 see a 4 percent to 5 percent increase in applications compared to a 2 percent to 3 percent increase for public schools.”"

Translation: you win, you get more applications.  More applications (in theory) equals higher enrollment.  Higher enrollment equals more dollars.

In the book “Beer and Circus”, Murray Sperber compares college athletics to Roman gladiatorial contests (more on this later in the week), saying that the sports program is used to distract students from the fact that undergraduate education has declined in quality.  He also explains that big time college sports connect deeply with a culture of binge drinking.

On a personal level, I’ve certainly seen this in action with students and I’ve never been at a school that had a truly elite athletic program.  I can see how the attitude of students at a school with consistently top-ranked athletic programs would fit under Sperber’s assumptions though.

An education at the University presents bigger and better opportunities for you.

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The College Sports Cash Cow

Posted on November 2, 2009 | 1 Comment

Since I started working at a college, I’ve had a much more difficult time rooting for college sports.  Usually when I tell this to someone, I get multiple bizarre looks, especially from those who know the kind of sports junkie that I am.  If you follow my tweets, you will see a constant barrage of sports tweets during major games but yet I am disinterested by college sports.

I wanted to spend a few posts explaining myself as well as asking some pertinent questions about college sports.

I’m still digging into and learning the numbers but here are a few figures…

The NCAA makes $600 million on their current contract for the college basketball tournament in the spring.

A report from the Indianapolis Star in 2006 found that “athletic departments at taxpayer-funded universities nationwide receive more than $1 billion in student fees and general school funds and services, and that without such outside funding, fewer than 10 percent of athletic departments would have been able to support themselves with ticket sales, television contracts and other revenue-generating sports sources. In fact, most would have lost more than $5 million.”

Here was one particular school’s line from the budget report:

University, Total Total % of operating
Student government outside operating revenue from Reported Adjusted
fees support support revenue outside support Bottom line bottom line
Virginia Tech 5,840,958 324,469 6,165,427 45,730,485 13% 8,265,356 2,099,929

If you’re not into finance, those numbers might be a little difficult to make sense of, but essentially the critical part to notice is that this is a CASH COW football program that is staying afloat largely on student fees.  Most NCAA (or NAIA) programs have nowhere near the potential to generate revenue that most of these programs do.

Now some of you might say, “that’s not so bad”.  But is it?  What are the educational/learning outcomes of athletics for students?  Is collecting 6 million dollars in student fees (at VT, this is essentially $200 per student) a wise use of student funds?

For the athletes, while many of them receive scholarships, their time is often FAR more invested in their sport than in the classroom (especially in the revenue generating football and basketball).

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