Data Study: FBS Football is key tool to help many schools meet state funding cuts. Scholarship
Stats.com

 

What if college football actually generates significant "hidden" profits at many schools that operate FBS programs, and these profits don't go to the athletic department but directly to fund the schools core education and research programs?

 

We did a 10 year statistical look at the percentage of in-state versus out of state incoming freshmen classes at NCAA I public schools. We specifically compared the 10 year trend between NCAA I public schools that operated FBS programs and NCAA I schools that did not operate a football program. Take a look at these stats:

 

 

  

 

NCAA I Public Schools with:

FBS Football

No Football

# of Schools

107

45

% of Out-of-State Students - 2012

21.6%

9.3%

% of Out-of-State Students - 2002

18.0%

9.1%

Increase in Out-of-State Student %

20%

2%

 

     Sources: US Department of Education, Scholarship Stats.com       

 

 

The percentage of out of state students increased at FBS schools by 10 times the increase at NCAA I non-football schools. Why is this significant? Out of state tuition is generally about 3 times the in state rate at most schools, and since the costs of education (i.e. professor salaries, facility costs, etc.) remain the same no matter where the student is from, the out of state tuition differential goes straight to the school's bottom line. Take a look at the results for these three prominent FBS schools:

 

University of

Ohio State

University of

% of Freshman Class

Alabama

University

Oregon

% of Out of State Students - 2002

23%

14%

29%

% of Out of State Students - 2014

64%

30%

48%

Increase in Out-of-State Student % 2002-14

178%

114%

66%

Annual Tuition: In-State

                  10,170

                    10,037

                       10,287

Annual Tuition: Out-of-State

                  25,950

                    27,365

                       32,022

Out-of-state tuition differential per student

                  15,780

                    17,328

                       21,735

Out-of-state tuition differential - freshmen

 $       44,057,760

 $        19,459,344

 $            16,083,900

Out-of-state tuition differential - 4 year total

 $     176,231,040

 $        77,837,376

 $            64,335,600

 

 

Additional revenue due to the increase in Alabama's out of state student percentage is $ 44 million for just the incoming (freshman) class. Assuming a stable student retention rate, the total undergraduate increase would be in the range of $ 176 million per year, or enough to pay Nick Saban's coaching salary for the next 30 years or so.

 

A couple of caveats: first the increase in revenue is before scholarships and other financial assistance granted by the school; however this aid is given to both in-state and out-of state students, and the key number we're looking at is the in-state versus  out-of state tuition differential.

 

And obviously football isn't solely responsible for the large increase in out of state students. But the fact that FBS schools have increased the percentage of out of state students by 10 times the rate of non-football NCAA I schools suggests that football is a major tool for marketing schools to prospective students. Televised football is in good part a 3 hour infomercial for the school, images of the campuses, students, famous alumni, and the free time granted by most networks directly to the schools to highlight their academic and research programs can entice a viewer in say New Jersey to consider Alabama, Ohio State or Oregon as an attractive school. Football is often synonymous with the entire collegiate experience. Mention Notre Dame and many people likely still think of Knute Rockne first, rather than a University with a student body that has average SAT scores in the mid 700's.

 

Most FBS college presidents will say football is integral to promoting the school beyond state lines, and vital in other ways. It joins students together and connects alumni who are most often the biggest donors to the schools general and endowment funds. 

 

But doesn't increasing the number of out of state students mean there are fewer openings for in-state applicants whose families actually pay taxes that support the schools? Absolutely, but due to the cut-back in funding of secondary education in many states, schools need to find a way to plug the gap. Generating additional revenue from out of state students is one way to do this and keep tuition affordable for in-state residents.

 

Proposed cuts in state funding of $ 300 million to the University of Wisconsin school system were in the news recently. If these cuts were actually enacted, one strategy the school will almost certainly take will be to increase the percentage of out of state students enrolled. What would the results be if the school targeted a 50/50 ratio of in-state and out-of state students, roughly equivalent to Oregon's percentage:

 

University of

% of Freshman Class

Wisconsin

% of Out of State Students - Target

50%

% of Out of State Students - 2014

38%

Annual Tuition: In-State

                  10,170

Annual Tuition: Out-of-State

                  25,950

Out-of-state tuition differential per student

                  15,780

Out-of-state tuition differential - freshmen

 $       12,637,625

Out-of-state tuition differential - 4 year total

 $       50,550,500

 

 

Raising the percentage of out of state students to 50% could add roughly $ 50 million per year to the school's bottom line and pay for the proposed $300 million shortfall over 6 years. Since Wisconsin is in the Big-10 which is the largest conference geographically stretching from Nebraska to New Jersey, football would very likely be a key factor in marketing the school to a significant portion of the country.

 

 Alabama, Ohio State and Oregon are all top tier programs, what about the schools that are struggling to keep up in the football "arms race"?  Washington State has been a Pac-12 punching bag for many years, and in 2011 the school hired Mike Leach, a high profile and somewhat controversial coach to run the program. How has the school done since in attracting out of state students?

 

 

Washington State University

% increase 2012-2015

10%

Freshman Increase - out of state

400

Annual Tuition: In-State

                  10,916

Annual Tuition: Out-of-State

                  24,500

Out-of-state tuition differential per student

                  13,584

Out-of-state tuition differential - freshmen

 $         5,433,600

Out-of-state tuition differential - 4 year total

 $       21,734,400

 

 

The tuition differential is pure profit and goes straight to the school's general fund. Again, football is obviously not the sole factor for the increase in out of state students, but university officials will most likely tell you it's a vital tool in marketing the school.

 

What's the downside of not using football to maximum advantage as a marketing tool? Well if the out of state student numbers are reversed, what you see in black becomes red. In the prior example, if WSU had a reduction of 400 out of state incoming students the revenue for the freshman class would fall by over $ 5 million annually, and result in a loss of over $21 million over the 4 year undergraduate span. Only one FBS school (University of Alabama Birmingham) has dropped football in recent years, and this was based off a highly questionable report; the sport was quickly reinstated.

 

The marketing by state schools to attract out of state students is controversial as some believe the schools are abandoning their mission to provide affordable and quality education to state residents simply to get more revenue. However given the widespread cuts in state funding,  the additional support received by increased numbers of students paying out of state rates is needed by many public universities to keep tuition affordable for in-state students. It's simply a reality of today and even for non-profit institutions,  if there's no margin, there's no mission.

 

 

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