Analysis: Washington State’s faculty outraged by proposed subsidy, but the evidence is clear: Winning benefits the entire campus

Washington State’s faculty members are upset with Washington State’s campus executives for attempting to aid Washington State’s athletic department.

The source of their exasperation is a proposed subsidy that would allow athletics to cover an annual expense that falls in the $2 million to $3 million range.

That doesn’t seem like much, and the money wouldn’t come from the academic core.

The plan calls for WSU to divert cash from the university’s auxiliaries services (i.e., housing, dining, etc.) to athletics beginning with the 2021-22 academic year.

Nonetheless, the nerdy older sibling is outraged that the sporty younger sibling is getting a bigger allowance.

Typically, we stay out of family disputes. But not this time, for the lesson applies to every campus in the Pac-12: Invest in football, and when you’re done, invest more.

Let’s start with the specifics of the dispute in Pullman.

In a letter calling for the Board of Regents to “reject” the funding proposal, WSU’s Faculty Senate expresses alarm “that the request will divert $2-3M of University funds annually to subsidize a University entity that is neither essential to the core mission nor self-sustaining.”

That last part is true: The Cougars have cumulative debt that’s approaching $100 million – it’s rooted in facility construction – and, like every program in the Pac-12, are facing a pandemic-related shortfall for the 2021 fiscal year.

But here’s where the Faculty Senate misses the mark:

“There are no data to support the assumption that intercollegiate athletics plays a crucial role in student enrollment and retention to graduation in the WSU system … the totality of the evidence from studies published in the higher education literature does not support broad assumptions about benefits to enrollment and retention from Intercollegiate Athletics.”

Seriously, why not just say the dog ate the homework?

There are, in fact, “studies published in the higher education literature.”

What’s more, there is substantial anecdotal evidence that connects success on the field (or court) to the enhancement of a university’s profile.

We saw that play out for the Cougars in 2018, the year of Gardner Minshew, when they contended for the North Division title and were the Pac-12’s top-ranked team.

The ESPN GameDay visit to Pullman that fall generated more than 400,000,000 impressions on social and broadcast media, according to the university.

An independent market research firm placed the “advertising equivalency” value of that exposure at $5 million.

Across the country, there are myriad examples of the impact winning can have on foundational matters such as alumni donations, applications for enrollment, acceptance rates and enrollment from out-of-state students.

During its run of success under Nick Saban, Alabama has experienced a quadrupling of the number of out-of-state students, according to USA Today, and a comparable rise in the academic profile of the incoming students.

Clemson has experienced a near-doubling of applications for enrollment in the past decade, the state reported.

Those programs are the top of the football heap, of course. But closer to home for WSU, there is anecdotal evidence:

Oregon’s run to the BCS Championship did wonders for the university.

“That season, that game, that experience took what was already a well-known brand and just sort of put it on steroids,” Roger Thompson, the university’s vice president for enrollment management, told the Washington Post in its examination of the impact of winning.

Same for basketball, and same for smaller schools.

The website Higher Ed Dive offered this nugget on Virginia Commonwealth after its run to the Final Four in 2011:

“And while an increase in applications is important, it is the difference between in-state and out-of-state applications that really matters. In 2008, VCU reported that 92% of freshmen were from Virginia. In 2012, that percentage had dropped to 85. This (7%) difference meant almost $3.4 million more in tuition for the school during the 2012-13 academic year.”

More recently, Loyola (Chicago) experienced the March Madness propulsion after its Cinderella run in 2018.

According to Forbes: “Requests for information from student candidates were up 31% from March 1 to April 2 compared with the prior year. Web traffic was up as well, with 91% of visitors being on the site for the first time. Athletic donations also rose sharply, experiencing a 660% increase over the same time period.”

But that’s anecdotal evidence, and our goal is to meet WSU’s Faculty Senate on its turf, with “studies published in the higher education literature.”

Problem is, there isn’t one study – there are two. And we feel compelled to summarize both, so bear with us.

Our first selection was published by the Journal of Sports Economics in 2014 and co-authored by Devin Pope, a professor of behavioral science and economics at the University of Chicago.

Pope titled his study “Understanding College Application Decisions: Why College Sports Success Matters” and drew the following conclusion:

“We find a larger effect of sports success on out-of-state than for in-state students. While a sports victory for a given school may not change the awareness of in-state students regarding its existence, the sports victory may present a significant shock in attention/awareness for out-of-state students.

“For football, the results suggest that ending the season ranked in the top 20 results in a 2% increase in score senders the following year, ending in the top 10 yields a 5.2% increase, and ending as the football champion yields an 11% increase in score senders the following year.

“Overall, our results provide clear evidence regarding a link between college sports success and student applications.

“Using a data set that allows us to identify where a student sends his or her SAT score and an identification strategy that controls for school-specific unobservables, we find that a school which has a good sports year receives an increase in sent SAT scores the following year.

“These increases can be quite dramatic. A school that is invited to the NCAA basketball tournament can on average expect an increase in sent SAT scores in the range of 2% to 11% the following year depending on how far the team advances in the tournament. The top 20 football teams also can expect increases of between 2% and 12% the following year.

“We are also able to explore which types of students are influenced by sports success. Our heterogeneity analysis shows that there is substantial heterogeneity in these results across different demographic groups with Blacks, males, out-of-state students, and students who played basketball and football in high school being more responsive than their demographic counterparts.”

The second study, from National Bureau of Economic Research, was published in 2012 by Michael Anderson, a professor of resource economics at Cal.

Anderson used regression models, the propensity score matching technique, and complicated equations.

So you know his paper, like the one previously mentioned, is serious stuff.

Anyway, Anderson came to the following conclusion:

“For FBS schools, winning football games increases alumni athletic donations, enhances a school’s academic reputation, increases the number of applicants and in-state students, reduces acceptance rates, and raises average incoming SAT scores.

“The estimates imply that large increases in team performance can have economically significant effects, particularly in the area of athletic donations. Consider a school that improves its season wins by five games (the approximate difference between a 25th percentile season and a 75th percentile season).

“Changes of this magnitude occur approximately 8% of the time over a one-year period and 13% of the time over a two-year period. This school may expect alumni athletic donations to increase by $682,000 (28%), applications to increase by 677 (5%), the acceptance rate to drop by 1.5 percentage points (2%), in-state enrollment to increase by 76 students (3%), and incoming 25th percentile SAT scores to increase by 9 points (1%).”

But we didn’t just read Anderson’s 20-page paper.

We talked to him.

Anderson follows football but is not a die-hard fan. He used data from the 1990-2009 seasons, so the study doesn’t account for the massive impact of social media on university branding.

He confirmed what has become clear over the years to academics, to athletic administrators and even to schmoe sportswriters:

The exact correlation between dollars and wins is unknowable.

Would $5 million in additional investment translate to two extra wins per season?

Would $10 million result in a 20% increase in applications?

“It’s hard to tease out causality,” Anderson said.

But if the evidence at hand doesn’t satisfy WSU’s Faculty Senate, that’s only because the bar has been set beyond the reach of statistical modeling.

In the real world, there’s a clear connection.

It’s one that every university in the Pac-12 should recognize: Investment in athletics, and football specifically, can benefit the entire campus.

We’ll finish with this section from Anderson’s study:

“Do these effects imply that investing in team quality generates positive net benefits for an FBS school? Answering this question is difficult because we do not know the causal relationship between team investments and team wins. Nevertheless, we consider a simple back-of-the-envelope calculation to establish the potential return on team investments.

“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.”

Bonus, anyone?