Economic issues in Intercollegiate Athletics: A book review essay (*). (Review Article).

The Game of Life and Intercollegiate Athletics challenge presidents, boards, alumni, students, and faculty of the colleges and universities in the United States to rethink the place of athletics in their institutions. William G. Bowen, former president of Princeton University, with coauthor, James L. Shulman, and James J. Duderstadt, former president of the University of Michigan, explore the place of athletics in higher education and reach similar conclusions.

The ancient and noble goal of offering all students opportunities to participate in sports has evolved into an arms race that erodes intellectual focus, imposes a substantial financial burden on the institutions, and reduces participation in intercollegiate sports by all but those specially recruited for specific athletic roles. Professional athletic administrations with full-time coaches, substantial recruiting budgets, and elaborate facilities respond to pressures to win by enrolling students with substantially lower academic qualifications than their peers. The Game documents these changes and evaluates their effects on the kind of students enrolled, the education they receive, and the lives they go on to lead. Although The Game does not consider peer effects, recent evidence (Zimmerman 1999; Sacerdote 2001) implies that the gap between athletes' and other students' academic credentials also diminishes the educational experience of nonathletes. Because the motivation and preparation of other students matte r to an individual's learning, having substantial numbers of classmates whose motivation is sports and whose academic preparation is limited diminishes the amount of learning for the rest.

The pursuit of winning records causes relatively more distortion at our most selective institutions--Princeton and Yale, Stanford and Duke, Swarthmore and Williams. Indeed, as Shulman and Bowen document, because of their relative size, the impact of athletic recruiting is greater at Ivy League and elite private liberal arts colleges and universities than at large public universities. Although only 3% of the men in the University of Michigan's large undergraduate population are on intercollegiate sports teams, this fraction rises to 11% at Duke, 22% at Princeton, and 40% at Williams. An average of 32% of the male graduates of coed liberal arts colleges who entered in 1989 had played on an intercollegiate team, compared to just 9% in Division IA public and private universities. Because total enrollment at selective institutions is relatively constant, many of the places taken by recruited athletes are places that would otherwise have been occupied by students with more focused intellectual aspirations. The gap in admissions credentials between the average athlete and the average nonathlete is so great as to imply that even those nonathletes on the admissions "wait list" are better prepared academically than is the average athlete. Nevertheless, The Game would make its case more forcefully if it were able to compare the academic qualifications of the athletes admitted to the qualifications of the best applicants not admitted.

The Game is based on the Andrew W. Mellon Foundation's "College and Beyond" survey of all graduates of the entering classes of 1951, 1976, and 1989 at 30 selective colleges and universities. There are about 90,000 individuals in the sample, covering 75% of the population. In addition to those noted here, the colleges include Denison, Hamilton, Kenyon, Oberlin, and Wesleyan. Women's colleges include Barnard, Bryn Mawr, Smith, and Wellesley. The private universities include Columbia, Georgetown, Northwestern, Notre Dame, Penn, Rice, Tulane, and Vanderbilt with Division IA athletics and Emory, Tufts, and Washington University (St. Louis) in Division III. And there are four public universities at Division IA in the sample--Miami (Ohio), Michigan, North Carolina, and Penn State.

The findings of this study are so remarkable that they are worth repeating here. Average combined SAT scores of male athletes who entered Division IA public universities in 1989 were 237 points below the all-student average. The gap was even larger--284--at selective private Division IA universities. In the non-athletic-scholarship Ivy League and coed liberal arts colleges, the gaps were less--125 and 135, respectively--but still substantial. Only at the women's colleges have athletes shown academic credentials comparable to their nonathlete peers--at least through 1989.

A difference in academic preparation between male athletes and other male students was already present in the 1950s, but the difference was negligible. The gap becomes substantial in the 1976 cohort, is even larger in 1989, and seems to be still growing in 1999. At one nonathletic-scholarship school in 1976, male athletes were 23% more likely to be admitted than were other comparable students after controlling for SAT score with regression. This admission advantage rose to 30% in 1989 and 48% in 1999. Among female athletes at coed schools, a similar difference is emerging, although a decade or so behind the men. The athletic preference in admissions is dramatic and accelerating.

Graduation rates for athletes are comparable to other students, but the athletes earned substantially lower grade-point averages (GPAs) than other students did. The Game reports regressions to predict GPAs controlling for SAT scores, rank in high school class, and more. It finds that athletes earn grades well below forecasts. This suggests a culture of athletics that drives athletes' academic performance even below the lower-than-average level of the forecasts. The disappointing academic performance of intercollegiate athletes does not seem to be caused by the extensive time commitment to their sports. Students involved in other time-consuming activities--editing the newspaper or serving as a student government officer--do not suffer the same academic penalty for time commitments similar to athletics.

Male athletes relate increasingly to their coaches and less frequently to faculty. They major disproportionately in the social sciences (primarily in economics at the College and Beyond institutions that typically do not offer an undergraduate business degree). They disproportionately view financial success as a primary goal in life. At one Ivy League university, 54% of high-profile athletes (football, basketball, and ice hockey) majored in economics and political science compared to just 18% of male students at large. The isolation of athletes from other students is pervasive and growing.

The percentage of male athletes pursuing careers in financial services has been rising steeply, even though the academic performance of former athletes has been declining. Former male athletes earn higher incomes than their classmates in spite of their weaker credentials at admission and underperformance as students. This appears to be caused by the preference of former athletes for jobs in the financial services sector, which pay well.

It appears that former high-profile athletes can exploit some of their celebrity by marketing financial services. It would be interesting to see the results of a regression analysis comparing the earnings of former athletes to forecasts. Even in the simple averages, athletes earn no more than nonathletes outside the financial services industry. It would be even more interesting to compare the return on investment portfolios of comparable risk sold by former athletes to other portfolios. Do customers of financial services pay to associate with former athletes?

Because graduates' earnings are not related to the number of years a former athlete competed, they do not seem to be affected by learning "teamwork," "competition," "dedication to a goal," or anything else as an athlete. At least the marginal product of such learning appears to be zero after the first year. The authors note that an earnings advantage related to the fact of participation rather than the duration of participation may be due more to selection than to treatment effects.

There is considerable evidence that female athletes are tracing the path of male athletes, except for the concentrated interest in the social sciences and pursuit of careers in financial services. Female athletes at coed schools show a gap in SAT scores relative to their classmates, and the gap was larger in 1989 than in 1976.

Although former male athletes rate themselves higher in leadership talent than do other students, their subsequent record as business or civic leaders is modest. Athletes are no more likely to become CEOs than are nonathletes. In those civic areas where former athletes do contribute an extra measure of leadership, for example, in college and university alumni affairs or as members of institutional boards, they bring a distinctive set of values favoring sports that diverge from the views of the vast majority of graduates.

Average alumni of the selective colleges and universities believe that there should be less emphasis on intercollegiate athletics. Surprisingly, the strongest desire for a deemphasis of athletics comes from the graduates of the Division IA public universities--Penn State, Michigan, North Carolina, and Miami (Ohio). Most colleges and universities, however, are moving in the opposite direction in terms of recruiting athletes and ceding admissions authority to coaches. Not surprisingly, former athletes at every type of institution are more inclined to favor increased emphasis on athletic programs than are students at large.

Male athletes who graduated 50 years ago make more unrestricted gifts to their alma maters than do their classmates. This tendency, however, has been sharply reversed for more recent graduates. Athletes who attended these schools in the 1970s contribute substantially less than their classmates; the difference is most pronounced for the athletes who played high-profile sports at Division IA programs. This shift may be related to the increasing professionalism and isolation of male athletes from the general student population, so that their connection to and affinity for the institution at large is diminished.

There is no evidence that winning in the high-profile sports promotes giving by alumni. There is no connection between football won-lost records and the general giving rates for any group of donors who did not play college sports. The giving rates of former athletes are related to the subsequent athletic fortunes of their schools, but since the 1970s former athletes have been less generous alumni than other graduates, and so the financial gains from winning via alumni support are diminishing over time. Graduates who make the largest gifts to their alma maters favor a deemphasis of sports. Colleges and universities probably would receive more total philanthropic giving from alumni in the future by recruiting fewer athletes and more students with stronger academic records.

Corroborating the reasoning and empirical analysis of Zimbalist (1999, chap. 7), both Duderstadt and Shulman and Bowen conclude decisively that college sports do not make money. Most institutions make substantial annual contributions from general funds to support athletic department operating budgets. Capital Costs for facilities add to the financial burden. Once the capital costs of athletic facilities are considered, even the most successful of big-time athletic programs show no financial "profit." Duderstadt suggests that great success makes the financial position worse. National championships seem to raise expectations and costs much more than they increase revenues and so expand the financial burden. Expenditures grow to consume all the revenue and then some. Taxpayers and students in general subsidize intercollegiate athletic programs but seem to be unaware of their largess.

The Game distinguishes the high-profile sports for men--football, basketball, and ice hockey--from the low-profile ones. Indeed, Shulman and Bowen report some information by sport. The high-profile sports draw the largest crowds and publicity, generate some revenue (particularly in Division I), and have a relationship to professional leagues in training players as well as in the public mind. The high-profile sports, particularly football, are most expensive. The pursuit of high winning percentages in football drives up spending on facilities, coaches, and recruiting while incurring the largest sacrifice of academic goals. The operating budgets for football programs in Division I averaged more than $5 million in 1997-1998, exclusive of scholarships. The Ivies averaged $950,000 to operate each football program with no earmarked financial aid allocated. The coed liberal arts colleges averaged $150,000 for football operations.

The quest for higher status through higher spending permeates all the sports. The Greek ideal of a sport for everyone has become perverted in the low-profile sports, where the focus on winning now fills nearly all the slots on the teams with recruited athletes who have pursued their sport single-mindedly from a young age, leaving no opportunities for a "walk-on." Fulltime coaches in dozens of low-profile sports with no revenue and little press attention fill admissions slots allocated to them by their institutions. Little wonder that their athletes show less interest in the intellectual enterprise, play limited roles on campus outside sports, and later contribute less to their alma maters. Nonscholarship expenditure per athlete in low-profile sports averaged about $9,500 in Division I, $4,200 in the Ivy League, and $1,500 in Division III coed colleges. Although the pattern is most pronounced among men, women's sports are headed in the same direction, just a decade behind. The Game also shows that most alumni, including most alumni who were athletes, think that the institutions should deemphasize athletics and increase emphasis on undergraduate instruction. The policy challenge is how to limit the influence of a potent, vocal minority that effectively promotes an expanded role for the campus athletic industry.

The Game describes an enervating quest for position in college athletics. Any college or university that puts in extra resources forces others to respond, leaving the relative athletic positions of the institutions unchanged. The average winning percentage remains at 50%, while all the institutions are worse off financially. Full-time coaches, more assistant coaches, longer trips to away games, Astroturf, better weight rooms, larger stadiums, and year-round recruiting all add expense and increase focus on athletics. Yet these expenditures have little long-term effect on relative rankings (either athletic, U.S. News and World Report, or National Research Council) and diminish the educational experience of other students. The potency and distortions of this positional race might lead one to ask about other positional races in higher education. Do non-need financial aid, the depth of student services, the quality of housing, and the expenditure on recruiting nonathlete students constitute similar competitions th at distort academic efforts? Perhaps future Mellon Foundation projects will address such issues.

One wonders how and if we can ever get intercollegiate sports under control. The Game's policy suggestions focus on university presidents and trustees. They define the missions, control the budgets, and would seem to have an incentive to address the issues. A few very vocal, prominent trustees usually sustain support for athletics. Most alumni, indeed, most alumni who were athletes, and most major donors would prefer a reduced emphasis on athletics. This gives cause for hope.

Sport, however, is deeply embedded in our culture. Cities and states throw hundreds of millions of dollars at the feet of sport promoters. Making countercultural changes will be challenging. The Game relates President Theodore Roosevelt's role in regulating college football in 1905. It is hard to imagine a similar external force holding sway today: The puppy has grown into a full-sized Rotweiler.

Shulman and Bowen's policy prescriptions are similar to those of other critics of college athletics. Nine concluding propositions in The Game call for colleges to reduce emphasis on high-profile sports, eliminate non-need aid in low-profile sports, and move more sports to the club level. In an attempt to offer realistic possibilities to reform collegiate sports, the authors offer little that is likely to make much of a difference, however. Perhaps nothing is possible in light of the prominent roles played on university boards by a few very committed former athletes and the depth to which athletic competition defines personal and institutional identities.

The analysis and recommendations in The Game compare readily with Duderstadt's perspective in Intercollegiate Athletics. He offers insights from his experience in hiring athletic directors, dealing with scandal, and engaging the NCAA and the Big 10 while his University of Michigan teams won many championships. Duderstadt highlights five changes in collegiate athletics that have increased their commercial quality: (i) full-tuition aid for athletes regardless of need, (ii) the expansion of out-of-season practice and postseason play, (iii) unlimited substitution and the two-platoon system in football with its associated cost increases, (iv) first-year eligibility, and (v) the escalation in total compensation of coaches. Duderstadt would welcome efforts to scale back these policy changes of the last 50 years. He particularly urges changes in football and men's basketball that would lead the professional leagues in these sports to finance their own minor leagues just as do baseball and ice hockey. These proposals are in line with the policy ideas in The Game.

Going well beyond Shulman and Bowen in thinking about policy, Duderstadt describes the context for decision making in a manner that reveals the difficulty in securing change and avenues that might bear fruit. He acknowledges that a number of universities have risen to prominence as educational institutions in large measure because of the success of athletics, particularly football. He cites Notre Dame, Michigan State, and UCLA as examples. He characterizes the NCAA and many conferences as essentially captured by coaches and athletic directors. That is to say, the NCAA, fueled by broadcast revenue, has adopted rules that both increase the commercial value of collegiate athletics and the rents earned by coaches and exploit monopsony power (to use the economics term) over athletes. It differs from a professional league only in not paying income taxes on its profit. He relates a number of instances in which prominent coaches and athletic directors have outflanked university presidents by persuading boards of trus tees to side with athletics against presidential efforts.

Duderstadt proposes the appointment of people with strong backgrounds in academics as athletic directors, for example, former deans. He points to the 1996 reorganization of the NCAA that provides a stronger role for presidents. He recommends that university boards of trustees discount the views of those with a single-minded focus on athletics.

Duderstadt's analysis differs from Shulman and Bowen's in several interesting ways. Duderstadt focuses on football and basketball as the source of the commercialization and characterizes lower-profile sports in positive terms. In contrast, Shulman and Bowen argue that overemphasis on low-profile sports has similar deleterious effects for the academy by attracting less able and lower-achieving students on average. Duderstadt focuses on Division IA sports, particularly the 50 universities most frequently seen on national television. Shulman and Bowen, however, indicate that in some respects the athletics problem is even more pervasive in the Ivy League and among distinguished liberal arts colleges, where a larger proportion of the student body is recruited athletes. Duderstadt attributes advantages to athletic participation, including leadership and character building, that do not seem to be substantiated by Shulman and Bowen's documentation of the lives of alumni. The Game, then, shows the problem of intercoll egiate athletics to be even deeper than Duderstadt's sharply critical vision.

Nevertheless, Duderstadt suggests several promising changes that universities might make alone or might successfully promote in their conferences or might advance in response to a future triggering event: (i) locate admissions decisions with academic officers and require an assessment of the full application dossiers for athletes just as for other applicants; (ii) make financial aid awards for four (or five) years instead of annually at the discretion of a coach; (iii) apply the same personnel policies to coaches as to other university staff, with rewards for student academic performance, restraints on conflicts of interest, and lower salaries with expectations of longer tours of employment; and (iv) bring the financial organization of athletics under general university control with an accounting system that makes revenues and expenditures readily apparent and that promotes cost-consciousness in operations.

Recognizing the influence of the entertainment industry and its quest for profit, Duderstadt speculates about events that could trigger a national reorganization of college athletics. He cites a national survey that suggests that 45% of male athletes have gambled while in college and that 5% have bet on contests in which they have participated. A gambling scandal might trigger a reassessment of the organization of intercollegiate athletics. The U.S. Treasury and the courts might find that the NCAA has so little to do with education that it no longer justifies exemption from taxes. The courts might find that athletes are university employees and so are eligible for workmen's compensation, union membership, and freedom from collectively agreed restraints on their compensation. Perhaps such a triggering event will induce enough of the universities' constituencies to rethink the place of athletics and so allow university presidents to better align sports with the central educational mission.

Here are two concrete examples endorsed by Duderstadt that go beyond the policy suggestions in Shulman and Bowen. A return to one-platoon football is attractive to many institutions grappling with overall cost control and the imbalance between female and male athletes that throws them into violation of Tide IX. One-platoon football would also help reduce the value of college football as a training league for the National Football League (NFL). A roster of 45 football players (vis-a-vis the current limit of 85) can sustain a one-platoon game. Yet with the return of first-year teams, as we suggest here, the total participation in college football might increase. NFL rosters are limited to 45 (albeit very well screened) athletes plus a reserve squad of about a dozen, and they play a two-platoon game. The versatile players that would be suited to play on both offense and defense in a one-platoon game are less likely to fit the more specialized two-platoon professional game, and so the NFL might be more likely to develop its own independent training league. The new minor league could encourage players who have modest intellectual aspirations to move directly into semiprofessional training. Making the college game less like professional football would also lower its profile and intrusion into the college life of the players.

As a second example, eliminating freshman eligibility is a realistic possibility. Many readers of The Game and Intercollegiate Athletics will recall a time when freshmen did not play on varsity teams. Freshman ineligibility will divert players who expect to develop quickly into professionals to pursue their sports training in specialized minor leagues because a "year off" from public exposure is costly to someone whose anticipated revenue stream is likely to end by age 30. If more and more aspiring professional players are segregated into separate training leagues, the professionalism of the high-profile collegiate sports may be slowed. College baseball is, for example, much less costly than football and basketball. High school baseball players who find the academic requirements of a college or university of little value are more likely to sign a professional contract and move directly into baseball's minor leagues. With first-year students ineligible for varsity play, schools might reinstitute freshmen teams with much wider participation than in the present environment, where only recruited, varsity players are allowed on the field or in the gym.

Will the great majority of alumni, faculty, and current students who favor reducing emphasis on intercollegiate athletic competition ever find a way to wrest control from the entertainment-industrial complex? Such a move could increase participation in intercollegiate athletics, open opportunities for the almost defunct "walk-on" college athlete, integrate college athletes back into the academic culture of our greatest academic institutions, and improve educational outcomes for all. In the other countries of the world, premier educational institutions do not have semiprofessional, commercial sports complexes attached to their intellectual enterprise. They thrive without the entertainment appendage.

Bowen and Shulman's careful assessment using the College and Beyond data undergirds the importance of significant redirection of intercollegiate athletics, a goal embraced by Duderstadt and others. To start the process toward majority control of college and university athletics in the United States, we recommend that the Andrew W. Mellon Foundation make a modest additional investment in its wonderful College and Beyond project. The Foundation should send these two books to all trustees and regents of the 300 most selective public and private colleges and universities in the country.

(*.) Review at The Game of Life: College Sports and Educational Values by James L. Shulman and William G. Bowen. Princeton, NJ: Princeton University Press, 2001. Pp. xxxvi, 447. $27.95; and intercollegiate Athletics and the American University by James J. Duderstadt. Ann Arbor: University at Michigan Press, 2000. Pp. xvi, 352. $29.95.

References

Sacerdote, Bruce. 2001. Peer effects with random assignment: Results for Dartmouth roommates. Quarterly Journal of Economics 113(2):681-704.

Zimbalist, Andrew. 1999. Unpaid professionals. Princeton, NJ: Princeton University Press.

Zimmerman, David, 1999. Peer effects in academic outcomes: Evidence from a natural experiment. Williams Project on the Economics of Higher Education Discussion Paper No. 52 (November).

John J. Siegfried (+)

Malcolm Getz (++)

(+.) Department at Economics, Vanderbilt University, Box 1819, Station B, Nashville, TN 37235, USA.

(++.) Department of Economics, Vanderbilt University, Box 1819, Station B, Nashville, TN 37235, USA; E-mail [e-mail]; corresponding author.

The authors thank Allen Sanderson, William Shain, Andrew Zimbalist, and the editor for comments on an earlier draft.