Universities’ sports-money problem

Paul Campos

Yet another prominent university is entangled in a sex assault scandal centered in its athletic program. The story unfolding at Michigan State University is a reminder that, when it comes to higher education in America, money corrupts, and sports money corrupts absolutely.

To understand the goings-on at MSU it helps to appreciate the school’s relationship with its chief athletic rival, the University of Michigan. (I comment on this from the perspective of someone who grew up in Michigan, and who knows many people who attended each school).

Despite becoming a major research university in its own right, many people associated with MSU still harbor an inferiority complex relative to its richer and more prestigious cousin. This is a very common dynamic in American public higher education: younger, less wealthy state institutions tend to constantly compare themselves to their longer-established flagship campus rivals.

An important form of satisfaction for alumni of all types of universities is success in athletic endeavors, especially in the high-profile sports of football and men’s basketball. University administrators know this well, and, for practical economic reasons they cultivate sports-centered alumni loyalties and passions.

MSU’s administration is far from alone in assuming that athletic success is integral to the school’s increasingly elaborate fundraising efforts. Michigan is completing a four-billion dollar fundraising campaign entitled “Victors for Michigan.” (“The Victors” is the University of Michigan’s fight song).

A generation ago, private fundraising was a trivial factor in public higher education. When I graduated from Michigan in 1982, the university’s total endowment was $121 million. This sum produced about $130 per year per student in expendable income. Today, the school’s endowment is nearly 100 times larger: $10.94 billion dollars as of last June.

As recently as 1990, MSU had almost no endowment: the school managed private funds totaling $61.7 million. Today, the endowment is $2.68 billion: a sum that, after adjusting for inflation, would have given MSU the seventh-largest endowment of any university in the country in 1990.

MSU’s Board of Trustees may have been so reluctant to fire President Lou Anna Simon, even as the athletic department sex assault scandal grew, because she excelled at fundraising. During her 14-year tenure, the school’s endowment more than quadrupled, increasing from the 77th to the 33rd largest in the country.

As is the case at so many schools, MSU’s fundraising efforts took full advantage of the bonds created with supporters via the school’s athletic program.

One consequence of the intimate link between college athletics and university fundraising has been an endless financial arms race to generate enough money to win on the field, in order to help keep deep-pocketed alumni happy. Spending per student has nearly doubled in America academia over the past generation, and alumni donations have become an ever-more critical source of subsidization. Nationally, expendable endowment income is now ten times higher, in constant dollars, than it was in the mid-1970s.

Perversely, higher education’s ever-more frantic search for ever-greater revenue streams has led to extraordinary increases in athletic department budgets. In 1975, Sports Illustrated published a profile of Michigan’s athletic director at the time, Don Canham. The thesis of the story was that college sports were “in danger of being killed . . . by murderously high costs.” At that time, Michigan’s athletic department budget was $4.5 million. (This is equivalent to $20.3 million in 2017 dollars.) Today it is $180 million.

Massive athletic department budgets are paid for by football and men’s basketball, and the compensation for coaches in those sports has reached levels that not long ago would have been unimaginable. Even after adjusting for inflation, Michigan’s current head football coach, Jim Harbaugh, makes more than 30 times what his predecessor Bo Schembechler made in the early 1980s. Michigan State basketball coach Tom Izzo’s salary is equal to the combined average salary of 30 full professors on his campus.

Stratospheric salaries for coaches have ripple effects beyond the athletic department: multimillion dollar compensation packages for university presidents, which also would have been inconceivable until recently, are now common. When he stepped down in 1991 after serving as Harvard’s president for 20 years, Derek Bok was making $213,000. In 2015, more than 60 college and university presidents had seven-figure salaries, and a dozen were making at least $2 million a year.

The money madness that has overtaken college sports is part and parcel of the corporatization of the American university as a whole. And the structural situation at MSU – an obsession with sports success, a closely connected obsession with fundraising, and a governing board that shared those obsessions while possessing few discernible qualifications for overseeing a research university — is a common one. The scandal at MSU should be a cautionary tale for the many institutions that resemble it on and off the playing field.

Paul Campos is a professor of law at the University of Colorado.