Tag Archives: college athletic budgets

Howard v. Harvard: Financial Takeaways From The HBCU-Ivy League Game Of The Century (Or So We Hoped)


This game was building in hype from the moment it was announced. The premier academic higher education institutions that represented the best of European American and the best of African America. Schools known best for their academics who also happen to have strong athletic heritages. Harvard University, founded in 1636, calls Boston, Massachusetts home. Arguably, the “capital” of WASP America. Howard University, founded in 1867, calls Washington, D.C. home and up until a decade ago was affectionately known as “Chocolate City” due to the high concentration of African American population. Today, thanks to gentrification it is starting to look a bit more like “Pumpkin Spice Latte City”, but that is another story all together. The game itself ended up resembling unfortunately the economic state of the two groups they represent and how sometimes no matter the size of the heart of the dog in the fight, the size of the dog actually matters. The final score: Harvard 62 v. Howard 17. HBCU Money decided to do a quick take on the financial reality of these two institutions since there is talk that HBCU-Ivy League games could be a “thing” in the future.

ENDOWMENTS:

Harvard has a 231 year head start and one could make the case even longer if we want to count African America’s struggle to hold onto financial assets from coming under attack through a myriad of issues like stolen land, Jim Crow, violence and the like for 100 years AFTER Howard’s founding. However, the situation is as the situation is. According to NACUBO, Harvard’s endowment at the end of fiscal 2018 stood at $38.3 billion, while Howard’s endowment stands at $688.5 million. That gives Harvard about $55 for every $1 that Howard has.

ALUMNI GIVING RATE:

While there are a lot of factor that tie into alumni giving rates, the fact remains it is one of the more even playing fields that HBCUs and PWIs can compete in head to head. Why? A donation of ANY size counts towards the alumni giving rate. From $1 to $100 million, it counts the same in the alumni giving rate. Harvard ranks second in the Ivy League conference with a giving rate of 33.1 percent according to Yale Daily News. Howard, like many HBCUs alumni giving rate fails to even break double digits with a 7 percent giving rate according to the Washington Post. This area may be more problematic in closing the institutional gap more than almost any other. Harvard’s alumni just by their demographic have more wealth than Howard alumni so to have an alumni giving rate that is 500 percent higher just exacerbates the problem. European Americans have over 10 times the wealth that African Americans have, which means that Harvard alumni are likely giving higher dollar amount donations and clearly at a higher percentage. If Howard and HBCUs are going to close the ground, then they are going to have to have a higher giving rate. HBCUs are not getting major donors, but they can get a lot small donors to give a lot to make up the ground.

RESEARCH EXPENDITURES:

Just as scary as the endowments, the research expenditures that both schools touts an immense institutional gap. Although, a grain of sunshine, Howard does lead all HBCUs in research expenditure, while Harvard ranks ninth among PWIs. That being said, Harvard’s annual research expenditure is 24 times the size of Howard’s. Harvard, ranked ninth nationally in research expenditures, has a 2017 RE of $1.1 billion. Howard, ranked 203rd nationally in research expenditures, has a 2017 RE of $45.8 million. Unfortunately, Harvard’s research expenditures have been trending upward the past few years, while Howard’s have been trending downward.

ATHLETIC BUDGETS:

Both institutions compete in the FCS, formerly known as Division 1-AA, but there have been 41 FCS champions since the formation of the playoff in 1978 and only one HBCU has ever participated in the championship game. Florida A&M University won the FCS championship its inaugural season and no HBCU has been back since. The Ivy League on the other hand is one of three FCS conferences that simply opts out of the playoff all together. In the 1950s, the league itself simply considered sports not even a secondary priority some would say. That being said, Harvard’s athletic budget is still 70 percent larger than Howard’s and larger than virtually every HBCU. Harvard’s $17.6 million makes a world of difference on the football field compared to Howard’s $10.1 million. The Ivy League average on athletics is $27.1 million, while the average in the SWAC/MEAC is $9.7 million. This makes future contest not very exciting too look forward too if this is the margin by which our schools will be competing against.

BILLIONAIRES:

A potentially odd category to finish with, but one clearly relevant. Resources matter in higher education and when Harvard’s endowment is almost 20 times the size of all HBCUs combined, then you have to wonder just how the gap can be closed among HBCUs and PWIs. As of 2018, Harvard has 188 alumni who were billionaires. The most of any college in America. Howard University have none. HBCUs all told have two (Oprah Winfrey and Ann Kroenke).

Howard’s largest donation in school history was $6 million in 1987, which adjusted for inflation is $13.5 million. Harvard’s largest donation seems to be a moving target with billionaire after billionaire competing for the top spot. In comparison, Harvard received a $400 million gift in 2015 from one of its 188 billionaire alumni. No HBCU has ever received a donation of $100 million or more.

 

Without Subsidies, FCS Public HBCU Athletics Losing $130 Million Annually


Humility is a virtue all preach, none practice, and yet everybody is content to hear.  — John Selden

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I needed a word to describe this internal report. The word I ended up settling on was hypovolemic. Healthline.com defines the condition as “Hypovolemic shock, also called hemorrhagic shock, is a life-threatening condition that results when you lose more than 20 percent (one-fifth) of your body’s blood or fluid supply. This severe fluid loss makes it impossible for the heart to pump sufficient blood to your body. Hypovolemic shock can cause many of your organs to fail. The condition requires immediate emergency medical attention in order to survive.” There might not be a better description of the findings of our internal HBCU Money study using NCAA provided data, we were able to get a startling and disturbing look at the athletic departments of public HBCUs athletic departments and their dependency on subsidies. Subsidies reported are a mixture of institutional support, government support, and student fees. Hopefully, this will spark some real conversation and give new light to the debate about whether or not HBCUs as a whole have the means to be athletically competitive long-term or is this a case of poor use of resources that is impairing the overall health of these universities and its students financial health long after they have left their hallowed grounds.

BREAKDOWN BY THE NUMBERS*:

REVENUES

Total: $177.0 million

Median: $7.9 million

Average: $8.0 million

EXPENSES

Total: $178.7 million

Median: $7.9 million

Average: $8.1 million

PROFIT/LOSS

Total: $-1.9 million

Median: $0

Average: $-79 827

SUBSIDY

Total: $126.9 million

Median: $5.5 million

Average: $5.8 million

WITHOUT SUBSIDY PROFIT/LOSS

Total: $-128.6 million

Median:$-5.8 million

Average: $-5.8 million

SUBSIDY % OF REVENUE

Total: 71.7%

Median: 75.0%

Average: 70.9%

*Chicago State University was included in our report of FCS public HBCUs. Considered an HBCU by HBCU Endowment Foundation, the school is a member of WAC, but athletic budget in line with its HBCU brethren.

According to USA Today, “Just 23 of 228 athletics departments at NCAA Division I public schools generated enough money on their own to cover their expenses in 2012. All 23 of the self-sufficient schools are from conferences whose champions automatically qualify for the Bowl Championship Series, which makes sense because that’s where the money is.” That is where the money is. Again, that is where the money is. The FCS public HBCU doing the “best” without a subsidy is Mississippi Valley State University, with a deficit of $2.4 million. In last place, Delaware State University with an egregious $10.5 million deficit without subsidies. With subsidies the most profitable team is Morgan State University at almost $475 000 in the profit column. Florida A&M, as has been reported recently, even with subsidies still manages to run an almost $1.1 million deficit. The report shows that in order for FCS public HBCUs to be able to operate without a subsidy and still produce the $177 million in revenue annually, they would need to set up an endowment of $3 billion. Greater than the sum all HBCUs, public and private, have in their endowment coffers combined. If alumni wanted a number that it would take to make HBCUs athletically competitive this would be it. However, remember this is only for public FCS HBCUs.

I continue to question the strategic investment many HBCUs on this list are currently putting into athletics and not research development or general scholarship. It is not hard to imagine that had FCS private HBCUs been included in the report, these numbers are even more frightening. The FCS public HBCU athletic budgets to research budget ratio approaches 80 percent. Essentially, we are spending $0.80 on athletics for every $1.00 we spend on research. This is unfortunate since all HBCUs do not even breach $500 million combined annually in research. For perspective since we always love to say “well the HWCUs are doing it”, we took a basket of 9 flagship HWCUs in their state and compared their ratio. The schools were University of Alabama, Florida, Georgia, Maryland, Michigan, Mississippi, Texas, LSU, and Ohio State. Combined their athletic budgets are $963.2 million, but their research budgets are a combined $6.8 billion or athletics gets $0.14 for every $1.00 research gets.

Too often HBCU alum and students are being sold a fairy tale of the investment in athletics without actually ever seeing numbers and data to support it. We are asked to just have “faith” that our leadership is doing the right thing. This while schools like Jackson State University and Prairie View A&M University are pining to spend $200 million and $60 million, respectively, on athletic complexes. I have been impressed with Paul Quinn and Spelman College’s decision making to use the athletic funds more strategically, which in the long run will have a major benefit on their institutions health. I love athletics as much as the next HBCUer, but I do not love seeing 90 percent of HBCU graduates finishing with debt to subsidize programs that are nowhere near capable of sustaining themselves. Especially when African Americans are struggling to close the wealth gap. If HBCUs believe they are part of the African American ecosystem and not independent of it, then there will be stronger considerations of how we use resources to maximize our ability to close gaps. Remember, the blood loss from hypovolemic shock eventually will cause ALL organs to fail.

 

 

Prairie View A&M University Costing Students $90,000 With Athletic And Scholarship Fee


It is easy to be generous with other people’s money. — Latin proverb

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The numbers do not lie. The African American median net worth is $2,170. European and Asian America’s median net worth is approximately $100,000 as reported by the Economic Policy Institute and Pew Research, respectively. The unemployment rate for African America is 14 percent while European and Asian America’s unemployment rates are 6.9 and 6.6 percent respectively.  At Prairie View A&M University 69 percent of their students are graduating with debt while Texas A&M University, its most prominent HWCU competitor, is graduating only 46 percent of its students with debt. Yet, the leadership at Prairie View seems to believe that it can operate largely and should chase the same objectives that its competitor has. In an article recently written by Nelson Bowman, Prairie View A&M University’s Executive Director of Development, admits that 95 percent of the student body is financial aid dependent. That most of financial aid for African Americans ends up as some form of student loan debt seems to be missed on the university’s leadership.

I grew up at Prairie View A&M University. My father’s family legacy runs deep with purple and gold. Many of the important first in my life even happen on that campus. I earned my master’s there in community development so there is a strong emotional investment to see this school improve in every way possible. That being said it can not do so on the back of its students because it can not find creative ways to raise funds for projects. Ultimately, if a college or university can not raise the money from alumni, outside sources, and endowment returns then it just simply does not need to engage the project. Asking students who are going to graduate playing catch up in terms of wealth and income or asking HBCU faculty and staff who are already underpaid and overworked in comparison to their peers is simply an apathetic way to show improvement without actually having to put much thought into actual achieving any.

It was during my time in graduate school that the current administration proposed building a $50 million athletic complex (it only has a $10.8 million research budget) as well as proposed to implement a $10 per credit hour fee onto student to help build the athletic department’s scholarships and improve their facilities. Some would argue a guise to help the university raise money for its proposed $50 million proposed athletic complex for which it could not use any state funds it had received to do so. Either way students were asked to bear the burden essentially by adding to the amount they already would need to borrow in student loans. Even more recent I had lunch with my cousin, an engineering major at Prairie View A&M University, who told me of a new $10 fee that was being added. He said it was being used to build the endowment as he understood it and provide a permanent endowed scholarship. Wait, what? You are asking students to borrow more money to fund a scholarship that they themselves actually need. A scholarships purpose is to decrease student debt but instead they are increasing their student debt. I guess standing outside in the rain when you have a house will keep you dry. There was something sad, unimaginative, comical, and paradoxical in all of it. Students of course approved the athletic and scholarship fee believing they were doing something to help their school. Somehow this is being sold to students as “giving” and not adding to their debt which will already have them at a wealth disadvantage upon graduation. A disadvantage they have to try and close with an income gap that currently has African Americans earning $0.65 for every $1.00 European Americans earn, wealth almost 50 times less than European and Asian Americans, and unemployment twice as high as their counterparts.

Just how much is this $150 athletic fee and $10 scholarship fee costing students? Federal statistics show that only approximately 40 percent of African Americans will graduate from undergraduate within six years. If one considers that a majority of Prairie View A&M University students will take six years to graduate it means they paid $960 over their six year academic career. What happens if they had been able to put that $960 into a Roth IRA or other investment account and just bought a standard S&P 500 Index? Over the next forty years at the historical average return of 12 percent that $960 would be worth $89 328.93 at retirement. What else is that $960 equal?

  • It would be equivalent to 5 months worth of savings at the current African American monthly savings rate. Something the majority of African American families did not have in the recent financial crisis.
  • As a percentage of the African American median net worth it is 44.2 percent.
  • Equal to 36 percent of the monthly median income for African Americans

The goal HBCUs should be working toward is decreasing their student debt burdens. By doing this it allows students to reach a point of wealth faster that they can be contributing alumni without sacrificing the financial health of their families. A complicated matter for African Americans who earn less and have higher student loan debt burdens while starting off with a wealth gap. Having less student loan debt also allows for the pursuit of home ownership faster and more importantly the ability to save money for the creation of businesses. Those businesses then can generate the kind of wealth that could provide seven and eight figure donations, employment faster for graduating students, and garner political influence for the HBCU. The logic that somehow burdening the students of today who will be the parents of tomorrow’s HBCU student makes little to no sense. It in fact endangers the possibility that the HBCU student of today and the parent of tomorrow will be forced to send their child elsewhere. Especially, if they are still paying off debt and must send their child to the school offering the most non-debt financial aid. Prairie View A&M University prides itself on saying it produces productive people. It must move beyond productive and do all it can so that it can produce powerful people. Ignoring the reality of its core demographic in its strategic planning to achieve that goal and mimicking HWCU behavior is something that far too many HBCUs are guilty of and it will be at the peril of our future if such behavior continues.

EDITOR’S CORRECTION: The fees are by semester. Therefore the $960 is actually $1,920 over six years. The cost to students is approximately $180,000.