Tag Archives: college sports

The Case For Mergers: Marrying The Big Four HBCU Conferences Into Two

Posted on June 26, 2022 by | 1 comment

“The way a team plays as a whole determines its success. You may have the greatest bunch of individual stars in the world, but if they don’t play together, the club won’t be worth a dime.” – Babe Ruth

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Many years ago, HBCU Money called for the creation of HBCU super conferences. It is time we revisit that conversation. This time we hope to give more scenarios and a clearer picture of what we now believe is the right course of strategic action. We will simply focus on the schools currently within the conferences as opposed to previously making an argument for expanding beyond the current five HBCU conferences, the Gulf Coast Athletic Conference is the only HBCU athletic conference in the NAIA. This conversation will focus again solely on the SWAC, MEAC, CIAA, and SIAC, all are whom a part of the NCAA. Whether that should continue to be the case will be a conversation for another time – one we hope HBCU athletic alumni and administrations are less afraid to have, but that is likely not the case as far too many still desire to chase the dreams of competing against their PWI counterparts for “their” championship.

Between the four HBCU conferences in the NCAA, there are 46 HBCUs and 2 PWIs that make up the four conferences. The CIAA and SIAC both having non-HBCU members who have joined their ranks. More pointedly, the SWAC/MEAC have 21 member schools in their conference, while the CIAA/SIAC have 27 member schools. Most know that the SWAC/MEAC and CIAA/SIAC play in the same divisions with the former being FCS and latter being Division II programs. Geographically though, the SWAC/SIAC and MEAC/CIAA share more accommodating footprints.

Why are both of these things something too heavily consider? First, the divisions that the schools play in is vital to understanding the cost difference associated with different divisions. FCS schools spend more, are expected to spend more, and do spend more than Division II and Division III schools. The fact that HBCUs largely lack the booster power to maintain their FCS infrastructure, largely leaning on the backs of their students to drive revenues through student fees has always been a matter of concern and why some advocates have called for them to drop down to Division II where sports are significantly more affordable. However, in fairness to the SWAC/MEAC, the numbers for the CIAA/SIAC in their own right as it relates to revenues, expenses, and student fee subsidies has not been compiled and scrutinized as it has with the FCS HBCUs. On a percentage basis things could look eerily the same. The NCAA reported in 2011-2012 that Division II member schools with football incurred a net loss of $4.5 million per year, while schools without football incurred a net loss of $3.6 million. While $900,000 does not seem like a huge difference, in the world of HBCUs where every dollar is dire it is worth noting in the conversation. This means if the CIAA/SIAC held the median, then the two conferences combined for an annual loss of $112.5 million as it pertains to the HBCUs in the two conferences. The SWAC/MEAC in 2017-2018 were losing a combined $150 million annually (without student subsidies). Also, a key factor to take note of is the cost between FCS and Division II conferences by the NCAA, “Division II institutions contemplating a move to the Division I Football Championship Subdivision (FCS) will likely be spending significantly more money as the median net expense was over $10 million in Division I FCS versus $4.5 million for Division II programs with football.” A factor of 2.2 between the two divisions.

Second in the conversation is the geography. A major factor in expenses for institutions. Travel costs alone can tear into a school’s athletic budget and the greater the distance the more the cost, obviously. Instead of buses, now it is planes. Instead of a one night in the hotel, now you need two. The cost can escalate quickly, which is why many colleges try to maintain their non-conference schedules close to home. This by its very nature means that a natural merger between the SIAC/SWAC and the CIAA/MEAC would make the most geographic sense. It would provide ample opponents in proximity and in-state greatly reducing costs across athletic departments. The linchpin is of course what division would the member schools play in. Do the Division II schools take on more cost to go up a level and hope they can increased revenues can support this? Winston-Salem State University tried it and quickly realized, not likely. What exactly FCS HBCUs are holding onto of not dropping down to Division II seems to be anyone’s guess at this point other than the belief that eventually they will rise to the FBS, join a Power 5 conference, make millions upon millions, and compete for a national championship against Alabama. A perfectly sensible (delusional) strategy somewhere. The path of least resistance says though that the divisions trump geography.

Lastly, the mergers would give something that small schools like HBCUs need – scale and cooperative ventures. Power 5 conferences are profitable because of three simple factors and the athletes on the field (albeit a nice piece) have little to nothing to do with it: 1) being able to put 100,000 people in the stands, 2) television contracts because of the alumni base size, and 3) boosters who shell out annually more money than most HBCU athletic budgets have. For HBCU conferences, the scale that doubling in size would bring along with the cost savings would be immeasurable regardless of the pairing structure from four to two. This could be magnified even greater if the five HBCU conferences would agree to form the HBCU Athletic Association, but for now, baby steps.

There is no denying that what HBCU athletics need most – like the schools themselves – is ways to drive revenue that do not rely on the backs of their students. HBCUs themselves rely heavily on tuition revenue to keep the doors open and HBCU athletics rely heavily on the students fees that most students and parents do not even know are in the small print being used to fund said athletic programs.

 

HBCU athletics is still an oversized concern for HBCU alumni who should be focused more on things like research, endowments, graduation rates, student loan debts, and the like. The notion that sports will bring in financial sustainability to HBCUs is wishful thinking on the best days. However, how a school manages its athletics and athletic budgets can make or break institutions if done so poorly. If we are insistent on sports, then it should be done so in a way that allows for the institutions to run those departments in a fiscally responsible way. and is far less reliant on students having to assume student fees that are being paid for with student loans. Scale in business is a prime way to cut expenses, increase revenues, and ultimately (hopefully) find a potential path to profitability or at the very least not have to rely on student fees being 75 percent of athletic revenues. To achieve scale, institutions or organizations often either merge or acquire and HBCU conferences should undoubtedly consider the same. 

 

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The $6 Billion Delusion Of Grandeur: HBCU Alumni Refuse To Accept The Harsh Financial Reality Of HBCU Athletics

Posted on July 4, 2019 by | 2 comments

“Every day is a new opportunity. You can build on yesterday’s success or put its failures behind and start over again. That’s the way life is, with a new game every day, and that’s the way baseball is.” – Bob Feller

It sometimes feels like there is no more irrational sector of HBCUs than athletics when it comes to HBCU alumni bases and administrations. We want to buy the Empire State Building, but barely have money for a night at Motel 6. If you have watched ESPN’s 30 for 30: The Pony Express and The U, then you probably do not need to go further in this article. For those who have not watched either, please do so immediately and continue to read. If cheap shots on the field bother you, then you are not at all ready for the brutality of what happens outside the lines and behind closed doors. College athletics is a contact sport, a dirty business, not for the faint of heart, and the cost associated with it remind us just how huge the institutional wealth gap is between HBCUs and our counterparts.

In 2014, HBCU Money produced an article that showed the SWAC/MEAC conferences were losing a combined $130 million in their member athletic programs. Two years later, that number had skyrocketed to $147 million. The members of the two conferences had combined expenses of approximately $194.1 million while revenues without subsidies were a meager $47 million. Of course most alumni have no idea that the subsidies that we speak of are primarily student fees. These subsidies accounted for a staggering $142.5 million or 75 percent of the athletic revenues that the SWAC/MEAC generated if you can call it such a thing. Subsidies or allocated as defined by the NCAA and others consider student fees, direct and indirect institutional support and state money “allocated,” or everything not generated by the department’s athletics functions. It is not clear however by the NCAA definition if booster giving is considered a subsidy or athletic functions. However at 75 percent of revenues what is clear is that it is not ticket sales, sponsorships, merchandise sales, media deals, etc., but primarily student fees driving HBCU athletic revenue.

For the majority of our students, that means additional cost onto their cost of attendance which is largely financed through – you guessed it – student loans. Essentially what rabid HBCU alumni and administrations have done is asked students to take out a loan for sports. A predatory payday loan at that. The irony is that even with the subsidies the two conferences still were losing money, approximately $5 million, meaning HBCU boosters were not even giving enough to breakeven. Many HBCU alumni hold dear to the belief that if you build it they will come (eventually), they being the abundance of riches that African American athletes pour into our white counterparts and if they return to HBCUs the power will tilt and so will the finances of sports back into our favor making our programs profitable and financially abundant. Never mind the harsh reality those mega television contracts we read about to the Power 5 have little to do with the athletes on the field and more about the fans in the seats and audience nationwide. Outside of the Bayou Classic, there is not one HBCU football or basketball game that could bring over 70,000 (Superdome’s capacity) to it and millions of viewers on television. The latter mainly due to it being a Thanksgiving weekend game and the game itself almost became something of a staple to watch in many African American households. Fan bases care about having the best players because they care about beating their rivals. Coaches care about having the best players because they want to keep their job. The fact that they are African Americans is a byproduct of a game played almost 50 years ago when USC beat Alabama with a young African American kid named Sam “Bam” Cunningham who “Bear” Bryant’s all-white team had no answer for so in true fashion they went out and got a few of their own. And the rest as they say is history, but the past echoing into the present is very real and the present’s echo into the future is also very real.

The question is as educated and critically thinking capable alumni, why are we not able to examine this subject in a rational and objective manner? Why are we not able to devise an actual plan that does not involve breaking the backs of our students? African Americans are already the poorest group by median income ($40,258 vs. $61,372 for all races) and median wealth ($11,030 vs. $134,230 for European Americans) in America and we want to make it that much harder for our graduates to become financially stable and wealthy in exchange for sports? Primarily, this accusation is lobbed at football and men’s basketball and the black financial holes that they are to the majority of the nation’s colleges. By far, they are the two costliest sports on any college campus, black or white.

Schools like the SWAC’s Prairie View A&M built a $60 million stadium and new athletic complex (uncertainty as to whether the school’s current renovation of their basketball arena is included or not) and Jackson State University at one point even had the gall to suggest a $200 million domed stadium complex. Yet, without subsidies Prairie View’s program lost $13.1 million in 2016-2017 and Jackson State lost $5.4 million. Meanwhile, Spelman College scrapped its athletic program six years ago. The former president, Dr. Beverly Tatum, “When considering our options, I learned that we only had 80 student-athletes and the cost of our program was approaching $1 million per year.” This against a reality of serving a college of African American women and as an ESPN article noted, “49 percent of African-American women over the age of 20 had heart diseases, and were twice as likely to develop Type 2 diabetes as non-Hispanic white women. The health issues that black women faced, including those at Spelman, were very much linked to diet and a lack of physical activity.” Spelman and its leadership wanted alumni to be healthy now and for the future. Health builds wealth is not just a saying but a real reality. Less days missed at work means more income earned, more money saved and invested, more wealth created, and more opportunity to give back to your alma mater. This is not even getting into the costs that many African Americans suffer from later in life because of poor lifestyle and diet which becomes so costly that there is little left at the end of life to even leave behind to their HBCU. Is Spelman sacrificing their athletic program today so that they can have wealthier alumni tomorrow who would be able to bring back the program and truly have it be sustainable? How much of a donation would it take to endow the $1 million annually to bring back their athletic program? Approximately $15-25 million.

Are we suggesting that all HBCUs follow Spleman’s lead? No, certainly not. There can be a happy medium, but first HBCU alumni need to truly understand the cost associated with major college sports, primarily football and men’s basketball. The harsh reality is that these are the only two sports at the college level that currently generate any significant revenue for colleges and unfortunately the cost to recruit in these two sports starts far before an athlete even gets to college. Recruiting for prized college basketball players for many college coaches starts in AAU middle school. Coaches from the basketball Power 5 conferences are constantly traveling year round and scouting talent that will not be college ready for four to five years in many instances. To say it is costly to follow an 8th grader around is an understatement, but if you do not do it, then you have almost no chance at seriously recruiting them (or their family) later on. HBCU alumni are not sponsoring or even mildly impacting the AAU financial machine, which can cost a family upwards of $5,000 for summer play and often times those costs are absorbed by a benefactor who maybe more akin to the Godfather and wants you to remember the favor he did for you later. Google AAU bribes and Google almost has a heart attack returning the amount of searches on the subject. When it comes to football, the situation has become just as complicated with the advent of the 7 on 7 leagues that have popped up all over the country. The cost spent on developing and “steering” young black boys as athletes begins early and costs tens of of millions annually – and we have not even gotten to the programs themselves yet. There is an enormous amount of dark money that is spent by athletic companies like Nike, Reebok, Adidas, etc. to ensure that the pup stars in both sports go to schools where they can maximize the exposure of the next superstar wearing their apparel. Of course, high school and AAU coaches receive perks for being the “voice of reason” to help influence many young men and advise their families on where would be best for them. Again, HBCU alumni and boosters barely have money to give to their own athletic programs, let alone “lobbying” to high school coaches with no guarantee of payoffs, but mandatory if you want to even be in the conversation. Then there are the facilities.

While Prairie View A&M spent $60 million on a stadium and athletic complex a few years ago, the University of Oregon was spending $68 million on a football performance center. Yes, Oregon built a building dedicated entirely to their football program and the state of Oregon changed the laws to accommodate the building that ran afoul of building codes because of the influence of Phil Knight, the founder and largest shareholder of Nike and the University of Oregon’s biggest booster. According to Oregon Live it includes, “offices, team video theaters, offensive and defensive strategy rooms, a coaching conference suite, a video editing center, a dining hall and a weight room.” Again, just for football. The Darth Vader to Prairie View A&M University’s Luke Skywalker for good measure, Texas A&M University, spent $450 million on a stadium renovation or eight times what the entirety of Prairie View’s athletic complex cost for a renovation to its stadium and now seats over 102,000 people. It has taken some HBCUs over 30 years to raise the money for even moderate renovations to their HBCU athletic facilities. Many are still waiting and some tired of waiting, increased student fees to redirect toward athletics. Colleges have to have the latest and greatest to attract the best athletes who are being treated as deities before even stepping foot on a college campus. College athletics has become an arms race of new facilities, high-paid coaches, under the table bags of money to recruits and so much more that spiral the cost beyond many of our wildest dreams. The rabbit hole is deep.

A few names and numbers:

Al Dunlap – $15 million. Paul Bryant, Jr. – $20 million. Phil Knight – $300 million. Christy Gaylord Everest – $18 million. Drayton McLane – $200 million. Herb Kohl – $25 million. Jack Vanier – $20 million. These are just six boosters that Mother Jones reported were major college boosters in an article in 2014. The six donations account for almost $600 million, an amount that is four times the size of the losses the SWAC/MEAC losses account for just a few years prior. Need even more perspective on how big these donations are? Aside from Prairie View A&M’s $17.9 million in expenses, those donations could cover the expenses of any SWAC or MEAC school in their singular. Phil Knight’s giving to the University of Oregon (since 2014 he has given another $200 million to Oregon) or Drayton McLane’s giving to Baylor University could cover the cost of every school in the SWAC and MEAC ($194.1 million) with money left over in the bank – by themselves. In comparison, HBCU Gameday recently reported that Winston-Salem State University was in the midst of a $250,000 athletic capital campaign with major donors coming from ESPN and WSSU alumnus, Stephen A. Smith, with a gift of $50,000 and Chris Paul, an NBA player whose 2018 salary was $25 million, giving a gift of $25,000. Large donations in HBCU athletic circles indeed, but making HBCUs competitive in recruitment among blue chips – not so much.

Unfortunately, there is no real repository of data on booster giving among colleges. Most of the information on the aforementioned boosters is from press clippings where donations to Power 5 conferences make headlines. In fact, a lot of giving becomes very opaque if we factor in boosters who provide jobs to athletes’ family members (remember Reggie Bush?) and the like. For the HBCU 5 conferences, there are not even press clippings, although if HBCU athletic and development departments wanted to disclose how much in donations were directed toward athletic programs from alumni it would be acutely helpful or create a database that sites like HBCU Money could use to give a fair analysis of the giving that is happening in HBCU athletic programs it would be greatly appreciated. However, again when 75 percent of the revenues come from student fees, it is not hard to know those numbers would be embarrassing and minuscule at best. And that brings us back to our problem of HBCU alumni who seem to be delusional about the true cost for building the type of athletic programs that can be self-sustaining and not breaking the back of students who in the future will not be able to give like they could and creating a vicious cycle of under giving to the institutions as a whole – all for the sake of sports.

The HBCU 5 athletic programs based on the SWAC and MEAC’s numbers, being Division 1 programs makes them inherently more expensive, brings all five conferences (SWAC, MEAC, CIAA, SIAC, & GCAC) total expenses to around an estimated $300 million annually. There are only two HBCUs with endowments above $300 million and we are possibly still a decade away from Howard University becoming the first HBCU to a $1 billion endowment. There are over 100 HWCUs with endowments over $1 billion. Around 90 percent of HBCUs do not even have endowments of $50 million. A startling statistic when you have schools trying to run athletic programs that cost $10 million plus annually. If HBCU alumni who truly cared about sports wanted to endow HBCU athletic programs with enough to generate the $300 million annually they would need to raise between $4 to $6 billion and hope they can find returns of almost 10 percent annually in an economic environment that is giving out low to mid single digit returns far more commonly. At 5 percent annual return, it would take $6 billion for HBCUs to get HBCU athletic programs off the backs and out of the pockets of its students and help reduce student debt loads. Almost 9 out of 10 HBCU graduates will finish with debt, 32 percent higher than the national average and a median debt load that is 40 percent higher than their counterparts at Top 50 endowed HWCUs. Is it worth it is a question any HBCU alumni and athletic boosters must ask themselves who cares about our institutions and the students who matriculate through them.

Wayne Gretzky is famously quoted as saying he was great because he skated where the puck was going not where it has been. HBCU alumni are bent on doing the exact opposite when it comes to athletics. Even if HBCU alumni could raise the $6 billion, it would be a fools’ decision to spend it on sports, mainly again football and men’s basketball. So why is an HBCU like Florida Memorial University selling $100 t-shirts to bring back its football program? Is it pressure from alumni? Is it an administration that wants it to be part of their legacy? The long-term implications of fielding a football program when Florida Memorial was moving towards a future of profitable athletic sports is baffling to say the least.

Little League sports statistics show that soccer is the future in this country, baseball is seeing a resurgence, and women’s sports is just scratching the surface of its potential globally. David Beckham, an international soccer megastar in his day and now the owner of the Miami MLS franchise, spent time at Florida Memorial just five years ago. Beckham’s is a relationship that should be leaned into and nurtured to put it mildly. Meanwhile, the pipeline for football is dwindling rapidly due to society’s fears over health concerns and yet, less than twenty HBCUs have soccer teams. HBCUs have all but abandoned baseball despite its resurgence in America and globally. Again, where the puck is and where is it going. This is to say nothing of the infancy that Esports is in, an industry that is estimated to breach a value of $1 billion in the next year according to the World Economic Forum coupled with prize money as high as $1 million for gamers in some tournaments and what feels like an exponential growth in sponsorships and endorsements. Esports is picking up so much steam it is being introduced in high school athletic programs and even some colleges are starting to offer Esports scholarships. There is not one of us who is over the age of 35 and under the age of 50 that does not remember a Madden tournament in the dorms of our HBCUs. We were early as we usually are, but completely missing the opportunity to leverage and be ahead of the curve.

HBCU alumni and athletic boosters need to have tougher conversations with themselves and with administrations. Read your HBCU’s financial reports for starters. A lot of this is poor financial literacy in that we do not know the cost of running our institutions, growing endowments, and sustaining an athletic program. We simply can not afford to buy high and sell low with HBCU athletics anymore. There is a happy medium and we need to have a honest conversation about it. Alumni and boosters need to understand the true cost of running our programs (something administrations need to be more transparent about) and not continue with the pie in the sky hope that African American high school athletes are just going to miraculously pick us. Zion Williamson, who had two parents attend Livingstone College still chose Duke University. There is a moat around football and men’s basketball and we need to accept that, but those two sports will not be the fountain of prosperity forever. Malcolm X said the future belongs to those who prepare for it today and it is time for us to start preparing like we need to cram for a final exam in the morning and our graduation depends on it.

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The 5 Steps To HBCU Athletic Profitability

Posted on October 3, 2016 by | 2 comments

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“Growth and profit are a product of how people work together.” – Ricardo Semler

HBCU presidents, athletic directors, athletic commissioners, and stakeholders gather around the camp fire. We are going to tell you a story of problem solving using critical thinking. Do not worry, this is not a scary story like the one you are telling your students and alumni currently. Many of you want athletics to be your legacy and are willing to mortgage every current student and burgeoning alumni’s future in order to see it come to fruition. Many of you think so far inside the box that Carter G. Woodson would probably blush at just how far you have taken his quote of controlling a man’s mind and how that control will make a man build a back door if one is not present. We even lie to ourselves that the door we have been relegated too looks like our neighbors front door just to suffice our ego. Refusing to even use the assets at your disposal like HBCU business schools, computer science departments, etc. to solve some of our institutions most basic problems.

You know what is not a basic problem? The $147 million that the SWAC and MEAC conferences are hemorrhaging were it not for the $142.5 million in subsidies that come primarily on the backs of their students. Even with those subsidies, the two conferences still managed a $4.6 million loss in the 2014-15 school year. Yet, the same playbook is rolled out every year to makeup for shortfalls. The infamous money games that alumni argue over every year as good or bad for their programs. Ultimately, athletic departments have made them part of their funding model usually in an exchange for treatment that would make Ike Turner blush. However, there is no plan and has been no plan seemingly offered by these HBCU athletic departments that would strategically some day let the money games be icing on the cake if they chose to play them instead of a vital necessity. There is always this talk of the players on the team wanting to test themselves against the “best’. The reality is they have no choice. Players do not schedule these games nor are they consulted. These games are scheduled by those that know if they do not play them, then there may not be an athletic department next year. There are five steps though that can allow HBCU athletics to actually make every program profitable: 

  1. Form the HBCU Athletic Association. Also known as the HBCU version of the NCAA. This is about ownership and leverage. Advertisers pay for schools or conferences that have large alumni bases, strong geographic footprint, and affluent alumni. Although HBCUs lack the latter, the former two is strong leverage when you approach corporate sponsors who are looking to get their brand in front of as many potential consumers as possible. There are 100 HBCUs that comprise geography in the Midwest, Southeast, and even Northeast if you included schools like Roxbury Community College in Boston and Medgar Evers in New York. The NCAA is able to make over $1 billion per year from the March Madness Tournament because it owns the tournament. Again, ownership matters. Having the HAA gives it a powerful economic scale that could go in and do something like buy the old Morris Brown stadium and convert it to a stadium, arena, hotel, and conference center that could host all of the major HBCU sporting events. Now, instead of getting almost nothing of the pie, HBCUs would have an opportunity to share in the parking, ticket, concession, and entertainment revenue pies that ownership over these facilities brings. Again, ownership matters.
  2. Drones. Okay, not just drones, but drones, cameras affixed to athletic facilities, and a website and app that you can purchase a monthly subscription for $10 per month just like Netflix that gives access to every HBCU sporting event for your alma mater and a special up charge for Classics. All of the computer science and communication majors that HBCUs have this seems almost like spiking a beach ball for a score. Put a camera in every corner of the stadium, arena, and field so that it can be remotely operated during a game to show every team’s games. Use drones, they are $99 or build your own, to highlight special views during the games or matches. Get a website and app built that allows people to view it anywhere at anytime. For sports like football, there is an additional charge for professional scouts, which can be a whole other package – a more expensive package.
  3. Conference Endowments. This could be done tomorrow and the fact that it has not been done is sad, really. HBCUs are stronger together than apart. A lesson that Florida A&M University learned the hard way when they tried to make the jump out of the MEAC to FBS. Wherever we go we must go together. With that said, it would make so much more sense if an athletic endowment was set up for each conference that could be equitably split among all the schools. Instead of each department trying to raise money independently, they share the common expense of doing so in hopes of reaching a larger audience. Conservatively, the MEAC and SWAC need an athletic endowment of $3 billion to produce the amount needed to ween themselves off of subsidies from their student population. All those golf tournaments by HBCU boosters that each school puts on could certainly assist in the greater good more so than the robbing Peter to pay Paul model our athletic departments currently exist on. It also provides a real vision – like the church building fund – that there is a goal and this is the result of that goal.
  4. HBCU football and basketball playoffs. This ties back into number one and ownership. HBCUs are forever trying to be the Cinderella story. Moments like North Carolina A&T beating Kent State, Grambling almost beating Arizona, or Norfolk State’s run in the NCAA tournament in 2012 where they reached the Sweet 16. You know what is better than being Cinderella though, getting paid and being profitable. An HBCU football playoff and basketball tournament is an opportunity to have a postseason, hold recruitment and marketing of high school students in cities, and again, own more if not all of the revenue. An eight team playoff from the four major HBCU conferences (SIAC, CIAA, SWAC, & MEAC) that starts the week after Thanksgiving and conclude on New Year’s Day at the HAA owned Morris Brown Stadium, hotel, and conference center. The playoff games themselves could be held in major cities that are geographically and expense friendly to the conferences, but also allow for exposure and recruitment. This is true for the basketball tournament as well. A 16 team (or 32 if you want to invite HBCUs not in HBCU conferences) basketball tournament held in cities like Chicago, New York, and other major basketball hotbeds that give exposure to our schools for future recruitment and a chance to create events we own around them that generate revenue only helps the bottom line. This is not limited to just football and basketball, but every sport. Events bring us money and using HBCU playoffs extends our seasons and extends the ability for them to generate revenue from the populations the events are held in.
  5. Black Owned Company Sponsors. When one hears how much HBCUs get paid by non-black owned corporate sponsors or in their money games it is utterly insulting. How someone treats you is a clear sign of how they feel about you and it is clear that the companies we receive sponsorship from currently think very little of our alumni as potential customers. Have you ever heard of Aliko Dangonte? He is the wealthiest man in Nigeria and owner of the Dangonte Group, which has interest in cement, sugar, and flour. Ventures Africa reports, “In Zimbabwe, Strive Masiyiwa, the founder of telecommunications giant, Econet Wireless, spent a reported $6.4 million setting up a trust for African students at Morehouse College, a historically black institution in the United States.” A sign that HBCUs are on these African entrepreneurs map. Why not approach them and their companies? The Dangonte Stadium, Arena, or Athletic Complex has a nice ring to it. It gives them an opportunity to expand their brand globally and to expand into the holy grail that is America.

Athletics is certainly an important part of the social experience of college and HBCUs, but it is not worth the burden to a people who are already trying to close a wealth gap that is sixteen times greater than their counterparts and are graduating with higher student debt loads despite HBCUs being cheaper on average. Instead of eliminating sports though or just subsidizing ourselves to death, there has to be the question of how do we make them an asset. Not just socially, but financially. There has been talk that the Power 5 conferences will eventually break away from the NCAA and super conferences come up every year in conversation. HBCUs have the opportunity to be ahead of the change curve, lead the change curve, and shift the paradigm instead of being reactive to it or simply mimicking our counterparts behavior after the fact. If we are going to be in a box, at least let it be a box we own and control.

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

Posted on January 30, 2013 by | Leave a comment

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.

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