Tag Archives: cost of college

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.

 

 

HBCU Money™ Dozen Links 10/14 – 10/18


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Did you miss HBCU Money™ Dozen via Twitter? No worry. We are now putting them on the site for you to visit at your leisure. We have made some changes here at HBCU Money™ Dozen. We are now solely focused on research and central bank articles from the previous week.

Research

Boson X: a running-style smartphone game with a particle physics twist l SLAC Lab bit.ly/19eKIM0

Non-Profit Solar Company Empowers Struggling Neighbourhoods l Clean Technica dlvr.it/496J82

Scientists develop heat-resistant materials that could vastly improve solar cell efficiency l SLAC Lab stanford.io/1fJd5Y2

Chytrid fungus is wiping out amphibians around the world by making their immune cells self-destruct l New Scientist ow.ly/pY9EC

IBM offers 2-factor authentication package for securing Android mobile transactions l Network World ow.ly/pY9Fz

Lost volcano set off an ice age, Homo skull 1.8 million years old, genes vs teachers and more l New Scientist ow.ly/pY9VD

Federal Reserve, Central Banks, & Financial Departments

Financial literacy may soon be a reality in schools in Florida. Its cost? About $138,000 over five years l Lusardi ow.ly/pY9WD

Taking stock of past year’s labor market improvements l Cleveland Fed ow.ly/pY9YL

Thinking about going to college? Check out this interactive infographic l St. Louis Fed bit.ly/16NiVmp

Do Teenagers Respond to HIV Risk Information? l World Bank Africa wrld.bg/peKC6

Financial crisis & recession impacted real GDP per capita in the U.S. l St. Louis Fed bit.ly/12hnSjh

California home sales fall to 1988 levels l Housing Wire hwi.re/496Rs7

Thank you as always for joining us on Saturday for HBCU Money™ Dozen. The 12 most important research and finance articles of the week.