Tag Archives: siac

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

“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

0-1

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. 

 

HBCU Money’s 2021 Top 10 HBCU Endowments

If there was a short analysis of the 2021 HBCU endowment list it would be this – still not enough. Despite record breaking donations toward HBCUs from Mackenzie Scott and others in 2020-2021, the PWI-HBCU endowment gap among the Top 10 PWIs and HBCUs continues to balloon, a gap that stands at a staggering $121 to $1. This despite a 35 percent increase by the Top 10 HBCU endowments from last year. Simply put, winning the philanthropic “lottery” is not enough and it never will be when it comes to closing the endowment gap. The rabbit never beats the tortoise to put it another way. HBCUs must find a way to find consistent capital infusions over time as opposed to lighting quick one-offs.

The HBCU donor pool is simply too small and too poor (relatively speaking) to close the endowment gap. Without increasing the percentage of African Americans college students who go to HBCUs from 10 percent to 25-30 percent, it does not bode well for HBCUs to be able to close the endowment gap through traditional means. HBCUs and their alumni are going to have to be more creative and must be so expeditiously. While this is the most HBCU endowments we have ever reported with $100 million or greater, increasing from five in 2020 to seven in 2021, PWIs saw an 25 percent increase in the number of endowments over $2 billion going from 55 to 69 and an equally 25 percent rise in the number of endowments over $1 billion going from 114 to 142. This while HBCUs are still waiting for their first billion dollar endowment.

To that point, the race between Howard and Spelman is tightening. Last year’s $334 million lead that Howard held over Spelman has shrunk to $265 million. At one point it seemed a foregone conclusion that Howard would reach the milestone first (The Race To The First Billion Dollar HBCU Endowment: Can Anyone Catch Howard?), that is no longer the case. Howard’s public relations over the past year have not been favorable and while many people say all press is good press – not when you are an African American institution. With Hampton and North Carolina A&T’s departure from the MEAC, no HBCU conference (CIAA, GCAC, MEAC, SIAC, SWAC) is dominating the Top 10 and the list is split 50/50 between private and public HBCUs as well. Arguably this is the most diverse Top 10 HBCU endowment list since we first began publishing, but one thing remains feverishly consistent and that is there is a lot of work to be done to ensure HBCU endowments and therefore the institutions of HBCUs are sustainable and thriving.

HIGHLIGHTS:

  • Top 10 HBCU Endowment Total – $2.7 billion
  • Top 10 PWI Endowment Total – $328.7 billion
  • Number of PWIs Above $2 billion – 69
  • Number of PWIs Above $1 billion – 142
  • HBCU Median – $97.8 million (33.7%)
  • NACUBO Median – $200.4 million (25.8%)
  • HBCU Average – $203.8 million (53.6%)
  • NACUBO Average – $1.2 billion (35.2%)

All values are in millions ($000)*

1. Howard University – $795,203 (11.6%)

2. Spelman College – $530,399 (40.3%)

3.  Hampton University – $379,992 (35.4%)

4.  Morehouse College – $278,073 (77.0%)

5.  Meharry Medical College – $186,943 (19.3%)

6. North Carolina A&T State University  – $157,336 (113.2%)

7. Florida A&M University – $118,635 (24.4%)

8. Morgan State University$97,783 (162.9%)

9. Tennessee State University – $91,120 (33.2%)

10. The University of the Virgin Islands – $82,863 (23.9%)

OTHERS REPORTING:

*The change in market value does NOT represent the rate of return for the institution’s investments. Rather, the change in the market value of an endowment from FY20 to FY21 reflects the net impact of:
1) withdrawals to fund institutional operations and capital expenses;
2) the payment of endowment management and investment fees;
3) additions from donor gifts and other contributions; and
4) investment gains or losses.

SOURCE: NACUBO

Take a look at how an endowment works. Not only scholarships to reduce the student debt burden but research, recruiting talented faculty & students, faculty salaries, and a host of other things can be paid for through a strong endowment. It ultimately is the lifeblood of a college or university to ensure its success generation after generation.

Student Debt Profile By Conference (School By School) – The SIAC

SIAC+new+logo

Albany State University

Average debt of graduates, 2011 – $32 034

Proportion of graduates with debt, 2011 – 90%

Nonfederal debt, % of total debt of graduates, 2011 – 4%

2010-11 Pell Grant recipients – 76%

Benedict College

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 84%

Central State University

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 76%

Claflin University

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 70%

Clark Atlanta University

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 70%

Fort Valley State University

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 75%

Kentucky State University

Average debt of graduates, 2011 – $36 293

Proportion of graduates with debt, 2011 – 30%

Nonfederal debt, % of total debt of graduates, 2011 – 0%

2010-11 Pell Grant recipients – 52%

Lane College

Average debt of graduates, 2011 – $8 619

Proportion of graduates with debt, 2011 – 87%

Nonfederal debt, % of total debt of graduates, 2011 – 3%

2010-11 Pell Grant recipients – 88%

Lemoyne-Owen College

Average debt of graduates, 2011 – $19 369

Proportion of graduates with debt, 2011 – 95%

Nonfederal debt, % of total debt of graduates, 2011 – 0%

2010-11 Pell Grant recipients – 80%

Miles College

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 78%

Morehouse College

Average debt of graduates, 2011 – $29 500

Proportion of graduates with debt, 2011 – 80%

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 49%

Paine College

Average debt of graduates, 2011 – N/A

Proportion of graduates with debt, 2011 – N/A

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 74%

Stillman College

Average debt of graduates, 2011 – $30 429

Proportion of graduates with debt, 2011 – 96%

Nonfederal debt, % of total debt of graduates, 2011 – N/A

2010-11 Pell Grant recipients – 79%

Tuskegee University

Average debt of graduates, 2011 – $28 575

Proportion of graduates with debt, 2011 – 91%

Nonfederal debt, % of total debt of graduates, 2011 – 29%

2010-11 Pell Grant recipients – 64%

Source: Project on Student Debt