“The value of one unit changes each year, and in 2022, it is estimated to be $338,887. That’s up a little bit from 2021, when a unit was worth $337,141.” according to Boardroom.
Here’s how it all plays out:
The SWAC/MEAC sent two teams to the NCAA Tournament: Texas Southern University and Howard University.
The two teams have earned one ECF unit for the SWAC/MEAC by making it to the tournament ($338,887 x 2 = $677,774).
Let’s say Texas Southern University wins the 16/16 play in game in the First Four. By then playing the traditional 16/1 (the First Round), Texas Southern gets another unit for the SWAC and gives it the possibility of earning seven units versus Howard University being able to earn a maximum of six units due to not having to play in a play-in game.*
Let’s say Texas Southern and Howard both lose their 16/1 games. Texas Southern University would have earned two units and Howard University would have earned one unit.*
Should both win and then have a Second Round loss. That’s one more unit for both and nothing more.
Now, let’s say both go on a miracle run to the national championship game. They would earn an additional unit for playing in the Second Round, Sweet 16, Elite Eight, and National Semifinal, for a total of thirteen units.
In total, this gives the SWAC/MEAC 13 units from this tournament, to be paid each year for the next six years, resulting in a total of $4.41M annually given to the SWAC/MEAC. That’s $26.43M total, which the conference will pay out to each of its 20 teams. If distributed equally, that’s $220,250 per school, per year, for a total of $1.32M.**
*HBCU Money was not able to confirm that the play-in game is worth an additional unit but serves as one in our example.
**Wins in the semifinals or final don’t count for units.
In the fourth HBCU Money report on the SWAC/MEAC’s athletic finances, there has been one trend that is consistent – an acute amount of red on the balance sheet of each respective HBCU as it pertains to their athletic departments and it continues to grow redder and redder. Since HBCU Money first began reporting the SWAC/MEAC Athletic Financial Review, there have been losses of $128.6 million (2014-2015), $147.1 million (2016-2017), $150.7 million (2017-2018), and this year they continue their trend of the athletic black hole with losses over $161 million through athletics with no correction in sight. Not exactly the cash generating juggernauts that HBCU alumni have in mind when it comes to how deeply many believe that athletics can be the financial savior to HBCU financial prosperity. Instead, athletics seems to be potentially at the crux of many HBCU financial woes. Almost unfathomable is that many in the SWAC/MEAC have athletic budgets higher than their research budgets.
The harsh reality is that even with all the popularity buzz generated by Jackson State University’s head football coach, Deion Sanders, the factors working against HBCU athletics ever achieving real profitability remains a pipe dream at best. To land a major television contract, which is the only reason on mass that the SEC and Big 10 are the profitable athletic programs they are requires something that HBCU alumni bases severely lack. Large fan bases that have high incomes and an affluence. The harsh reality that HBCUs have small alumni bases, a reality that has been exacerbated post-desegregation where now HBCUs only get 9 percent of African Americans in college, combined with African America having both the lowest median income and wealth do not make for a recipe for advertisers to pay top dollar to television stations who would then healthily compensate HBCU institutions. HBCU athletics can be profitable, but it requires a completely different business model than our PWI counterparts. See, “The 5 Steps To HBCU Athletic Profitability”.
HBCU athletic revenues went down while expenses and subsidies went up in 2019-2020. That is usually a trend all would prefer be flipped. Students continue to bear the brunt of generating HBCU athletic revenues. This year’s review shows that approximately 73 percent of HBCU athletic revenues are generated through subsidies, up from 70 percent the year prior. Something to consider when 90 percent of HBCU students graduate with student loan debt.
REVENUES (in millions)
Total: $200.4 (down 1.2% from 2017-2018)
Median: $10.3 (down 4.6% from 2017-2018)
Average: $10.6 (up 5.0% from 2017-2018)
Highest revenue: Prairie View A&M University $18.7 million
Lowest revenue: Coppin State University $2.8 million
EXPENSES (in millions)
Total: $213.0 (up 0.5% from 2017-2018)
Median: $12.5 (up 15.7% from 2017-2018)
Average: $11.2 (up 5.7% from 2017-2018)
Highest expenses: Prairie View A&M University $18.7 million
Lowest expenses: Mississippi Valley State University $3.9 million
SUBSIDY
Total: $148.4 (up 4.9% from 2017-2018)
Median: $6.4 (down 18.4% from 2017-2018)
Average: $7.1 (unchanged from 2017-2018)
Highest subsidy: Prairie View A&M University $15.5 million
Lowest subsidy: Coppin State University $1.7 million
Highest % of revenues: Delaware State University: 92.0%
Lowest % of revenues: Florida A&M University: 37.0%
PROFIT/LOSS (W/ SUBSIDY)
Total: $-12.7 million (down 40.0% from 2017-2018)
Median: $0 (up 100.0% from 2017-2018)
Average: $-666,295 (down 46.3% from 2017-2018)
Highest profit/loss: North Carolina A&T State University $615,094
Lowest profit/loss: North Carolina Central University $-6,264,082
PROFIT/LOSS (W/O SUBSIDY)
Total: $-161.0 million (down 6.8% from 2017-2018)
Median: $-9.8 million (down 40.0% from 2017-2018)
Average: $-8.5 million (down 13.3% from 2017-2018)
Highest profit/loss: Mississippi Valley State University $-2,177,123
Lowest profit/loss: Prairie View A&M University $-15,417,471
CONCLUSION: At current, it would take an approximately $4.3 billion endowment dedicated to athletics to ween the SWAC/MEAC off of these subsidies onto a sustainable path. A sum greater than all HBCU endowments combined. Perhaps through merchandise sales, Jackson State could see its way to profitability without subsidies. Perhaps, but as former HBCU alumnus and NFL Hall of Famer Shannon Sharpe recently said, “There is only one Deion Sanders”. One thing is for certain, HBCUs have not done a proper cost-benefit analysis for the money they spend and subsidize to their athletic departments nor have they explored potential alternative models.
Editor’s Note: Howard and Bethune-Cookman are excluded in this report because they are private institutions and their athletic finances were not included in this report.
“We need to intentionally invest in health, in home ownership, in entrepreneurship, in access to democracy, in economic empowerment. If we don’t do these things, we shouldn’t be surprised that racial inequality persists because inequalities compound.” – Pete Buttigieg
On the campus of Texas Southern University on November 4th and 5th, the National Association of Real Estate Brokers, an organization representing the interest of African American real estate professionals, hosted a homeownership summit with focuses on not only homeownership, but also student debt, access to credit, and investing. The importance of such an event being held on an HBCU campus can not be understated.
Intertwining African American institutions with each other has long been a struggle for the community’s development with African American institutions often operating on islands instead of a connected ecosystem. Events like NAREB’s Black Homeownership Summit at Texas Southern University helps highlight the power, potential, and scalability of what happens when African American (and Diaspora) institutions work together. What better place to address Black homeownership after all than on the campus of an HBCU? Soon to be African American graduates and professionals will be at the vanguard of trying to close the acute homeownership crisis that African America continues to face (graph below).
One of the keynote speakers at the NAREB Black Homeownership Summit event was Teresa Bryce Bazemore, CEO and President of the Federal Home Loan Bank of San Francisco, speaking exclusively to HBCU Money about the event said, “We need all the parties in the housing finance industry and other stakeholders to collectively work to eliminate the barriers to homeownership. In this new environment, all consumers including Black and Brown people should be able to participate equally in the dream of homeownership. We need initiatives that can help potential buyers with improving their credit, saving for down payments and understanding the entire home buying process from A to Z. We also need to make sure that the lending rules are equitable.”
HBCU Money’s Suggested Five Initiatives For HBCUs Can/Should Be But Not Limited Too:
Making financial literacy a mandatory part of matriculation for HBCU students. This can be done through the financial aid office, workshops, or a class.
Providing HBCU students work study jobs that go into the community at African American K-12 schools and teaching financial literacy.
Partnering with African American owned banks and credit unions. Due to their deposit bases, many African American owned banks and credit unions simply can not participate in the primary mortgage market and there are few to none African American owned non-bank mortgage lenders. This leaves the African American community in an extremely vulnerable position to predatory lending as has been demonstrated and shown time and time again. HBCUs are a key to growing assets within African American financial institutions through students, alumni, and institutionally.
Offering more scholarships for ALL students. Scholarships are purposed to reduce student loan debt, but they are often resigned to high achieving students despite the majority of students being in the middle. This becomes highly problematic for African Americans who usually do not have the familial wealth to assist in paying down or off their student loan debt. HBCUs while cheaper than our PWI counterparts on the whole could be doing even more to reduce the student loan debt burden for African American students by ensuring that any student who is academically eligible has an opportunity to reduce their student loan debt burden. This provides an opportunity upon graduation that more of their initial paycheck is going towards wealth building and potential homeownership rather than debt burden.
Encouraging the use of startups like HBCU Real Estate, who has part of their mission statement to use a portion of their profits to provide down payment assistance for HBCU alumni who seek to purchase primary or investment properties.
Homeownership and real estate ownership have long been a cornerstone to establishing generational wealth in the United States. Despite this, the African American homeownership has never crossed over the 50 percent threshold and according to MarketWatch and has always maintained a 20-30 percentage point gap between African and European Americans. African America’s civilian noninsittuional population as of October 2021 was 33.7 million and its civilian labor force is 20.6 million and the African American labor force 20 and over is 19.9 million. Assuming that 44 percent of the 19.9 million are homeowners (8.7 million), it would take approximately 1.5 million more African Americans to become homeowners to get African America above 51 percent. Based on the most recent data provided by Zillow, the typical value of U.S. homes is $308,220 as of September 2021. Between 1999 and 2021, the median price has almost tripled from $111,000 to $308,220. This means in order for those 1.5 million to acquire homes they would need down payments of approximately $16.2 billion using FHA’s 3.5 percent down financing or $10,800 per potential African American homebuyer. While it does not on the surface seem like a lot to many, that number represents almost 45 percent of the African American median net worth, but a mere 6 percent of European American median net worth.
Just for perspective on that $16.2 billion, there are no African Americans with a net worth more than that, but there are 45 Americans whose single net worth exceeds $16.2 billion. The road to achieving more African American homeownership will be no small task, but events like NAREB/Texas Southern will go a long way in us doing the hard work together, lifting the heavy load together, and ultimately achieving our goal together.
How many HBCUs have you donated money too? Below are the jump pages for every SWAC/MEAC school and/or foundation’s giving page. We challenge HBCU alumni to give to their own and as many HBCUs as possible.
There are 21 HBCUs between the SWAC/MEAC. That means there are 21 opportunities to give that stretch from Texas to Maryland and impact the institutional opportunities of tens of thousands of African American students, their families, and our communities. How many will you impact?
The past 365 days for HBCU endowments has seen a lot of press, mainly led by Bennett College’s #StandWithBennett campaign as the school is embattled and was raising money to retain its accreditation and keep the doors open. A constant reminder of the fragility of HBCUs and their financial uncertainty. Economic conditions in the United States have made overall growth in higher education tempered and with it HBCU endowments have been a mixed bag. While the top ten HBCU endowments have five endowments that beat the median increase in endowment market value, only two endowments beat the national average. In comparison the top ten PWI endowments had eight endowments beat the national median average and seven of the ten exceeding the national average.
Over the past 12 months, the top ten HBCU endowments have increased their market value by $134.5 million or an increase of 7.4 percent over last year. There is plenty of argument that HBCUs should not be compared to the largest PWI endowments in behavior and instead to schools that are comparable in their size and scope. This is certainly a valid argument, but at a time when there are more PWIs with $1 billion plus endowments than there are HBCUs, it maybe hard to continue to lean on such an argument. The reason being is that higher education in general is experiencing and going to continue to consolidation and contraction with education alternatives entering the market. Smaller colleges and HBCUs are going to have to be over capitalized and nimble in order to shift to changing market demands and conditions. At the moment, over 90 percent of HBCUs do not have even $100 million endowments leaving them highly vulnerable as we have seen with the closure of a number of HBCUs in recent years and more than just Bennett in current crisis.
This year we included more than just the top ten, but all HBCUs who reported to NACUBO, which is the reporting endowment organization we use to keep our reporting date uniformed.
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.
*Note: 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 FY2016 to FY2017 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.
HBCU Money 