Cinderella Story: the Impact of College Athletic Success on Student Applications
Total Page：16
File Type：pdf, Size：1020Kb
Cinderella Story: The Impact of College Athletic Success on Student Applications By: Eric Tang Northwestern University MMSS Senior Thesis 2011 Advisor: Burton Weisbrod I would like to thank Professor Burton Weisbrod for all his time, effort, guidance, and patience as my senior thesis advisor. I also greatly appreciate the help I received from Chris Vickers answering my questions regarding regressions in Stata. ABSTRACT Despite the abundance of literature on the topic, empirical studies have produced mixed results on the relationship between college athletic success and student applications. Some studies have lacked comprehensiveness by only analyzing a subset of Division I schools, while others have failed to realize that different schools have different standards of “sports success.” This paper captures breadth by analyzing all 346 Division I schools, but also factors in different interpretations of sports success by distinguishing between three main groups of schools that are well-known in the college athletic community: BCS schools, mid-major schools, and other Division I schools. The study uses a range of representative sports success variables designed to proxy the amount of national media attention a school receives from athletic success. The paper finds that although there is generally a positive advertising effect of college athletics, the relationship between sports success and student applications has weakened in the most recent decade and is no longer statistically significant. TABLE OF CONTENTS I. Introduction………………………………………………………………………….…….3 II. Literature Review…………………………………………………………………….……5 III. Data Sources………………………………………………………………………………11 IV. Variables and Regressions…………………………………………………………………12 V. Results……………………………………………………………………………………18 VI. Limitations………………………………………………………………………………..24 VII. Conclusion and Future Research…………………………………………………………26 VIII. References………………………………………………………………………….…….30 2 I. Introduction The excitement of competitive college athletics attracts millions of viewers each year. Fans and alumni from across the United States regularly gather to support their college teams. Due to this widespread appeal, college sports have seen an increased focus in the national media, evident by the recent 14-year, multi-billion dollar television rights deal for the NCAA men’s basketball tournament1. However, building a competitive athletic program comes at a substantial cost for colleges and universities. Over the past decade, athletic budgets have skyrocketed at alarming rates. Schools have gone on bidding wars to erect the best stadiums, secure the most prominent coaches, and place into the highest revenue tournament and bowl games. According to the recent Knight Commission report, the average of the top ten college athletic budgets has increased over 55% from 2005 to 2009. This average budget of $69 million in 2005 is projected to balloon to over a quarter-billion dollars by 20202. This bidding war has been referred to as an “expenditure arms race” by some3. Robert Frank contends that even though the “bids” have increased without bound, the rewards stay relatively constant. No matter how many dollars are spent on college athletics, there will only be a certain number of bowl games each year, a fixed number of teams that will make the NCAA tournament, and still only one champion4. Therefore, only a limited number of schools are able to reap the rewards. The Knight Commission reported that only about 15% of Division I and Division II institutions operate their athletics programs with a profit5. According to a recent USA Today study, just seven athletic programs out of hundreds have achieved a profit each of the past five years. It should be noted that these statistics were presented in an excessively bleak 1 (Knight Commission on Intercollegiate Athletics, 2010), Page 3 2 (Knight Commission on Intercollegiate Athletics, 2010), Figure 4 3 (Frank, 2004), Page 11 4 (Weisbrod, Ballou, & Asch, 2008), Page 220 does show that the financial rewards for playing in bowl games have also increased dramatically over the past 80 years 5 (Knight Commission on Intercollegiate Athletics, 2001), Page 16 3 manner, and Weisbrod et al. show that although aggregate profits of athletic programs may be minimal or negative, schools with Division I FBS (formerly Division I-A) football teams generate profits from men’s football and basketball programs that cover losses from other sports6. Even so, overall athletic profits at these schools are minimal, and it raises the question of whether universities should continue to dramatically increase expenditures to fund athletics. From a pure numbers viewpoint, this university behavior to engage in high levels of athletic expenditures for a low or sometimes negative return on investment seems irrational. After all, expenditures could be better used towards academics to serve the greater educational purpose of higher education institutions. Yet, proponents of college athletics argue that college sports contribute greatly to the institution as a whole. They contend that there are numerous spillover effects of college athletics that are not easily represented by numbers, such as bringing unity to the student body and alumni and providing name recognition for the college. This latter perspective, which has been referred to as the “advertising effect” of college sports, suggests that sports success may have an effect on student applications. Sports success may increase the quantity and quality of incoming students, resulting in a positive academic effect on the institution and perhaps justifying such high levels of athletic expenditures. This belief has prompted many empirical studies on the topic, outlined in the next section. After covering previous empirical research, Section II explains how this paper contributes to the overall literature. Section III covers the sources of data used in the study, while Section IV discusses the variables in detail and provides the logic behind the regression models. Section V gives the results of this empirical study, and Section VI discusses any shortfalls and limitations. Section VII concludes by interpreting the impact of the findings in this study and offering areas of future research. 6 (Weisbrod, Ballou, & Asch, 2008), Table 13.1 4 II. Literature Review There has been a wide range of empirical research involving the impacts of college athletic success on the quantity of school applications and the quality of the incoming freshman class. Table 1 provides a summary of the literature regarding application quantity. Two papers have studied how sports success affects the total number of applications. Murphy and Trandel (1994) examined a subset of Division I schools---55 schools from major football conferences--- and found a small but significant positive coefficient relating football conference winning % to the number of applications. They concluded that an improvement in conference winning percentage by 0.250 (i.e. from 50% to 75%) would increase applications an average of 1.3% the following year. In a more recent and comprehensive study, Devin Pope and Jaren Pope (2009) looked at all Division I schools from 1983-2002 and created several unique variables for sports success. This paper used dummy variables for progression within the NCAA tournament for basketball and dummy variables for AP rankings for football and created lagged dummy variables for up to three years. The paper found significant and persistent increases in applications of 2% to 8% for top-20 football schools and colleges that made the Sweet Sixteen of the NCAA Tournament. Two other papers used basic cross-sectional OLS models and discovered that schools in a higher-level athletic division and schools that performed better in basketball had a higher proportion of out-of-state students. Table 2 provides a summary of the literature regarding application quality. McCormick and Tinsley conducted one of the first empirical studies in 1987. Although they found that football success had a positive correlation with incoming SAT scores among schools in the major conferences, their results were not significant at the 10% level. The same Pope and Pope paper 5 Table 1: Literature on Application Quantity Study Years Schools Model Results Murphy and (10 years) 42 schools Fixed-effects OLS: number of Significant but small positive effect: Trandel (1994) 1978-1987 from 6 major applications on football increase in conference win% by 25% football conference win% lagged 1 year, results in 1.3% increase in apps conferences control variables Pope and Pope (20 years) All NCAA Fixed-effects OLS: number of Final16, Final4, Champ for basketball (2009) 1983 – 2002 Division I applications on lagged basketball and Top20, Top10, Champ for football schools (~330) tournament (64,16,4,1) & football all have significant increase in AP Rank dummies (20,10,1), applications of between 2% and 8% control variables Mixon and (1 year) 220 schools, Cross-sectional Tobit: % Out-of-state students tend to favor Hsing (1994) 1990 70% in NCAA enrollment out-of-state on higher division sports (Division I) Division I, division variable, control others in Div. variables II, III, NAIA Mixon and (1 year) 156 schools in Cross-sectional OLS: % Significant relationship where 100% Ressler (1995) 1993 Division I enrollment out-of-state on number increase in tournament rounds from of rounds in NCAA basketball 1978 to 1992 results in 6% increase in tourney, control variables out-of-state enrollment 6 Table 2: Literature on Application Quality