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SMU and the Death Penalty

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SMU and the Death Penalty The Lasting Impact of NCAA Sanctions: SMU and the Death Penalty Kerianne Lawson∗ West Virginia University John Chambers College of Business and Economics Department of Economics Abstract In 1987, the Southern Methodist University (SMU) football program received the NCAA's harsh- est penalty, also known as the death penalty. SMU was caught committing two or more major violations of NCAA rules in less than five years. Therefore, under the repeat offender clause, their football program was terminated for the 1987-1988 school year, and they chose to take the next season off as well. Before this unprecedented and highly publicized scandal, SMU was a nationally ranked and competitive team. In the years following the death penalty, the team struggled to find success. Using the synthetic control method, this article measures the cost of the death penalty in terms of athletic success and the university's finances. JEL codes: Z20, Z23, I22 ∗[email protected] 1 1 Introduction The Southern Methodist University (SMU) football team received the NCAA's \death penalty" in 1987. This is the harshest punishment that the NCAA can give to an athletic program, and SMU is the only collegiate football program to received the death penalty.1 The punishment was handed down under the repeat offender clause, which NCAA to shut down an athletic program if the schools has two or more violations of NCAA policies within five years. In SMU's case, the violations were related to compensating players. The NCAA discovered SMU continued to pay players despite already being on probation for a previous offense. Therefore, they had grounds to impose their harshest penalty. In February 1987, the news broke about SMU and the death penalty. The list of punishments included cancelling SMU football's 1987 season, no home games in the 1988 season, no bowl games or televised games through 1989, restrictions on recruiting and hiring coaching staff, and loss of scholarships. Even though the athletic scholarships to SMU had been terminated, players remained eligible to play in the 1987 season at other schools. In the days following the news of SMU receiving the death penalty, dozens of SMU football players transferred to other schools, or were forced to leave the school because they could not afford tuition without a scholarship. SMU elected to cancel their 1988 season in addition to the 1987 season. They resumed play in the fall of 1989. The death penalty was a devastating blow to SMU's football program. Members of the NCAA committee who made the decision have since stated that they never expected to actually give out the death penalty when they created the policy, but that SMU left them no choice (Dodds, 2015). They were caught cheating, again, and red-handed. Many believe that the NCAA felt that they needed to make an example out of a school to warn others out there who were also paying their players (Dodds, 2015; Farrey, 2001). Since the NCAA handed down its most severe punishment to SMU, no other football program has received the death penalty, while many have been eligible to receive it (Farrey, 2001). John Lombardi once said that the death penalty was like a nuclear bomb on SMU and it is still affecting the school in the after shocks (Dodds, 2015; Farrey, 2001). At a glance, it seems true. SMU's football program has struggled over the years. Not only has the team experienced very little success on the field, but there hasn't been the same support from the fans like there was before the death penalty (Dodds, 2015). Before the death penalty, SMU football was one of the best programs in the country. Overnight, they went from one of the most formidable opponents in college football, to no program at all. 1The other programs that have received the death penalty are University of Kentucky men's basketball for 1952, University of Southwestern Louisiana men's basketball for 1973{1975, Morehouse College men's soccer for 2004-2005, and MacMurray College men's tennis for 2005-2007. 2 In order to understand the effect of the death penalty on SMU and its football program, there needs to be a counterfactual. But, it is impossible to observe what would have happened to SMU had they not received the death penalty. Thus, constructing a synthetic counterfactual version of SMU using the Synthetic Control Method can show what might have happened to SMU had the NCAA not given them the death penalty. Then, the synthetic version of SMU is compared it to what actually happened. First, this article looks at how SMU performed compared to the synthetic counterfactual and how the death penalty affected SMU. Second, it discusses if and by how much SMU has recovered from death penalty. This article builds on the literature that discusses the relationship between a collegiate athletic program's success and school finance. Namely, how winning in sports affects a college or university's tuition revenue (Alexander and Kern, 2009; Mixon, 1995; Mixon et al., 2004), gifts and donations (Humphreys and Mondello, 2007; Grimes and Chressanthis, 1994), or student applications (Chressanthis and Grimes, 1993; Pope and Pope, 2009). This article looks at changes in tuition revenue, gifts and donations revenue, as well as auxiliary revenue and expenditure, which primarily comes from the athletic program, after the death penalty. Additionally, this article is related to the research done on how badly a scandal, athletic or otherwise, can hurt a school financially or in academic performance. Eggers et al. (2020) and Groothius et al. (2019) show that sanctions on NCAA basketball programs has adverse effects on academic outcomes, such as the quantity of applications and the quality of those applicants. Rooney and Smith (2019) find that high-profile scandals, not just athletic ones, at universities negatively affect the number of applicants in the following year. McCannon and Johnson (2020) study the Penn State football scandal and find that incoming freshman GPAs and SAT scores were significantly lower after the scandal. This article looks at an incredibly unique and extreme case which, surprisingly, has never been discussed in the sports economics literature. The goal of this article is to employ a causal econometric method to better understand the true cost of the NCAA death penalty. The following outcomes are examined: win percentage, NFL draft selections, tuition revenue, gifts and donations revenue, revenue from sports, expenditures on sports. 2 Related Literature Studying the impact of NCAA sanctions on an athletic program, or a university is not new to the literature. Sanctions can affect the competitive balance in sports (Depkin and Wilson, 2006) and employment and promotion decisions about coaches (Soebbing et al., 2015). Eggers et al. (2020) and Groothius et al. (2019) 3 find that post season bans on collegiate level basketball teams negatively affect the quality and quantity of applications to the college or university, and these results persist for years after the ban is lifted. McCannon and Johnson (2020) also look at the quality of the incoming freshman classes at Penn State University after the football scandal in 2011. They discover that the average high school GPA is 0.12 points lower after the scandal and the proportion of students with a high SAT Math score is down 4.8 percentage points. The Penn State scandal was much larger than a post season ban in terms of how it affected the school and the media coverage surrounding it. The NCAA refrained from giving the death penalty to Penn State, even though they considered it (Axon and Brady, 2014). In addition to NCAA sanctions, a school may be affected by other scandals. Rooney and Smith (2019) look at highly publicized scandals at universities and finds that there is a reduction in the number of applications (about 10%) and this persists for around 2 years after the news breaks. Interestingly, Rooney and Smith (2019) compare the result to the previous literature and says that a public scandal does about the same damage to applications as falling 10 spots in the college football rankings. This article is bridging these two ideas and discussing a scandal that is related to sports. When SMU football got the death penalty, it was the harshest possible punishment and it was highly publicized. 3 Data The data in this study come from a number of sources. Football team statistics come from the Sports Reference website. College football teams that had data available for every season from 1980 to 2019 were included in the main specification’s donor pool. The variables used from Sports Reference are the overall win percentage, strength of schedule score, the point differential (total points scored minus total points allowed), and if the teams were ranked by the AP poll during the season. To determine which schools had former players selected in the NFL draft, we used the the pro-football section of Sports Reference which has the draft results for the 1981-2019 NFL drafts. Data on each university's finances and student population come from the National Center for Education Statistics (NCES) dataset known as the Integrated Postsecondary Education Data System (IPEDS). The summary statistics for all of the data are presented in Table 1. Figure 1 shows the locations of all of the colleges and universities included in the donor pool in the main specification. SMU is located in Dallas, Texas. Schools qualified to be in the donor pool if they had a Division 1 football team in every seasons from 1980 to 2019. 4 Table 1: Summary statistics Variable Mean SD Min Max Overall win % 0.527 0.224 0.000 1.000 Conference win % 0.506 0.263 0.000 1.000 Point differential 1.760 11.141 -38.400 39.900 NFL draft selections 2.279 2.305 0.000 17.000 Strength of schedule 2.230 4.316 -15.010 12.180 Tuition & fees revenue (in millions) 208.770 241.091 3.238 2,043.450 Private gifts revenue (in millions) 54.353 101.703 0.000 1,578.600 Sports revenue (in millions) 91.910 92.755 0.922 899.25 Sports expenditures (in millions) 95.570 104.528 0.720 1,250.87 Fall undergraduate attendance 19,011 9,351 2,501 56,562 Percent female undergraduates 48.80 0.080 6.50 63.70 Figure 1: Locations of all colleges and universities considered in the donor pool selection.
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