DO INTERCOLLEGIATE ATHLETICS SUBSIDIES CORRELATE WITH EDUCATIONAL SPENDING? AN EMPIRICAL STUDY OF PUBLIC DIVISION-I COLLEGES AND UNIVERSITIES

Intercollegiate athletics are a prominent feature of American higher education. They have been characterized as the “front door” to the university due to their unique ability to draw alumni and other supporters to campus. It is often supposed that the exposure from high-profile athletics produces a number of indirect benefits including greater institutional prestige. Such exposure comes at a cost, however, as most Division I athletics programs are not financially self-sufficient and receive institutional subsidies to balance their budgets. At present, it is unclear how institutions budget for athletics subsidies or whether the recent increases in subsidies have impacted the overall financial picture of colleges and universities. Prior research has shown that athletics subsidies and student tuition and fees are not significantly correlated for public Division I institutions, which suggests the possibility that institutions have reallocated funds from other core areas to athletics. In this dissertation, the relationship between athletics subsidies and one of the most important core areas of the university – education and related activities – was examined. This relationship was investigated using fixed-effects structural equation models to analyze a panel dataset of public Division I institutions. It was found that total athletics subsidies (school funds and student fees) per student and education and related spending per student were positively correlated. This suggests that rather than decrease educational spending, institutions that increase total athletics subsidies have simultaneously increased their educational expenditures. However, in the analyses involving the more restrictive definition of athletics subsidies, it was shown that athletics subsidies from school funds was not correlated with educational spending. The results also provided some evidence that differences in the relationship between athletics subsidies and educational spending exist according to Carnegie classification and level of athletics competition. The findings from this study have a number of implications for higher education policy and future research. The absence of a negative relationship between athletics subsidies and educational spending suggests that athletics subsidies are not associated with decreases in educational spending that could ultimately harm the quality of education provided by colleges and universities. Furthermore, the existence of a positive correlation between athletics subsidies and educational spending and the fact that core revenues were controlled for in the models suggest the possibility that institutions have redirected funds from other areas to support education and athletics