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Once more unto the breach with the Lesniak Report: There's still no plan

Senator Lesniak released his report about the economic impact of Rutgers Athletics. I read all 45 pages and my thought is.....


....there's still no plan.

The report commissioned by state senator Ray Lesniak was published on his website last Wednesday. And it was pretty much as advertised: a defense/justification of spending on athletics.  And about eight pages of it, including tables and commentary, was a direct counter attack to the University Senate's report on scaling back/banning any new athletic construction until the deficit/subsidy was eliminated.  We'll get to that later in this post.

On the Banks has looked at this report and addressed it.  Dave White gave a quick overview when it first came out and our new managing editor Timothy Wentz pulled out some points as well.  Let's make it a trifecta.

As for a plan for athletic construction, that wasn't what this report was supposed to create.  That, supposedly, is going to come out in some form when University President Robert Barchi makes his presentation at the Board of Governors meeting on June 18.  But, you know what?  After that Board of Governors meeting and that presentation, I doubt there'll be much to really sink your teeth into, either. When you read his comments and responses to Lesniak, it seems very much as if he is just going to give a very broad brush treatment to any athletic master plan. But I digress.

The Lesniak report was a series of commentaries about the benefits of athletics, the long-term advantages and returns on investment, and how poorly developed the Senate report was.  Here are a few highlights I took from reading the report (before my eyes glazed over):

In the opening section, the report states:

With Rutgers move to the Big Ten, the Rutgers administration has considered several capital upgrades to current facilities, and has proposed new facilities to improve the quality of Rutgers Athletic programs.....Rutgers administration has identified specific facilities that it would like to improve and increase the seating capacity of.

Well, if they have, I guess that's coming out on June 18.  And we'll ignore the poor grammar.  These are, after all, economics people.

From Section 1.5:

Athletics and having successful teams may also generate intangible benefits in terms of school spirit and pride in the community. Empirical evidence suggests a positive correlation between football and basketball success, and the graduation and retention rates for undergraduate students. [bold emphasis added]

There's a good amount of those words used: may and suggests; it's probably a standard practice in these types of reports.  The old caveat that past performance is not a guarantee of future results holds true.  Yet, it certainly makes sense that more income generated by higher exposure and a more prestigious conference would equal greater success in a multitude of areas, from revenue to student applications to the subsequent higher end student population.  Which brings us to this:

For the University, athletics serves a selling point to prospective students. Numerous studies including: Borland et. al 1992, Sandy and Sloane 2004, Mixon & Hsing 1994, Pope & Pope 2009, and McCormick & Tinsley 1987, have shown positive connections between higher enrollments and SAT scores with schools that have higher division sports. The McCormick & Tinsley study controlled for numerous other factors....and found SAT scores were 30 points higher at schools with major sports programs compared to their non-major sports peers.....Sloane and Sandy (2004) also found that enrollment was about 2,000 students less and SAT scores were 7 to 51 points lower for institutions affiliated with levels of athletics below the Division I level. [bold emphasis added]

Ahh, the ever popular "intangibles" of big time athletics.  While a school's athletic program should not be why a student chooses a particular school (that's the educator in me speaking), the fact is, kids are attracted to what's hot and what's shiny. From RU's Senior Associate Athletic Director for Communications, Kevin Lorincz, a simple example:

And, again, as an educator, I like this gem:

Athletics and having successful teams may also generate intangible benefits in terms of school spirit and pride in the community. Empirical evidence suggests a positive correlation between football and basketball success, and the graduation and retention rates for undergraduate students. This results in a gain for University and State through the graduation and retention of more students who will contribute and add tax revenues to the local and New Jersey economy. [bold emphasis added]

And, finally, what I feel was the primary raison d'etre for the report: the University Senate's attack on athletics.  A few highlights:

Regarding the timing of the report:

The most glaring error in the report is its nearsightedness. The report focuses on the current state of Rutgers' athletic expenses while largely ignoring the future impact of Big Ten revenues to the University.

On the issue of scale:

According to the financial data reported to the NCAA cited in the Senate report, Rutgers ranks last among Big Ten in non-university sources.  Moreover, revenues from ticket sales, contributions, and media/NCAA distributions to Rutgers are roughly two-thirds less than the average of its Big Ten peers.....Particularly in revenues and expenses there is a wide gap between the "Power 5" conferences and the rest of the Division I athletic conferences.  Using 2013 data obtained from 230 NCAA Division I schools, average athletic revenues for the Power Five conferences was 479% higher, and school subsidies to athletic departments were less than half (46%) of those of the non-Power Five conferences. On average, non-Power Five conference members relied on school subsidies for 64% of their athletic revenues compared to 6% for Power Five conference members. Rutgers' foray into Power Five conference athletics is only in its first year, and the department has not yet been able to reap the full rewards of media exposure that the Power Five conferences garner.  Secondly, unlike Maryland (ACC) or Nebraska (Big 12), Rutgers did not move from one the Power Five conferences to another. The AAC is not considered one of the Power Five conferences and on average received only 52% of the revenues received by the Power Five conference members, and school subsidies represented about 42% of their athletic revenues compared to the 6% on average in the Power Five conferences.  Over time, non-school subsidized revenues will likely converge closer to the Big Ten average, and Rutgers Athletics will require fewer subsidies to maintain its programs. [bold emphasis added]

From the Figures Never Lie and Liars Never Figure file:

The Senate report does acknowledge that Big Ten media revenues received by Rutgers during their 2014-2022 financial plan are expected to rise and may in fact be conservative. Instead of taking this in to account, they show different scenarios where annual expenditures grow at a higher rate, yet leave revenues unchanged. [emphasis added]

That's really an interesting point.  Wasn't the principal author of the Senate's argument, and one of the loudest critics of additional athletic spending,, according to most, economics professor Mark Killingsworth.  From the report, it appears that there was a selective use of data.  Hmmmm.

On the Big Ten Brand:

While the Senate report argues that athletics are a drain on the University's resources, it undervalues the gains from Big Ten membership. The Big Ten is an athletic and academic conference comprising of 11 state flagship universities, two public land grant institutions, and a private university. Thirteen of the fourteen Big Ten schools are Association of American University (AAU) members, and twelve have endowments over $1 billion. This puts Rutgers in an elite group of public land-grant universities that are recognized nationally for their athletics and academics.

While these affiliations [Big Ten, CIC] present the University with additional marketing opportunities to prospective students, the actual impact remains to be seen. Enrollment and SAT metrics shown in the University Senate report would not show the impact of joining the Big Ten. However, after Nebraska joined the Big Ten in 2011, it saw a 12% uptick in applications between 2010 and 2013. During the same time period, Rutgers only saw a 4% increase in applications.

So let's summarize some thoughts.  My biggest take away was why hadn't Rutgers done this type of study a long time ago and publicized the bejabbers out of it?  The fact of the matter is, Rutgers is an economic engine for the state -- and that's outside of athletics.  Add in the additional revenue that is generated by, for example, a Saturday football game (meals, hotels, tolls, taxes, etc) and you're generating a bunch of bucks.

The fact is, that in 2009, our friends from ttfp did just that in a report pointing out how significant Penn State ttfp football was to Centre County and the Commonwealth. Their Executive Summary only took 16 pages to say all that was needed:  in 2009, the Business Volume Impact on Pennsylvania from ttfp football (alone) was over $161 million.  You want to think about that number for a moment?

Okay, Rutgers isn't close to that, but it does create already a certain economic multiplier effect.  And the Lesniak report talks about that, as well.

And a final point, that I never even considered -- and personally don't think is viable, but....  On page 24 of the Lesniak report, the writers make this comment about cutting athletic spending:

This could potentially jeopardize Rutgers [sic] place in the Big Ten. If Rutgers' membership in the Big Ten would be terminated, there are several schools in other conferences with similar academic and athletic credentials that would readily take Rutgers' place. This expulsion could result in numerous negative direct and indirect effects to Rutgers Athletics and Rutgers University as a whole.

Jim Delany ain't no fool; inviting Rutgers to the Big Ten was well calculated.  But imagine if somewhere in the near future the Big Ten had a "change of heart".  How foolish does everyone look in that scenario,  And I will say, though, that after reading that comment, I did sleep with the lights on that night.