There is currently controversy in Alabama about whether the University of Alabama-Birmingham (UAB) should drop its football program. Suffice it to say UAB hasn't had the success enjoyed by traditional powerhouses like Alabama and Auburn. Via Twitter, my colleague Darin White shared this article, which notes the following:
Like many lower-resourced Division I schools, UAB has drained money on football. From 2006 to 2013, UAB athletics received $85.4 million in direct institutional support and $28.4 million from student fees. Subsidies accounted for 64 percent of UAB's athletic revenue in fiscal year 2013, though the university's support declined by $1.4 million that year in a rare instance when subsidies decreased.
Note that this is money spent on athletics, not just football. To keep things easy, let's suppose UAB had decided to dump sports in 2006 and instead stuffed that $113.8 million in a mattress. What could they get for it now?
According to US News, UAB's 2014-15 tuition and fees are $9,280 for in-state students. The money UAB spent on athletics subsidies between 2006 and 2013 had it been stuffed in a mattress instead would have provided full-tuition, in-state scholarships for about 12,263 students in 2014-15. UAB has 11,502 undergraduates.
Obviously, there are a lot of other things UAB needs to consider before deciding whether to cut football. Maybe Division I sports create school spirit, attract students and faculty members, build valuable brand equity, and provide other benefits. The numbers above suggest UAB is subsidizing sports to the tune of $14-$16 million a year or so with institutional support and student fees. Sports are fun, but I'm not sure Division I sports are worth ten chaired professorships or 1,500 full-tuition scholarships worth of subsidies every year.
Note: I make a few of these points in tweets, but with slightly different numbers since I'm using different sources and doing a bit more reading.
Update, 11:02 AM: I just sent the following to my Principles and MBA students. What about Samford?
You might have learned of recent controversy about whether UAB should drop football. My latest post at EconLog takes this up by asking "what does UAB give up in order to subsidize sports"?
What about Samford? According to this site, Samford spent $16,748,946 on sports in 2013. That would have been enough to provide about 631.5 full-tuition scholarships for 2014-15.
Is this a wise investment? How would we know?