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The College Football Arms Race Is Bigger Than Ever: What Is the True Cost?

“Big Ten” contracts force colleges to spend on sports facilities even if they have underperforming football teams.

Notre Dame and Purdue University students play football in a game on September 4, 2010. (Photo: kevingwelch; Edited: LW / TO)

The college football regular season is over. Many schools are gearing up to play in a bowl game, and Alabama, Clemson, Washington and Ohio State will compete in the college football playoff. Other schools will take immediate steps toward building a better team for next season, including firing their head coach and hiring a new one. The coaching carousel is only one aspect of the college football arms race that never seems to end.

Purdue University, for example, just hired a new coach to lead the Boilermakers for the next six years. Purdue is also building a new football training facility and adding lights to its stadium. All told, the university is spending close to $90 million on its football program. This is wonderful for fans who want a winning program — but it is a risky investment for a school without a strong football tradition that can barely put 30,000 fans in its stadium.

This kind of spending on college athletics is customary across the nation — but spending for most athletic departments is not sustainable. Even though revenue is high, athletic departments spend more than they generate by trying to outspend the competition in an arms race. Money is taken from university sources and mandatory student fees to cover the cost.

Some schools, such as Purdue, are drawn into big-time spending, even though their administrations may not particularity favor this prospect. These schools are reluctant to spend large amounts on football, but the nature of the arms race draws them into it. How is this possible and what is the true cost?

Race to the Top

Today’s college football programs enjoy lucrative television contracts, merchandise deals, gifts from wealthy donors and proceeds from huge fundraising events that funnel money into athletic departments. Because college players are not paid for their labor, millions of dollars are available to spend on infrastructure, such as stadium renovations with new press boxes, additional seating, giant jumbotrons and luxury suites. State-of-the-art training facilities are built with locker rooms, sports medicine centers, meeting rooms, weight rooms, nutrition centers and indoor practice fields.

The Washington Post found that 48 large football programs in 2014 spent a combined $772 million on football facilities — a nearly 90 percent increase from 2004. Some schools have better facilities than professional teams.

Schools with superior facilities gain an advantage in the never-ending contest of charming18-year-old athletes into playing for their team. Yet, as soon as upgrades are complete, facilities are already behind the competition, leading to further additions like video game rooms, player lounges, student housing and multiple uniform combinations. Clemson University, for example, is building a facility with a barber shop, bowling alley and laser-tag equipment for football players. Look at Oregon’s incredible new facility here.

It should be no surprise that the highest-paid public employees in 39 states are college football or basketball coaches. The highest-paid football coach in 2016 is Jim Harbaugh from the University of Michigan, who collects a $9 million salary. Nick Saban from Alabama will take home nearly $7 million, and Urban Meyer from Ohio State will collect $6 million. It is also not uncommon for schools to pay former coaches millions of dollars after they have been fired. A combined total of $50 million in “dead money” was paid to coaches for doing nothing last year.

Athletic departments are able to generate millions of dollars in revenue — but most schools still spend more money than they make. On an episode aired on April 19, 2016, “HBO’s Real Sports” reported that only 24 Division I schools are making money on sports. That means over 300 schools are losing money — a combined $2 billion a year. According to a USA Today analysis, total football revenue for schools in a Power Five conference rose by $304 million in 2015 — but spending rose by $332 million from the previous year. (Power Five schools are those in the Southeastern Conference, Big 12, Big Ten, Pacific 12 and Atlantic Coast Conference.)

Winning is not cheap. To cover the cost, schools are forced to accept money from university sources and mandatory student fees. In 2014, the Rutgers athletic department received $36 million from student fees and subsides, roughly half of what the school spent on its sports programs. This is the largest amount among Division I schools, and it is certainly an anomaly, but schools that have trouble selling tickets and generating revenue must take subsidies. Rutgers is not alone.

According to an analysis conducted by ESPN’s Outside the Lines, around 5 percent of the revenue of athletic departments at Power Five schools is subsidized, and smaller schools are subsidized around 55 percent.

Student fees are customary in collegiate athletics and it is not necessarily a problem, considering the added value sports provide for campuses, student athletes and school branding, which attracts students and tuition money. But fees have increased in many places, costing students hundreds of dollars per year, and athletic departments are increasingly dependent on fees to keep up in the arms race. The absurd spending habits of large schools have trickled down to smaller schools that cannot afford it. The richest programs spend money on private jets, five-star hotels and large staffs — all things that Divisions II and III schools cannot afford. To keep up, smaller schools take even more money from taxpayers, student fees and other university programs to pay for coaches and amenities for athletes. This is not sustainable, especially amid austerity cuts and rising tuition costs that already burden students.

The bubble could burst if student-athletes are paid, which is why the National Collegiate Athletic Association (NCAA) has fiercely fought to keep players from unionizing. The bubble could also burst if concussion lawsuits force big payouts. A recent study concluded that degenerative brain disease is a problem for college football, not just the NFL.

The entire enterprise of college sports will not likely go bankrupt anytime soon, but what does it say about a country that invests so much in college athletics, while public education faces serious funding issues? Although some schools may not pay coaching salaries and specific stadium renovations with university sources or student fees, wasteful spending on college sports costs society as a whole. It drains resources from basic human necessities, such as health care, education, affordable housing and livable wages. USA Today estimates that somewhere close to $100 billion has been spent on college sports in the past 11 years.

Purdue Enters Arms Race

Purdue University is an example of a school with an athletic department that covers its annual operating expenses without drawing on subsidies from students or taxpayers. Only a handful of schools can say the same. Purdue’s president and athletic department have been reluctant to spend huge amounts on football — yet the school is still drawn into the arms race. How is this possible?

The president of Purdue, Mitch Daniels, has never shown particular interest in college sports, having gone so far as to publicly disavow the big-time spending that is a common feature of college athletics. In September 2012 while Daniels was president-in-waiting, he was asked what he thought about college sports. He called it “out of control” and “filled with excess money, often hypocrisy, [and] double standards.” If he did not think Purdue was “an outlier to that,” he said, he “couldn’t have come [to Purdue].” Such a perspective is rare among universities, which are usually more than willing to spend money on whatever it takes to win football games. Meanwhile, former Purdue Athletic Director Morgan Burke was also careful to steer the school away from football-based debt. Having served from 1993 to 2016, Burke had the fourth-longest tenure among athletic directors at Football Bowl Subdivision (FBS) institutions. As his legacy, he left a self-sustaining athletic department that did not make risky investments in football.

With a 9-39 record in the past four seasons, Purdue is a prime example of what happens if a school does not keep up in the arms race. In recent years, Purdue has become known as one of the worst college football teams in a Power Five conference. It has had only one winning season since 2007, and it has not won back-to-back games in four seasons. Purdue consistently ranks near the bottom of several major statistical categories, and although it has historically had long stretches of consecutive losing seasons, it has fallen further behind.

After covering all expenses, the Purdue football team profited only $1.5 million in fiscal year 2014-15. The next lowest earner in the Big Ten was Rutgers, with $6.9 million; while Michigan was the highest at more than $56 million. By no measure is Purdue good at football. It has a small fan base, small budget and few wins to show for it.

Nevertheless, despite a fiscally responsible administration and a football program that generates very little revenue, Purdue will receive a projected $38 million in 2016-17, and probably $50 million the following year from the Big Ten conference. This money, along with contractual agreements with the Big Ten Network, draws the school into wasteful spending, even if the administration desires otherwise.

Purdue is a basketball-first school, making large investments to its basketball facilities in recent years, but the school has been slow to spend money on its football program. New Athletic Director Mike Bobinski has been given the resources to make major upgrades in football — but this has less to do with Purdue wanting these things, and more to do with getting free money from the Big Ten conference and the NCAA.

Money is guaranteed regardless of how bad the team is or how many fans attend games. Purdue had an average football game attendance of 37,500 in 2015, and in 2016 it barely sold 20,000 season tickets, including students. President Mitch Daniels is correct when he said, “On a relative basis, the number of football seats we sell has never been less important, financially.” In other words, attendance does not matter when the school gets free money.

Purdue will receive millions of dollars from the Big Ten Conference that will go to pay for major upgrades to the football program: $60 million for a new training facility, $5 million for stadium lights, $4 million for a coaching buyout, and in the neighborhood of $20 million for a new coach. That is nearly $90 million of upgrades for a school that does not inherently want them.

The university board of trustees approved a $5 million expenditure to have permanent lights installed at Ross-Ade Stadium for the 2017 season; but again, not necessarily because the administration wants it. Contractual agreements with the Big Ten Network requires lights at each Big Ten stadium for scheduling purposes. Purdue is required to spend the money.

Athletic Director Mike Bobinski will also help finalize a brand new Football Performance Complex with a price tag of $60 million, complete with a new weight room, sports medicine center, meeting rooms and player’s lounge. It will be finished in time for the 2017 season. This facility is long overdue, according to the timetable of other schools in the Big Ten. Purdue must adopt the spending habits of other schools if it hopes to be competitive in any capacity.

Purdue also reportedly offered its new coach, Jeff Brohm, more than $3 million a year for the next six seasons. The previous coach, Darrell Hazell, was fired midway through the 2016 season, costing the athletic department a massive buyout of roughly $4 million. This effectively means Purdue is paying two head coaches. Again, the university is drawn into immense spending.

Purdue would not be putting forth this type of financial commitment into its football program if it were not part of a larger, wasteful system. The athletic department does not engage in risky investment, nor does the football team generate enough revenue to pay for such an investment. It is impossible to know exactly how serious the administration is about football, nor does it really matter. Purdue is drawn into the college football arms race, whether the administration wants to or not.

Other schools in the Big Ten with recently announced upgrades include $132 million at Illinois, $260 million at Northwestern and $155 million at Maryland. Similar to Purdue, these schools do not generate significant amounts of revenue from football, so such a degree of spending owes much to the larger wasteful system of which they are a part.

Race to the Bottom

At risk of oversimplifying complex issues, it should be noted that even if all information were available, budgets for athletic departments are far too complicated to be condensed in this context. It is beyond the scope of this article to discuss the intricate details of legal agreements between schools and conferences, or between conferences and television networks. However, it can be said with a high degree of certainty that too much money and too many resources are directed toward sports that should otherwise be directed toward environmental protection and basic human necessities, such as education, health care and affordable housing.

Athletic departments are able to generate millions of dollars from wealthy individuals, merchandise deals, naming rights and advertising via televisions networks — all associated with crony capitalism that is responsible for extreme inequality we see in society. The direct line is obvious: Trickle-up economics allows wealthy individuals and corporations to drain wealth from the poor; and, along with a broken political system, wealth is misdirected towards things that do not benefit society. Such an approach provides nothing more than wasteful entertainment. Some money may go for academic centers, new dormitories, libraries and computer labs, but most of it goes to needless sports facilities, large coaching staffs and various amenities designed to attract recruits.

There is little doubt that college football is popular. Large consumer demand drives up revenue, and revenue drives up expenditures. On the surface, supply and demand is merely providing people what they want: Fans love attending games and the number of people watching is high, so revenue will naturally lead to expenditures. However, it is not so simple. Those who watch college football and provide the demand come from a small segment of society that is not necessarily hurt the most when society misuses resources. Typical fans of college football are often white, middle class, educated and alumni of the schools playing. The market is satisfying the preferences of a select group of people, which undoubtedly has value to the fans, players and coaches involved, however wasteful spending drains resources from society, hurting the most vulnerable people first, such as the poor, the uneducated and people of color.

There must to be limits. The four teams in this year’s college football playoff — Alabama, Clemson, Washington and Ohio State — paid a combined $21 million to their head coaches this season. Yet it is a zero-sum gain. Three teams will go home losers, and their fans will undoubtedly call for more money, better facilities, better coaches and better players. Where does it end?

At some schools, the success of the football program is paramount, and winning is so important that a win-at-all-cost philosophy leads to major scandals, such as recruiting violations, academic cheating, sexual assault cover-ups, and backdoor deals between individual players and boosters. Schools that espouse a win-at-all-costs mindset and a spending-first philosophy depend on the success of the athletic department, and success of the athletic department depends, at least in part, on the success of the football team — whether that brings alumni support, donations and positive branding. But Purdue is different from many other universities: At Purdue, power does not rest with the athletic department, and the football coach is not the most powerful person on campus.

The spectacle of college sports distracts us from what is important, and while the “bread and circus” of today’s games are not intentionally designed to be instruments of social control like they were for the Roman Empire, they have the same impact. Far too many resources are siphoned away from important things like education, and even schools like Purdue — which has been reluctant to spend money on football — still spend far too much on sports. It is said that the US can be judged by entering its prisons, but it can also be judged by entering its college football stadiums.