In its Sept. 4 editorial, the Reveille editorial board argued that athletic director Scott Woodward’s decision to end the $7 million annual transfer-fund policy displayed “LSU’s misguided principles.”
As an economics professor and proud LSU and Reveille alum, I share the board’s concern for the University’s budget predicament. But the editorial itself is misguided.
Counterintuitive as it may seem, Woodward’s decision is what’s best for LSU athletics and academics. To the extent it helps LSU athletics become more competitive, ending the subsidy will inevitably help the University.
The best example of how athletic success translates to academic success comes courtesy our arch-rivals in Tuscaloosa. Before Nick Saban was hired in 2007, Alabama’s enrollment had stagnated below 25,000. The school received 15,761 applications, the vast majority of which were from in-state students.
By 2016, a decade after the Crimson Emperor’s arrival, enrollment rose by 50% to 37,665. Alabama received 42,802 applications, a 300% increase from 2006. Average ACT scores rose from 24 to 27 and average GPAs from 3.4 to 3.7. For the first time in its history, more than half of Alabama’s students are from out of state.
Thanks in large part to this football-fueled spike in demand, tuition revenue rose by more than 400% from $112 million in 2004 to $482 million in 2016. Academic fundraising has also boomed. In 2017, Alabama raised $224.2 million compared to LSU’s $56 million.
Saban isn’t the only reason for Alabama’s academic miracle, but he is the most important. Based on these results, one could argue he’s the best hire Alabama has ever made.
Importantly, all of Alabama’s recent academic success occurred without an athletic kickback. Saban would’ve never taken the Alabama job had a transfer-fund policy been in place, just like Woodward would’ve never accepted the LSU job had he been forced to maintain it. The cost of the policy far outweighed its benefit – both to LSU athletics and, ultimately, to the University.
Woodward’s critics need to realize that the transfer-fund policy, though a nice (albeit costly) gesture, is but one small way athletics has contributed to the University. In a 2014 study, economist Loren Scott estimated that LSU athletics generated $400 million per year in new sales to Baton Rouge area firms and 4,000 jobs. Although it’s difficult to pinpoint the precise financial benefit LSU athletics provides the University, it vastly exceeds $7 million. One need only harken back to the halcyon days of the early 2000s, when the football program’s success as the “front porch” of the University fueled the greatest surge in out-of-state enrollment the University has ever seen (let’s not talk about the coach at the time…), to see why a strong athletics program is the University’s best friend.
Scott Woodward was right to call the transfer-fund policy unsustainable. It puts LSU Athletics at a competitive disadvantage and creates a dangerous precedent by making the University dependent on athletics instead of more appropriate – and sustainable – sources of revenue.
The question isn’t whether “the University’s principles are misguided.” (As has been repeated ad nauseum, LSU athletics is privately funded. Not a penny of its spending comes from University coffers.) It’s whether its fundamental business model is misguided.
In 2014, LSU was the only SEC program that had more athletic contributions than academics. The $45.1 million in athletics contributions was on par with peers like Florida and Texas A&M. But the paltry $36.8 million in academic contributions was only a third of Florida’s $111.2 million and Texas A&M’s $105 million.
What this shows isn’t that LSU’s donors have misplaced priorities. It shows the LSU Foundation must do a better job of making the case to donors that investing in LSU is in their best interest.
LSU will always receive public funds, but the past decade has shown why it shouldn’t be so reliant on state funds the whims of Louisiana politics. It should be able to sustain itself in large part through private donations like its peers. Relying more on private funds would put the University on more stable footing and sharpen its focus on creating value for the community.
Colleges that embraced this approach have thrived, even in an era of budget cuts. The E.J. Ourso College of Business raised $30 million from donors to help build the BEC. The Engineering College raised $50 million to renovate Patrick F. Taylor Hall. These state-of-the-art facilities weren’t built by professors inciting PR debacles on Twitter (That $80 million would buy a lot of Dirt Devils). They were built because these colleges and faculty members took the initiative and show investors how their programs create clear value for our community.
There has always been a tension between athletics and academics. That shouldn’t be the case. One of the most important economics lessons is that success in a market economy is not zero-sum. This is especially true for LSU athletics and academics. At the end of the day, we’re all on the same team. LSU’s athletic success is good for its academics. Or to put it in a manner we can all rally behind, “one team, one heartbeat.”
Scott Burns is an LSU alumnus and economics professor at Troy University