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John J. Cheslock Pennsylvania State University David B. Knight University of Queensland

Following a Problematic, Yet Predictable, Path: The Unsustainable Nature of the Intercollegiate Athletics System. John J. Cheslock Pennsylvania State University David B. Knight University of Queensland. Everything should be made as simple as possible, but not simpler. Albert Einstein.

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John J. Cheslock Pennsylvania State University David B. Knight University of Queensland

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  1. Following a Problematic, Yet Predictable, Path: The Unsustainable Nature of the Intercollegiate Athletics System John J. Cheslock Pennsylvania State University David B. Knight University of Queensland

  2. Everything should be made as simple as possible, but not simpler. Albert Einstein

  3. A Simple Idea Diverging Revenues Cascading Expenditures Ensuing Subsidies

  4. Diverging Revenues

  5. Diverging Revenues:Underlying Theoretical Complexity Changing marketplace: More money in the system. Winner take-all market: A disproportionate share of the money flows to elite programs.

  6. Cascading Expenditures: Point in Time

  7. Cascading Expenditures: Over Time

  8. Cascading Expenditures:Underlying Theoretical Complexity • Elite athletic programs increase spending when their athletic revenues increase. • Resource Dependency Theory • Revenue Theory of Costs • Increased spending at elite athletic programs lead to increased spending at other athletic programs. • Positional Arms Race [Positional Externalities] • New Institutional Theory

  9. Ensuing Subsidies

  10. Ensuing Subsidies:Can This Be Sustained? Subsidies: Large and growing Subsidies: Heightened opportunity cost

  11. Policy Options Alter revenue distribution Limit expenditures at the top Limit the cascading of expenditures Take no action

  12. Relevant Quotes • “I think when we make it, we have a right to spend it. That’s the way America is.” • Mack Brown, University of Texas head football coach • “We eat what we kill.” • Ed Goble, Chief Financial Officer, University of Texas Athletic Department

  13. Relevant Quotes II • “At Texas, it may be sustainable. But think about the schools that are desperately struggling to stay in the game and are dramatically increasing the university’s subsidy of intercollegiate athletics and aren’t succeeding in improving their financial position. Texas, in a certain sense, elevates the stakes of the game so that schools … are further motivated to make financial commitments to try to catch up.” • Peter Likins, Former President, University of Arizona

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