Alumni support for NCAA division I reclassification

Harter, John; Howell, Matthew Article Alumni support for NCAA division I reclassification Journal of Business and Economic Studies (JBES) Provided in Cooperation with: Northeast Business and Economics Association (NBEA) Suggested Citation: Harter, John; Howell, Matthew (2024) : Alumni support for NCAA division I reclassification, Journal of Business and Economic Studies (JBES), ISSN 2576-3458, Northeast Business and Economics Association (NBEA), Port Jefferson, NY, Vol. 28, Iss. 1, pp. 88-98 This Version is available at: https://hdl.handle.net/10419/333857 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-sa/4.0/ Alumni Support for NCAA Division I Reclassification 88 Alumni Support for NCAA Division I Reclassification John F.R. Harter College of Business Eastern Kentucky University Matthew Howell Department of Government Eastern Kentucky University Contact: [email protected] Abstract We surveyed alumni of Eastern Kentucky University (EKU) in an attempt to measure their support for the school changing classifications in NCAA membership from the Football Championship Subdivision (FCS) up to the Football Bowl Subdivision (FBS). Using a contingent valuation method (CVM) mechanism, we show that alumni who intend to attend more football games in FBS are most likely to support the reclassification and support it most strongly. In general, alumni who donate to the university anyway, are out-of-state residents, are former intercollegiate athletes, attend football games, and think athletics are important would favor the reclassification. Keywords: College athletics, NCAA, reclassification, contingent valuation Introduction Intercollegiate athletics are a large part of the culture at US colleges and universities. In the National Collegiate Athletic Association (NCAA) alone, over one thousand universities and almost half a million of their students participate every year in athletic contests against other universities and their student-athletes (NCAA, n.d.). These contests are educational and teach valuable life skills (Brand, 2006; Chalfin et al., 2015), but are also often commercial enterprises (Clotfelter, 2011). They are not put on just for the students, but also for alumni, faculty and staff, and others not otherwise affiliated with the university. In football alone, over 47 million spectators attend games every fall (NCAA, n.d.). There have been many research projects looking at the economic effects of athletics on the university. There are too many to list, but for a summary, see Getz & Siegfried (2012). Few schools actually make money directly from athletics (Matheson, O’Connor, & Herberger, 2012; Fulks, 2010). It is possible that athletics increases applications (Pope & Pope, 2009), allowing the schools to increase enrollment (Mixon & Ressler, 1995), raise admissions standards (McCormick & Tinsley, 1987), or both (Pope & Pope, 2009). Alumni might be more inclined to donate to the school (Grimes & Chressanthis, 1994; Baade & Sundberg, 1996). The school might achieve higher subjective rankings (Trenkamp, 2009; Mulholland, Tomic, & Sholander, 2014). Governmental budget allocations might increase for state schools (Humphreys, 2006). Or, the school might be able to use athletics to increase diversity, whether it is gender (Getz & Siegfried, 2012), racial (Pugh, 2013), or geographic (Mixon & Ressler, 1995). Another possibility is that the university can use athletics to increase visibility and branding (Knight, 2009; Hanson, Bryant, & Lyman, Alumni Support for NCAA Division I Reclassification 89 2020). For all of these, the evidence, while mixed, seems as a whole to say that it is possible for athletics to help the university achieve its economic goals. However, the effects are often small (Getz & Siegfried, 2012), require a high level of success (Baade & Sundberg, 1996; Segura & Willner, 2018), and are not long-lasting without continued success (Pope & Pope, 2009). Almost all of these works, however, look at the effects of athletics overall and not the effects of a change in the level of athletics. Specifically, there are tiers within the NCAA from the small schools (Division III) up to the large (Division I). Schools mainly compete against other schools within the same tier, especially for end-of-season championships. Even within Division I, there are the Football Bowl Subdivision (FBS), the Football Championship Subdivision (FCS), and the non-football schools. The FBS is the highest level. When the public and researchers think of intercollegiate athletics, the FBS is generally what is considered. (For a counter-example, see Willner, 2019, or Zvosec and Bass, 2022.) Table 1 uses data from the NCAA web site to give an idea of how many colleges and universities are in each division along with sample members. Table 1 NCAA Divisions Division I Division II Division III FBS FCS NonFootball Number of Schools 130 124 98 311 441 Examples The Ohio State University University of Kentucky Morehead State University Villanova University Gonzaga University St. Joseph’s (PA) University Kentucky State University University of New Haven Amherst College Centre College This project will instead look at a reclassification of the university’s athletics program, which is usually a movement up (Stark-Mason, 2014). In moving from Division II to Division I (FCS), Orszak & Orszak (2005) discovered that all of the schools in their dataset had lower net revenues from athletics, and Tomasini (2005) detected no benefit of the reclassification on alumni donations or student enrollment. Other movements up in classification might benefit the brand and reputation of the school (Schwarzber, 2014; Smith, Soebbing, and Washington, 2015; Weaver, 2010). Moving from FCS to FBS, specifically, is also likely to decrease net revenues (Frieder & Fulks, 2007), but there also might be more potential to benefit the university. Roy et al. (2008) found reclassification can improve perceptions about the university, Goff et al. (2015) observed an increase in attendance for football, and Jones (2015) found a positive correlation with state appropriations. Closest to this paper was Barnhill et al. (2016), who looked at which students supported a move from FCS to FBS based on their beliefs about the expected benefits and costs of the reclassification. This paper looks at which alumni support such a move based on their characteristics and beliefs. Alumni Support for NCAA Division I Reclassification 90 In 2015, Eastern Kentucky University (EKU) applied to become a member of the Sun Belt Conference (Brown, 2015). The Sun Belt is an FBS athletic conference and is a step up from EKU’s athletic conference at the time (the Ohio Valley, an FCS conference) in terms of prestige (Roy et al., 2008). It is also a step up in money – both revenue and costs (Carpenter et al., 2016). At the time, EKU had higher revenues from athletics than other OVC schools, but lower than Sun Belt Schools. Using 2014 data from USA Today’s database (USA Today, n.d.), revenues from athletics at EKU were $13,033,265, while the OVC average (including EKU) was $12,323,660 and the Sun Belt average was $20,966,335. However, the Sun Belt’s revenues were rising more quickly than the OVC’s. This would naturally lead to higher expenses as well as EKU would pay more for travel and coaching salaries, for example. In addition, EKU wished to increase media exposure and recognition (EKU, 2014). Dwyer et al. (2010) point out that a university’s decisionmakers do not always view the decision to reclassify athletics in the same way that other stakeholders do. Since the alumni make up the group of stakeholders who gain the most from the change (Harter & Howell, 2022), this manuscript will look at who among EKU’s alumni benefits and to what extent. This will help inform the decision-makers of how a reclassification would affect the alumni and can allow for targeted marketing and coalition building. Procedure In order to see who supports a move from the NCAA’s Football Championship Subdivision (FCS) to the Football Bowl Subdivision (FBS), we constructed a survey using the online site, SurveyMonkey. The survey first pointed out the construction occurring at campus athletic facilities and indicated that the administration was open to moving to the FBS. The respondents were told that this move would be “a step up in terms of prestige, publicity, and money. However, it is also more expensive.” It then asked about the respondents’ interest in and engagement with sports in general and EKU athletics in particular. Then, a series of contingent valuation method (CVM) questions were asked. CVM generally consists of setting up a plausible situation and surveying stakeholders about their hypothetical willingness-to-pay (WTP) for some public good, service, or project. This is done in a case where the good or project is not actually traded, and so the value people place on it cannot be ascertained from data about their behavior (Mitchell & Carson, 1989). Though originally developed to measure benefits from environmental issues (Hanemann, 1994), the approach has also been used in studying health and health care (Soler & Borzykowski, 2021; Cerde & Garcia, 2021), cultural resources (Noonan, 2003), public transportation (Worku, 2013), and even sports facilities (Johnson & Whitehead, 2000; Harter, 2015). In our survey, the CVM questions asked if the respondent would be willing to donate a certain amount for a move up to the FBS. Specifically, the survey asked: If EKU does move to an FBS conference, it will be expensive. Membership in the higher conferences of the NCAA requires better facilities, more athletic scholarships, and more of a commitment to athletics. This might mean EKU would need increased donations from alumni. Would you be willing to donate $__1___ more to EKU each year to help pay for the step up to an FBS conference? The amount then increased with each affirmative answer. In other words, if a respondent indicated a willingness to make an additional donation of $1 per year for the move to FBS, the Alumni Support for NCAA Division I Reclassification 91 respondent was then asked about donating $5. The amount was increased ($1, $5, $10, $15, $20, $25, $35, $50, $75, and $100) until $100. The final part of the survey asked the demographic questions and other items of interest, such as if the respondent had ever been an intercollegiate athlete or had given a donation to EKU in the past. The survey was sent by EKU’s Office of Alumni Relations to its contact list in November of 2018 with a follow-up reminder sent in December. The descriptive statistics can be found in Table 2. From them, we can see that 58% of respondents were residents of Kentucky (17% in Madison County, EKU’s location). The respondents were mostly male (71%) and white (94%). The average respondent was about 46 years old with an annual household income of just over $100,000. Only 14% had ever been intercollegiate athletes. The respondents tended to be sports fans, and fans of EKU in particular. Overall, 69% felt that sports are somewhat important or very important to them, and 59% felt the same about EKU sports. Table 2 Variable Definitions and Descriptive Statistics Variable Description Obs Mean Std. Dev. Min Max ATHIMPORT Athletics important (Likert scale) 1908 3.657233 1.414182 1 5 EKUIMPORT EKU athletics important 1905 3.424147 1.297883 1 5 ATHENGAGE Engaged with athletics (1: "never", to 4: "frequently") 1912 3.422594 0.841911 1 4 EKUENGAGE Engaged with EKU athletics 1906 2.760756 0.997347 1 4 FBATTEND Home football attendance 1878 1.530351 0.817291 1 4 ATTENDMORE 1 if will attend more in FBS 1890 0.391534 0 1 PASTDONATE 1 if donated to EKU in past 1713 0.731465 0 1 ATHDONATE 1 if donated to EKU athletics 1231 0.281885 0 1 KYRESIDENT 1 if Kentucky resident 1857 0.57566 0 1 MADCO 1 if Madison County resident 1847 0.166216 0 1 FEMALE 1 if female 1800 0.289444 0 1 MIDPTAGE Age using midpoint of options 1822 46.43908 10.61349 9 55 WHITE 1 if race is white 1732 0.93649 0 1 EDUCATION Education level 1850 4.069189 0.979272 1 5 MIDPTINCOME Income using midpoint of options 1611 100169.1 41059.23 10000 150000 ATHLETE 1 if intercollegiate athlete 1841 0.143944 0 1 DONATE1 1 if willing to support FBS move 1560 0.498718 0 1 ALUMWTP MaxWTP 1560 21.91731 36.11032 0 100 Alumni Support for NCAA Division I Reclassification 92 Empirical Estimation Who Supports the Change To examine if an alumnus or alumna would be in favor of moving up in the NCAA from FCS to FBS, we look at whether that person would be willing to donate any money to support the move. Since the survey is designed to elicit the value to alumni of a change in subdivision, any net gain at all should be met with a positive willingness to pay. No net gain, or even a net loss, should elicit a response of no willingness to pay. Thus, we create the variable DONATE1 which takes the value of 1 when there is a positive response to donating $1 towards reclassification and takes the value of 0 otherwise. We omit some variables from the survey because of strong correlation. For example, the respondents who believe athletics are important also tend to engage with athletics by reading about, watching, or attending games. This leaves us with the following model: 𝐷𝑂𝑁𝐴𝑇𝐸1=𝑓(𝐴𝑇𝐻𝐼𝑀𝑃𝑂𝑅𝑇,𝐹𝐵𝐴𝑇𝑇𝐸𝑁𝐷,𝐴𝑇𝑇𝐸𝑁𝐷𝑀𝑂𝑅𝐸,𝑃𝐴𝑆𝑇𝐷𝑂𝑁𝐴𝑇𝐸, 𝐾𝑌𝑅𝐸𝑆𝐼𝐷𝐸𝑁𝑇,𝐹𝐸𝑀𝐴𝐿𝐸,𝑀𝐼𝐷𝑃𝑇𝐴𝐺𝐸,𝑊𝐻𝐼𝑇𝐸,𝐸𝐷𝑈𝐶𝐴𝑇𝐼𝑂𝑁, 𝑀𝐼𝐷𝑃𝑇𝐼𝑁𝐶𝑂𝑀𝐸,𝐴𝑇𝐻𝐿𝐸𝑇𝐸 ) where ATHIMPORT is a measure of the respondent’s belief about the importance of athletics. FBATTEND is a measure of the EKU football games the respondent typically attends, and ATTENDMORE is 1 if the respondent anticipates attending more games if EKU joins FBS. EDUCATION is a measure of the respondent’s level of education. KYRESIDENT, FEMALE, WHITE and ATHLETE are self-explanatory dummy variables. Similarly, PASTDONATE is 1 if the respondent has ever donated to EKU. Finally, MIDPTAGE and MIDPTINCOME give the age and income at the midpoint of the chosen ranges from the survey. It is not clear a priori whether any of the independent variables would have a positive or negative effect on support for a move to FBS. While it might be expected that those who like, attend, and participated in sports would be more likely to want to move to FBS, it is also possible the opposite is true. For example, former athletes might feel that they would have been denied a chance to participate if EKU had been competing at a higher level. Similarly, if the fans place a sufficient premium on winning, the lower expected level of relative success at higher levels might not hold much appeal. Since DONATE1 is a dummy variable, Probit was used in STATA to evaluate the model, dropping incomplete responses. To see the relative importance of the various factors influencing support for moving to FBS, the marginal effects are presented in Table 3. From this, it is clear that those who are most likely to support a move to FBS are those who intend to take advantage of the move up to attend more games. When other values are held at their means, the intention to attend more games if EKU reclassifies to FBS would increase the probability of supporting the reclassification by about 35 percentage points. Being a past donor has the second-largest effect on support for the move, but this has only a little more than half the effect (about 18 percentage points). Looking only at the statistically significant independent variables, these are followed by (in order) living out of state, being a former athlete, attending games, and thinking athletics is important. Alumni Support for NCAA Division I Reclassification 93 Table 3 Marginal Effects of Supporting Move to FBS Variable dy/dx S.E. ATHIMPORT** 0.048175 0.008211 FBATTEND* 0.0813 0.015706 ATTENDMORE* 0.351598 0.019139 PASTDONATE* 0.180666 0.026985 KYRESIDENT* -0.09317 0.025035 FEMALE -0.01104 0.026329 MIDPTAGE -0.00144 0.001177 WHITE -0.03866 0.049217 EDUCATION -0.01254 0.012683 MIDPTINCOME 3.92E-07 3.02E-07 ATHLETE* 0.089353 0.035782 n=1193 **significant at p-value < .010 *significant at p-value < .050 Intensity of Support To get a look at the intensity of the support for moving up in FBS, we can look at the full willingness-to-pay (WTP) of the respondents. A person with a stronger desire for EKU to move to FBS should be willing to donate more for that move, ceteris paribus. Consequently, we can create the variable ALUMWTP which gives the highest WTP for each respondent. We then evaluate using Tobit since ALUMWTP is constrained (see Johnson & Whitehead, 2000). 𝐴𝐿𝑈𝑀𝑊𝑇𝑃=𝑓(𝐴𝑇𝐻𝐼𝑀𝑃𝑂𝑅𝑇,𝐹𝐵𝐴𝑇𝑇𝐸𝑁𝐷,𝐴𝑇𝑇𝐸𝑁𝐷𝑀𝑂𝑅𝐸,𝑃𝐴𝑆𝑇𝐷𝑂𝑁𝐴𝑇𝐸, 𝐾𝑌𝑅𝐸𝑆𝐼𝐷𝐸𝑁𝑇,𝐹𝐸𝑀𝐴𝐿𝐸,𝑀𝐼𝐷𝑃𝑇𝐴𝐺𝐸,𝑊𝐻𝐼𝑇𝐸,𝐸𝐷𝑈𝐶𝐴𝑇𝐼𝑂𝑁, 𝑀𝐼𝐷𝑃𝑇𝐼𝑁𝐶𝑂𝑀𝐸,𝐴𝑇𝐻𝐿𝐸𝑇𝐸 ) The results in Table 4 show similar results to the question of who supports the move to FBS. Again, wanting to attend more games in the FBS seems to have the biggest effect. In this model, however, being female and the level of household income become significant. Being female is negatively related to WTP, implying that males feel more strongly about moving up to FBS. Income is positively related with WTP indicating that reclassifying is a normal good (Villar and Guerrero, 2009). The negative coefficient for Kentucky residents is interesting. It is possible that reclassifying into an FBS conference would increase the visibility of EKU’s games or would mean more or better away contests near where alumni live. Another possibility, however, is that the University of Kentucky (UK) is less than 30 miles from EKU’s main campus. UK dominates the sports landscape in Kentucky, and so the in-state alumni might already be fans of UK and would derive less benefit from EKU playing what would still be considered lesser games. There is some evidence that in-state students value EKU athletics less than out-of-state students (Carpenter et al., 2016), and if in-state students are more likely to become in-state alumni, that might carry over. Alumni Support for NCAA Division I Reclassification 94 Table 4 Determinants of Alumni WTP Variable Coef. Std. Err. P>|t| ATHIMPORT** 10.86891 1.867096 0.000 FBATTEND** 24.28457 3.13925 0.000 ATTENDMORE** 67.32763 5.56289 0.000 PASTDONATE** 36.66742 6.286306 0.000 KYRESIDENT** -17.7259 5.296876 0.001 FEMALE** -16.1421 5.731543 0.005 MIDPTAGE -0.20291 0.246353 0.410 WHITE 1.945597 9.948475 0.845 EDUCATION 0.242799 2.640991 0.927 MIDPTINCOME** 0.000281 0.000065 0.000 ATHLETE** 15.46587 6.987895 0.027 _cons -147.669 20.71874 0.000 n=1193 LR chi2 (11) = 536.11 Prob > chi2 =0.000 Log likelihood = - -2757.5334 Pseudo R2 = 0.0886 ** - significant at 5% level * - significant at 10% level Conclusion When we look at the Eastern Kentucky University’s alumni and attempt to measure their support for a potential move of EKU’s athletics program up from the Football Championship Subdivision of the NCAA to the Football Bowl Subdivision, we find that those who support reclassification and benefit the most are those who like, attend, and participated in sports. In particular, a desire to attend more football games at the FBS level seems to be the biggest influencer. Also, those who have donated to EKU in the past and who live out of state are more likely to benefit from the change in athletic status. In addition, while we cannot claim that males are more likely to support reclassification than females, their support is stronger if they do. Barnhill et al. (2016) surveyed students to find which supported their school reclassifying from FCS to FBS. Students who believed the increased benefit outweighed the added costs were influenced by the expected added prominence and reputation, better competition, improvements in the local economy, and the ability to recruit better faculty. For alumni in this project, the desire of alumni to attend more games at the FBS level seems to coincide with the students’ desire for better competition. Because of nonresponse bias (Mitchell & Carson, 1989), hypothetical bias (Walker and Mondello, 2007), and incentive compatibility issues (Carson & Groves, 2007), we cannot find a definitive total for how much the alumni as a group benefit. Most alumni would not have a net Alumni Support for NCAA Division I Reclassification 95 benefit at all as fewer than half of those who did respond to the survey were willing to pay anything for the move. However, those that would have a net benefit are also more likely to be donors and probably otherwise engaged with the university already. These alumni perhaps should have more say in the direction of the university. This also suggests that the decision-makers at the universities might target certain groups of stakeholders for support and partnerships. Since a move in subdivisions is likely to decrease EKU’s net revenue (Orszag & Orszag, 2005; Frieder & Fulks, 2007), a change in subdivisions might not make fiscal sense for EKU even if the alumni are in favor of it. In addition, universities do not have a mechanism to force alumni to help pay the enhanced cost of reclassification. Some of that money will presumably come from higher ticket prices and ancillary purchases, but the university would also want an increase in donations. The evidence of an increase in alumni donations because of athletics is mixed, but there is the further complication that an increase in donations to athletics might substitute for donations elsewhere in the university (Getz and Siegfried, 2012). However, cross collaboration between the university (particularly the athletics department) and alumni groups can increase alumni engagement, leading to higher levels of athletic support. Ultimately, EKU did not receive an invitation to join the Sun Belt Conference. It did move from the Ohio Valley to the ASUN Conference in 2021. The ASUN is also at the FCS level, but the updates to the facilities positioned the university to be ready to move up to the FBS in the future. This study looks only at the alumni of EKU. Naturally, others are affected as well. Students, faculty and staff, and near-by businesses would all be affected by the reclassification, and it would be interesting to see who among these groups would be most in favor of the change. References Baade, R.A., & Sundberg, J.O. (1996). Fourth Down and Gold to Go? Assessing the Link between Athletics and Alumni Giving. Social Science Quarterly, 77(4), 789-803. Barnhill, C.R., Palmero, M., & Kim, W. (2016). Students’ Perceptions of the Benefits and Costs of Transitioning to FBS Football: An Exploratory Study. Journal of Contemporary Athletics, 10(2), 73-86. Brand, M. (2006). The Role and Values of Intercollegiate Athletics in Universities. Journal of the Philosophy of Sport, 33(1), 9-20. https://doi.org/10.1080/00948705.2006.9714687 Brown, M. (2015, October 9). How Much Is FBS Membership Worth? Eastern Kentucky’s Willing to Spend $10 Million. SBNation. http://www.sbnation.com/collegefootball/2015/10/9/9353273/sun-belt-conference-realignment-new-mexico-state-ekucoastal-carolina Carpenter, R., Hartch, T., Harter, J., Howell, M., Johnson, W., & Pressley, S. (2016). Faculty Report: Ad Hoc Committee on Athletics and Academics. Eastern Kentucky Faculty Senate. https://facultysenate.eku.edu/sites/facultysenate.eku.edu/files/files/minutes/2015-16/0502/ad-hoc_athletics-academics_report_w-resolution_REVISED.pdf Carson, R., & Groves, T. (2007). Incentive and informational properties of preference questions. Environmental and Resource Economics, 37(1), 181-210. https://doi.org/10.1007/s10640007-9124-5 Cerde, A.A., & Garcia, L.Y. (2021). Willingness-to-Pay for a COVID-19 Vaccine. Applied Health Economics and Health Policy, 19, 343-351. https://doi.org/10.1007/s40258-021-00644-6