The effects of conference realignment on NCAA athletic departments

Abstract

This study uses a panel of National Collegiate Athletic Association (NCAA) Division I athletic department revenue and expenditure data from 227 public colleges and universities to empirically investigate the effects of conference realignment over the period 2006–2011. The results show that schools moving into automatic-qualifying conferences experienced nearly $12.15 million in increased revenue, nearly matched by $10.12 million in added expenditures. Schools moving into any FBS conference saw revenues increase by $6.43 million, with expenses growing $5.03 million. Schools switching conferences to a non-FBS conference did not see a statistically significant change in revenues or expenses. Schools with football programs saw revenues increase by $2.94 million and profits increase by close to $1 million. Despite the increase in revenues, no change to institutional subsidies was observed.

Keywords:

• NCAA expenditures
• athletic subsidy
• athletic departments
• conference realignment

JEL Classification:

• L83
• L3
• H3

Notes

¹ The full Rutgers University press release can be found here: http://news.rutgers.edu/news-release/rutgers-settles-exit-fee-dispute-former-conference-rutgers-readies-big-ten/20140212#.U4jTG_ldWSo.

² Hausman test statistics (available upon request) support the use of a fixed effects model.

³ FBS consists of ten conferences for football, the six automatic qualifying conferences and the four non-automatic qualifying conferences, and independent schools. An AQ conference is an athletic conference whose league champion receives an automatic berth in one of the five football Bowl Championship Series bowl games. The six AQ conferences are the American Athletic Conference, the Atlantic Coast Conference, the Big Ten Conference, the Big 12 Conference, the Pac-12 Conference, and the Southeastern Conference. The four non-AQ conferences are Conference USA, the Mid-American Conference, the Mountain West Conference, and the Sun Belt Conference.

⁴ George Schroeder provides a detailed analysis of these new revenues, http://www.usatoday.com/story/sports/ncaaf/bowls/2012/12/11/college-football-bcs-playoff-revenue-money-distribution-payouts/1762709/.