Friday, November 8, 2013

NCAA Athletic Department Revenues

Today I am looking at the financial side of NCAA athletic departments using USA Today's NCAA athletic department database from 2006 to 2011.  USA Today reports ticket sales revenue, student fee revenue, school fund revenue, contribution revenue, rights & licensing revenue, other revenue and total revenue during this time period.

Please note that the USA Today NCAA athletic department database does not cover all FBS or non-FBS schools.  One of the reasons is that private schools like Notre Dame and Stanford do not have to publish their financial athletic department data like most public athletic departments.

I am interested in whether two different types of athletic departments - athletic departments in the Football Bowl Subdivision (FBS) and athletic departments outside of the Football Bowl Subdivision (non-FBS) - have different levels of revenue among other things.  Thus I have separated the data into these two groups for the analysis below.

Here are a few questions (and answers) I want to investigate about NCAA athletic departments covered in the USA Today database.

What is the average revenue at FBS and non-FBS athletic departments for the 2011 season?

First, I have added one more revenue variable to the USA Today NCAA Athletic Department Financial Database - Generate Revenue.  Generated Revenue is the amount of revenue that athletic department create by creating athletic events as opposed to revenue that athletic departments receive by being part of a college or university.  In the latter case, schools transfer funds from one part of the university to the athletic department independent of economic activity produced by the athletic department.  Economist usually refer to this as a subsidy.  For my calculations, the NCAA athletic department subsidy is equal to Student Fees plus School Funds.  Thus Generated Revenue = Total Revenue minus Student Fees minus School Funds.

Focusing on the most recent time period in the database, we see that average revenue for these various revenue streams are quite a bit different for the two types of NCAA schools.

2011 FBS
Ticket Sales $12,866,227
Student Fees $4,053,653
School Funds $5,843,586
Contributions $11,511,685
Rights & Licensing $16,337,623
Other Revenue $4,125,049
Total Revenue $54,737,824
Generated Revenue $44,429,462

How much are athletic departments subsidized at FBS and non-FBS athletic departments?

As you can see in the table above, for the two revenue streams that are non-generated (or a subsidy):  student fees and school funds have similar average revenues between FBS and non-FBS schools.  Combined FBS schools receive an average of $9,897,240 of non-generated revenues and non-FBS schools receive an average of $9,365,724 of non-generated revenues.

Which (if any) revenues streams at FBS and non-FBS athletic departments are significantly different from each other?

The numbers in the table above are average revenues for each revenue stream for FBS and non-FBS schools in the USA Today database.  While many of the averages between FBS and non-FBS schools are different from each other, what I want to know is which (if any) revenue streams are different in a statistical sense.  To do that, I will use a t-test assuming that FBS and non-FBS average revenues have unequal variances, which is called a Welch's t test.

Running the Welch's t test, I find that all of the generated revenues are statistically different from each other in FBS and non-FBS schools at the 99% confidence level.  This result holds for all generated revenue streams (Ticket Sales, Contributions, Rights & Licensing, Other Revenue, Total Revenue - including the subsidies, and Generated Revenue - the sum of Ticket Sales, Contributions, Rights & Licensing and Other Revenue) since 2006!  FBS and non-FBS schools in the USA Today database average generated revenues are different from each other at the 99% confidence level!

With respect to the non-generated revenues (Student Fees and School Funds) I find that BOTH of the non-generated revenues are NOT statistically different from each other between FBS and non-FBS schools at the 95% confidence level and this same result holds since 2006 between the two groups of athletic departments.

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