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Thursday, May 23, 2013
ESPN TV contracts, clothing apparel, ticket sales, etc. There are countless revenue-generating sources from which collegiate athletics derive operational budgets. As much money as college athletic programs produce, there are also substantial costs associated with running these programs.
When expenses are greater than revenue, this results in what is known as a budget shortfall. Each of Virginia’s public colleges and universities operated athletic programs with a deficit in 2011 (most recent data available), according to a database of college athletic finances produced by USAToday. Despite all available resources, costs are greater than revenues.
Some schools are big and others are small, and as such, their athletic programs operate in different conferences with access to different revenue sources. One thing they do have in common (apart from running a deficit) is that each institution charges students a mandatory athletic fee. The revenue derived from this fee is used to subsidize the cost of these college athletic programs.
While many public colleges and universities in the commonwealth might have sports programs offset by generated revenues (Virginia Tech’s football program, VCU’s and George Mason’s basketball programs), there are many sports offered by colleges and universities that cost more to operate than they bring in.
The argument often made is that one of these expenses deals with Title IX; Title IX is a law passed in 1972 that requires gender equity in every educational program that receives federal funding. This establishes that proportionality must be reached by college athletic programs. This adds to the cost of operating college athletic programs that may not generate enough revenue to cover the operating costs.
In order to fund an equitable level of college athletic programs, public higher education institutions rely on the use of cross subsidization (taking money earned from one activity and using it to fund others that may not generate enough).
This is where student fees come in. In exchange for paying fees, students receive, among other services, free admission to sporting events, which are not technically free. The fee is mandatory, and there is a mandated default option mechanism in place that incentivizes students to pay.
If they want to go to school, then they pay the fees to attend; therefore, their compliance is determined as a form of “consent.” Paying the fee is perceived as an act of acknowledgement that says students’ willingness to pay is identified as their support of subsidizing college athletics. Don’t go to any sports, don’t play sports and don’t like sports? Too bad.
Social economic behaviorists Richard Thaler and Cass Sunstein in their 2008 book, “Nudge,” created default options because they recognized human behaviors could be influenced; if given the choice not to have to pay a $1,000 a year athletic fee, Thaler and Sunstein would argue that students and parents would simply opt out.
So, in order to alter students’ and parents’ behavior, a mandatory default option mechanism is created. One in which the default is so undesirable (you don’t pay the fee, then you cannot attend college) it incentivizes an individual to take the proposed alternative or desired course of action (you pay the mandatory athletic fee and get to go to college).
The issue with the athletic fee is that it is often not itemized on bills, college websites or official college catalogs. Some of Virginia’s public colleges and universities do not divulge the cost of the athletic fee on their websites for parents and students to assess. There are exceptions. Tech and the College of William and Mary both provide itemized listings of all their mandatory fees.
Couple this with the mandated default option that pressures students with a presumed “threat” to comply (pay or you can’t attend), and institutions have quite the revenue generator to fund their operations without contention from students and parents. Students can’t complain about something if they don’t know about it.
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