Three essays on intercollegiate athletics and the financial relationship with institutions of higher education
This study includes three essays that seek to better understand the relationship between intercollegiate athletics activities and higher education institutions. The first essay is a review of the literature, which provides evidence of a strong relationship, specifically a financial relationship, between athletics and higher education. The next two essays conduct empirical studies to test aspects of this relationship. In Essay 2, panel regressions and an instrumental variables approach are used with data from the USA Today athletics finance database to analyze the effects of winning on institutional subsidies to athletics. Basketball wins are found to have a positive effect on the amount of subsidy that an institution provides to intercollegiate athletics. However, no evidence of a similar effect of football wins is found. A possible explanation for this difference is the timing of the respective season in the typical university budget cycle. Essay 3 uses a regression discontinuity approach with data from the Department of Education’s Equity in Athletics database to test the effects of making the men’s NCAA basketball tournament on athletic and institutional revenues. The findings suggest that making the tournament increases basketball-specific and total athletics revenues, but has no effect on institutional revenues. Although athletics success has been found to be associated with positive outcomes in other literature (e.g., higher applications), these essays provide evidence that any revenue increases related to success are isolated to the athletic department and are not realized by the institution. In fact, institutions appear to respond to athletics success by increasing the subsidies that they provide to athletics. Taken together, these essays provide insight into the relationship between athletics activities and the higher education institutions that choose to sponsor these activities.
intercollegiate athletics finance, subsidies, regression discontinuity, instrumental variables
University of Illinois - Urbana-Champaign
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University of Illinois at Urbana-Champaign