(Never) Minding the Gap: Division I HBCU Revenue Generation Trends

from Out of Bounds Magazine: https://t.co/K2dkWxDHq2

During a recent visit to Norfolk State University, I spoke about athletic development strategies designed for Division I low-to-mid-major institutional growth. The university is emphasizing athletic fundraising efforts in 2017–18 and recently committed institutional resources and staffing to ensure its plans are carried out. The university’s first-ever athletic fundraising specialist will be housed in the university’s advancement division and be a liaison to the athletic department and its all-volunteer athletic foundation, focusing about 30% of his fundraising responsibilities focusing on athletics. While it will be immensely challenging for one person to take on such a task, it is a significant and crucial undertaking, and a commendable sign of commitment to student-athlete success.

The vast majority of college athletics professionals reading that a Division I program is adding its first athletic fundraising specialist in 2017 is likely to be completely blown away, as fundraising staffs are a staple in Division I, and many of the more advanced athletics external relations units will employ dozens of full-time, part-time, intern, and student staffers engaging in fundraising, marketing, promotions, new media, and content production. However, as a former athletic director at a Division I HBCU where I was expected to oversee all fundraising, marketing, and promotions, with no full-time staff members in the athletic department or at the university to support those efforts, I can attest that Norfolk State, with this staffing addition, is actually far ahead of the curve for Division I HBCUs. After visiting the athletic department staff websites of every Division I HBCU, 70% (17 out of 24) of them did not identify a full-time staff member with an external relations responsibility.

In lay terms, it appears that revenue generation in Division I HBCU athletic programs is not overseen, strategized, or carried out by full-time athletic department staff. If that is the case — and these programs do not have annual funds, endowed scholarship funds, corporate/small business, facility enhancement, and donor relations programs — then the outcomes are predictable. Year in and year out, a department without these resources will rely upon five categories for revenue generation, all of which restrict and retard growth, rely upon institutional resources or student tuition/fee hikes, or place undue burdens on student-athletes/coaches/teams who can bring in guarantee game (aka “money game”) revenues. It’s a safe bet that the institutions your alma mater struggles to compete with have external relations staffs promoting their athletic department’s successes, strategically identifying and acquiring funding, and developing and closing major gift opportunities. This also explains how HBCUs perennially dominate Division I and Division II in football attendance but lag behind peers with regard to revenue generation.

In 2016, I published a report on NCAA Division I HBCU athletic budgets based on USA Today data analyzing athletic department spending and revenues. In this analysis, I turned to multi-year data submitted to the federal government by athletic programs to ensure their compliance with Title IX standards. This report, in compliance with the Equity in Athletics Disclosure Act, is colloquially called the “EADA Report.” Every year since 2004, the U.S. Department of Education collects survey data from every institution that sponsors intercollegiate athletics annually, and on each campus, this data is certified by university officials. When the report is published, anyone can search the extremely detailed database and identify each institution’s annual revenues and expenditures and generate reports, comparisons to conference or state/regional peers, and even track trends over multi-year periods per institution. For my analysis, I focused only on reported revenues of Division I HBCUs, including Southwestern Athletic Conference (SWAC), Mid-Eastern Athletic Conference (MEAC) members and Ohio Valley Conference member Tennessee State University. I identified revenues over a four-year period (from 2012–2013 through 2015–2016), determined a four-year average, and compared the most recent year’s revenues to that four-year trend. Finally, I ranked conference members by how well their most recent year’s revenue generation grew compared to the four-year average.

A note on athletic department revenues before reading the report: The EADA does not distinguish sources of revenue, but rather groups them by which sport is associated with the generation. So, while one can observe that an institution brought in, say, $1 million through its football program, one cannot distinguish how much of that revenue is dependent upon ticket sales, game guarantees, donations/sponsorships, licensing royalties, student activity fees, or institutional subsidies. In other words, “revenues” is a measure of total amount of monies invested in the athletic program, but revenue growth does not mean that an athletic department raised more money through sales, donations, and sponsorships.

This also includes NCAA revenue distributions, which have increased significantly in recent years (the NCAA distributed over $1 million more to the 24 Division I HBCUs in 2015–16 than it did in 2011–12). What it does mean, generally, is that the institution has found ways to commit more resources to student-athlete success, including student-welfare, academic support, facility and program enhancement (as well as to administrative and coaches salaries, the individuals charged with stewarding such success). Revenue reduction, similarly, does not necessarily mean waning performance in sales and fundraising. If successes in those areas remain consistent and NCAA distributions grown annually, but an institution reduces subsidies because of budget cuts, this will be reflected in revenue performance declining.

As the costs of student-athlete scholarships and support continues to increase steadily each year, so must athletic revenues, or else cuts to student aid or coaching/support positions is likely to ensue, meaning fewer opportunities for student-athletes and diminished on and off the field success. As a rule of thumb, look at your institution’s 2015–16 revenue growth performance in comparison to conference peers. Then compare championship success, facility enhancement, student-athlete success (retention and graduation rates). Revenue growth will likely correlate with Commissioner’s Cup, conference championship and NCAA post-season success, national and regional rankings, and growth of the institution’s athletic reputation.

While budgets do not unequivocally dictate student-athlete success, sufficient financial resources to remain competitive are a general staple of long-term success. When viewing my analysis, bear in mind the success, failure, potential, growth, and success trends of your alma mater or favorite team. Compare their revenue generation with that of their institutional and conference peers. Think of the teams with persistent success and growing conference and regional/national reputations and then compare that with their revenue generation. A strong correlation between revenue growth and student-athlete success persists across college athletics, and HBCU athletics is no exception.

Findings:

Average athletic department revenues, 2015–2016

Big South Conference (MEAC regional Division I FCS peer): $14.82 million

Southland Conference (SWAC regional Division I FCS peer): $11.953 million

Ohio Valley Conference (MEAC regional Division I FCS peer): $11.742 million

Tennessee State: $12.737 million

MEAC: $10.182 million

SWAC: $8.836 million

Average athletic department revenues, 2013–2016

Big South Conference (MEAC regional Division I FCS peer): $14.819 million

Southland Conference (SWAC regional Division I FCS peer): $11.953 million

Ohio Valley Conference (MEAC regional Division I FCS peer): $11.742 million

MEAC: $10 million

Tennessee State: $12.52 million

SWAC: $8.02 million

Average athletic department revenue growth, comparing 2015–16 to four-year trend

Big South Conference (MEAC regional Division I FCS peer): $1.95 million

Southland Conference (SWAC regional Division I FCS peer): $1.678 million

Ohio Valley Conference (MEAC regional Division I FCS peer): $891,000

SWAC: $816,200

Tennessee State: $217,000

MEAC: $182,000

• 50% of Division I HBCU athletic departments (7 MEAC, 5 SWAC) increased revenues by <$500,000 in 2015–16 compared to their 4-year averages.
• 58.3% of Division I HBCU athletic departments (8 MEAC, 6 SWAC) grew 2015–2016 revenues by more than 5% compared to four-year trend.
• 41.66% of Division I HBCU athletic departments (7 MEAC, 3 SWAC) grew 2015–16 revenues by more than 10% compared to four-year trend.
• Only four Division I HBCU athletic departments (2 MEAC, 2 SWAC) lost revenues in 2015–2016 compared to four-year trend — Norfolk State, South Carolina State, Southern, and Alcorn.

Top 5 Athletic Departments for Revenue Growth, 2015–2016 compared to four-year trend:

Bethune-Cookman increased revenues by $4,089,000 (29.7%)

Alabama State increased revenues by $3,560,000 (28.6%)

Hampton increased revenues by $2,801,000 (25.5%)

Prairie View A&M increased revenues by $1,893,000 (24%)

Howard increased revenues by $1,593,000 (14.48%)

Bottom 5 Athletic Departments for Revenue Growth, 2015–16:

South Carolina State: lost $2.45 million in revenue

Norfolk State: lost $739,000 in revenue

Southern: lost $303,000 in revenue

Alcorn State: lost $30,000 in revenue

Coppin State: gained $69,000 in revenue