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Why big athletics spending makes sense: The Flutie Effect

Harvard is known more for its success in big time research than it's success in big time college sports, but a study out of Harvard Business School claims the "Flutie Effect" is real . . . and spectacular.

Have you ever tried Flutie Flakes?
Have you ever tried Flutie Flakes?

The "Flutie Effect" is the name given to the claim that a school can improve its admissions-selectivity significantly by winning on the football field. The name comes from a 1984 football game where Doug Flutie, then the undersized runt quarterback of Boston College, tossed a "Hail Mary" pass down the field for a game-winning touchdown against the powerhouse Miami Hurricanes.

It was one of the most exciting and memorable games in college football's history, and it is often considered a turning-point in the history of the small Catholic school in Boston, that helped them grow into one of the models for Catholic higher education in this country. Applications to BC shot up by 30 percent in the two years that followed.

Harvard Business School's Douglas J. Chung has been studying the Flutie Effect, and believes it is a real and powerful force for universities.

Boston College wasn't the only Catholic school to benefit from an increase in athletic success. Between 1983 and 1986, Georgetown University's basketball 'hey-day' included deep runs to the final weekend of the NCAA tournament, a super-star Patrick Ewing, and a 45 percent spike in applications. Villanova notably saw it's own boost in admissions following the 2009 trip to the Final Four.

Some university administrators, including those at BC, want to deny the existence of the Flutie Effect, but Chung's research shows a notable correlation between athletic successes and both the quantity and quality of students that schools can attract.

Admittedly, his research found that students with lower SAT scores were most likely to show a preference for strong athletics, but there was still a significant effect on students with high SAT scores, and schools were shown to become more academically selective as they gained in athletic success.

Chung specifically noted that when a school's fortunes in major college football improve from mediocre (approximately four wins per season) to great (approximately 10 wins per season), that applications tend to increase by 17.7 percent. In order to replicate that effect sans athletic success, a school would need to "either decrease its tuition by 3.8 percent or increase the quality of its education by recruiting higher-quality faculty who are paid 5.1 percent more in the academic labor market."

The costs of hiring those higher-quality faculty reaches into the seven figure mark somewhere around the 198.1376-mark for faculty-hires (if you were wondering), and assuming you would require higher-quality faculty across the board, that would mean a 5.1% increase across all faculty salaries.

Villanova reported a payroll (including benefits) of over $219 million in 2012. For Villanova, based on an assumption that the average faculty salary is around $73,000 (for both junior and senior faculty combined), with a reported full-time faculty of "over 500," that would mean a faculty payroll of around $36,500,000. An increase of 5.1% from that figure would mean spending at least an additional $1.9 million per year on faculty salaries.

Scale that up for a school like the University of North Carolina, with almost 3,000 more faculty members than Villanova, and you can start to see how the cost/benefit analysis can shift toward spending more money on athletics.

The study also concluded that athletic success allowed schools to become more selective in the admissions process. Admissions rates improved 4.8 percent for a mid-level school (in terms of average SAT scores) after experiencing athletic success.

Explaining the phenomenon, Chung first notes that success has an impact on institutional awareness (also known as branding), and that a fairly unknown school could reach a larger swath of the population through major athletic achievements. Participating in big games and the postseason increases visibility, even for schools that are already well-known.

A recent anecdote illustrating Chung's point is the story of Florida Gulf Coast, whose basketball team dunked their way to the Sweet Sixteen in this year's NCAA tournament. Few Americans knew that FGCU existed or could place it's Ft. Myers campus on a map, but their takedowns of brand-name Georgetown and San Diego State in the tournament had millions talking about "Dunk City."

Athletics, however, have deeper roots in American culture. There is a reason that ESPN is one of the highest-paid cable television channels in terms of subscriber fees; American culture is heavily influenced by sporting events and high-profile athletes. Games are one of the strongest ways for universities to connect to their alumni, build morale among students, and create a general feeling of "social bonding," in the community.

For schools like Boston College, that all has translated into a very large endowment and at-least somewhat-greater alumni giving. For Villanova, the successes on the hardwood in 1985 and 2009 haven't offered such a massive financial boost to the school's endowment funds and football remains somewhat incognito at the I-AA level. However, it is hard to argue that the athletics program doesn't serve a purpose at the Main Line school.

With constant local opposition to university expansion, Villanova can't easily attract students with fancy new laboratories and dormitories. Basketball victories over top-25 teams at the Wells Fargo Center or NCAA Tournament runs into the second weekend are alternate means of offering something better and unique to prospective students. Once those prospective students are turned into matriculated ones, and later into alumni, that experience of athletics becomes more and more important to keep them engaged and a part of the university community — building additional strengths to offer the next generations.

That may be one deficit that Villanova's use of the undersized Pavilion doesn't account for. Sure, the law of supply and demand dictates that high-interests games held at a smaller facility will have greater ticket value and could drive revenue for the University through season ticket sales and mandatory donations; but it also cuts out the majority of interested alumni. The same alumni that the university hopes to engage and see donate are turned away at the door.

The simplest solution to the problem is to move more and more games, or the entire schedule, to the Wells Fargo Center. That may result in a poor atmosphere for some lower-interest games, but tickets would be easily available for alumni. At BC, they have big time football in addition to ACC basketball, but that formula isn't available to Villanova at this time and a poor game-day experience for fans and mediocre marketing of the FCS program have generally worked to drive fans away.

The Flutie Effect is just one justification for big time athletics. The benefits to a university are usually worth the cost of investing in their athletic programs, and administrators should always be seeking a way to maximize that benefit.

(and, of course, the profitability of NCAA Sports are a center of the dispute in the O'Bannon Case)