Some Michigan Universities Spend Huge Money Subsidizing Sports

Eastern, Western transfer tens of millions from general fund to athletics

Even though Michigan is the only state with two public universities in the top 10 of USA Today’s rankings of subsidies to athletic programs, university leaders here are rejecting calls to review conference affiliations, eliminate expensive sports and pursue other options to reduce the high costs of college sports to students and taxpayers.

Eastern Michigan University is at the center of the debate after data collected by USA Today was publicized in a segment on HBO’s “Real Sports With Bryant Gumbel.” EMU gives its athletics department the sixth-largest subsidy in the country at $27.3 million, while its general fund budget for the current fiscal year is $311.7 million. Western Michigan University is only two places behind EMU in the list of 231 universities, subsidizing its athletic department to the tune of $25.8 million.

Subsidies from the universities' general funds are necessary when revenue from sources such as ticket sales, sponsorships and directed donations fail to cover the costs of running the athletic department. These expenses include not only direct costs such as staff salaries, facilities maintenance, and travel but also tuition, fees, and room and board for scholarship athletes.

School leaders, however, don’t appear to see a problem. An open letter, signed by EMU interim President Donald Loppnow, President-elect James Smith and all eight members of the EMU Board of Regents, said the university's leadership has “absolutely no plans to eliminate football or move into any other division or conference.”

Both of those proposals were contained in a report by EMU accounting professor Howard J. Bunsis that estimated that the university could save as much as $20 million per year by moving its teams to a lower-tier league and eliminating its football program.

These proposed changes would put EMU roughly on par with Oakland University, which competes in the Horizon League and does not have a football program. Oakland ranked 94th in the USA Today report, giving its athletic department an $11.4 million subsidy.

Two days after EMU’s leadership rejected the calls for cutting athletic subsidies, the Michigan House of Representatives passed an education budget to provide EMU $74.5 million in general state appropriations and $4.9 million in subsidies for its bond debt. WMU’s 2016 share of the state education budget is $107.9 million in general appropriations and $15 million in bond subsidies.

By comparison, the state’s general appropriations for Lake Superior State University, the University of Michigan-Dearborn and the University of Michigan-Flint are each smaller than the athletic subsidies at EMU and WMU.

This student and taxpayer-supported spending hasn’t shown up in on-field performance. Since Eastern Michigan University joined the NCAA’s Division I and the Mid-American Conference in 1972, its football team has performed consistently poorly. In 43 seasons, its teams have won just one MAC championship, have never finished the season ranked in the top 25 teams in the country and have appeared in just one postseason bowl game.

During this time, WMU did slightly better, winning the conference once and appearing in six bowl games. Central Michigan University, which ranked 39th with a $19.4 million subsidy, has won seven MAC championships and appeared in nine bowl games.

It's unlikely that any EMU alumni still paying off student loan debt ever got to watch a winning football team funded with their borrowed money.

Before more graduates begin paying interest on their non-voluntary investment in historically bad athletics, leaders at EMU and in the Michigan Legislature should take a clear look at the costs and benefits of literally playing games with tax and tuition dollars. The state subsidizes these universities because, in theory, they serve a public purpose. Surely, there are more pressing public uses for tax dollars in Michigan than ensuring EMU continues to field a football team that went 1-11 in 2015 and hasn't had a winning season since 1995.

USA Today’s methodology ranked Michigan State University 217th with a $702,284 subsidy and the University of Michigan 219th at $263,345. Both schools transfer profits from their athletic department's operations to their general funds, and those dollars are not accounted for in the news outlet's calculation.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.