Essential Factors to Consider When Calculating The ROI in Athletics
There is not a day that goes by where administrators are not questioned about the return on their institution’s investment (ROI) in athletics. This is due to sport program expenses increasing at a faster rate than the revenue they generate and also because fiscal support continues to diminish at most institutions.
Today more than ever, institutions that sponsor sports must take a best business practice approach to understanding what the true return on the athletic investment is. It is vital to evaluate, scrutinize and examine all financial data including operating expenses, revenue generated (not just from ticket sales) and other essential factors. Using this method will provide clarity and justification that your return on the investment of each sponsored sport program at your institution is meaningful and substantial or indicate areas in which it may be inadequate and deficient. Having this knowledge may also keep the institution’s senior leadership from making impulsive and drastic decisions such as significantly reducing athletics operating costs or eliminating specific sport(s) entirely.The following will provide business managers and athletic administrators with an understanding of the essential factors that must be considered when calculating the true return on your athletic investment at your institution.
It is no secret that the value of providing students with an opportunity to partake in intercollegiate athletics is significant not only to the student, but is extremely beneficial to the university. Research has established that participating in athletics provides the student with a meaningful additional educational experience that allows for personal growth and development, which has many health advantages including social and psychological benefits, as well as skills to prepare students for life. The balance the students demonstrate between the hours of athletic activities while prioritizing academic responsibilities creates a strong work ethic, self-discipline, persistence, and effective time management skills. Besides the health benefits of the physical workout activities, the student-athletes also gain a sense of selflessness, confidence, leadership, problem-solving skills, relationship building with a diverse group of individuals, and collaboration skills when they participate in athletics. It will be important to calculate the impact athletic participation has on heightening students’ success in the ROI formula. This can be measured by using an exit survey. When student-athletes communicate a positive message to external constituents regarding the meaningful and satisfying experiences they had during their time at the university, the institution will be the benefactor of many varied and valuable outcomes such as increased enrollment and retention, spectator support, donations, and brand awareness.
Since athletics serves as the front porch of the university due to its high visibility, it will be important to include in the ROI calculation the impact each sponsored sport program athletic and academic accomplishments and honors as well as their service has on the university brand and reputation. Student athlete participation and engagement in the community, now and in the future as alumni, elevates the university reputation. The contact the student-athlete has with external stakeholders will also have a positive impact on enrollment, donations, and spectator support. Engagement with external constituents may also generate career opportunities for student athlete’s post-graduation. It is important to realize that when the student-athlete engages with and provides service in the local community the student will develop heightened social responsibility and gain opportunities for personal and civic growth, that are invaluable to the student as well as the institution.
Enhancing Enrollment and Retention Through Athletics
Two of the most essential factors an institution must utilize when calculating the ROI in athletics is the impact each sponsored sport program has on overall enrollment and retention. Today most tuition-dependent colleges and universities have enlisted the assistance of the athletic department coaches, requiring them to maximize their respective sport’s roster size. This approach makes the athletic department recruiting and retention efforts an official and extremely vital part of the institution’s overall enrollment and retention plan. An additional aspect of this factor is to identify and separate the in-state and out-of-state student tuition revenue gained by the institution through athletics recruiting as well as university scholarships issued to the student-athletes out of athletics fundraising efforts.
Athletics Influence on Diversifying Campus
Another essential factor that should be considered in the ROI calculation is the impact each sponsored sport program has on diversifying campus. Most head coaches have developed a recruiting system to attract and enhance the enrollment of student-athletes from underrepresented minority groups. This plays a significant part in diversifying the campus student population, while meeting the university’s overall enrollment goals. The personal relationships the coaches build with prospective student-athletes, their parents, as well as high schools and junior college personnel and coaches from institutions with substantial diverse student populations are priceless and very often unduplicated by admissions.
Increasing Revenue Generation Through Athletics
Understanding the revenue generated through athletics or those areas that support or are an extension of athletics must be calculated in the ROI. It will be important to include the income generated from student-athlete tuition as well as fees and revenue from university auxiliaries. Detailing and calculating all revenue generated through tickets, concessions and merchandise sales, housing and meal plans, summer camps, clinics and tournaments, field and facility rentals, corporate sponsorship, and athletic branding and licensing efforts in the ROI will provide perspective on each sponsored sport’s impact.
It will also be important to include the financial support that comes through fundraising efforts and contributions from alumni and friends of the program. Financial support is defined as scholarship, operational, capital item or in-kind donations and contributions that the institution may not be able to provide through its usual annual funding.
Athletics Impact on Campus Life
Since athletics is a significant part of campus life, it will be critical to include in the ROI the contributions each sponsored sport program has on creating an environment that enhances the institution’s spirit and pride. It will also be crucial to include the impact each sponsored sport program has with areas that support or are an extension of athletics in the ROI. For example, admissions will deliberately schedule their open house and recruiting activities when athletic competitions are occurring. The alumni, advancement and student service offices will also utilize athletic competitions to celebrate homecoming and family events as well as special accomplishments and recognitions. The impact on academic offerings and the growth and development of certain majors and minors on campus and other co- or extracurricular offerings such as cheerleading, marching/pep band, and ROTC should also be calculated into the ROI.
Activities/Offerings Associated with Athletics
Many athletic departments across the nation are also required to offer and direct a variety of camps, clinics, tournaments and leagues throughout the year. It will be extremely important to calculate the financial, enrollment, and brand impact of these offerings in the ROI. It is also important to note that many times, these activities are the prospective student and student athletes’ first exposure to the campus and the institution.
In closing, when business managers and athletic administrators take the bold step to utilize these essential factors, I have no doubt they will quickly find a more holistic, yet still very measurable return on their institutional investment in athletics. It is important to note that all the information found may not be positive, however, utilizing these essential factors will give you a better understanding of how you can maximize and grow each sport program’s value to the institution.
Dr. Tom Gioglio is a highly experienced administrator with 18 years of work as a Director of Athletics. Currently, he is completing his seventh year as the Director of Athletics and Associate Professor at Lock Haven University. Since Gioglio’s arrival, the athletic department, which sponsors 19 NCAA Division II sports and two NCAA Division I sports, has placed a new emphasis on building a positive, diverse, inclusive, respectful and supportive environment to ensure all student-athletes succeed academically and athletically.
Previous to Gioglio’s arrival to Lock Haven, Gioglio served as Director of Athletics at East Stroudsburg University, Dakota State University and the University of Saint Mary. Prior to Gioglio’s administrative endeavors, he accumulated 20 years of head/assistant coaching and physical education teaching experience from high school to NCAA Division I-A. He coached football, wrestling, baseball, and men’s and women’s tennis.
Gioglio is a graduate of Montclair State, Mansfield, West Virginia, and Northern State Universities.