Collegiate Fiscal Insanity in Texas

It seems to me that Texas always likes to try to outdo everyone else—think of outsized political personalities like Lyndon B. Johnson. Maybe the state has something of an inferiority complex that it thought it could remedy by adroitly using its massive oil revenues. Two large direct beneficiaries of those revenues are the University of Texas (UT) and Texas A&M University. Those black gold handouts have led to some interesting spending habits. While most flagship state universities with high reputations will pay their presidents a $700,000 or $800,000 a year, many Texas state universities, schools like the University of Houston or Texas Tech University, typically pay their top official well over $1 million annually, apparently thinking higher pay will get better results. And Texas clearly shells out for the best.

But A&M has gone over the top even by Texas standards, paying their longtime but just fired football coach, Jimbo Fisher, $75 million to disappear—to stop coaching at A&M! That is the amount of money on his contract that he is to be paid over the next eight years or so—whether he works at A&M or not. Mr. Fisher is free to go coach at another school, for no doubt millions annually.

Mr. Fisher’s sin? Did he verbally abuse or sexually molest players or staff? Did he steal money? No. His huge deficiency: while he won a sizable majority (64 percent) of the games (even this year), he has not won all—or nearly all—of them. As Jason Gay of the Wall Street Journal so nicely put it, “College football has long been an irrational circus thanks to the mammoth television deals of booster gazillionaires making moguls out of irritated-looking men in visors…” The A&M boosters seeking pigskin immortality, like similar groups at other schools, try to defy the immutable Iron Law of Sports: anytime someone wins a game, someone else loses. In the entire world of college sports, teams collectively win precisely 50 percent of the games in which they compete.

The economic concept of opportunity costs is relevant here. For $75 million, Texas A&M could generously permanently endow 15 or 20 professorships in the fine arts or humanities, and 10 or more in higher paying STEM disciplines, business, or economics. They could greatly enhance the national prestige of several academic departments. While A&M is not at the top of the football rankings this year, neither is it in overall academic reputation. I looked at three magazine national academic ratings, done using varying criteria. Texas A&M ranked 38th best with the Wall Street Journal, 47th with US News, and 50th with Forbes. I would characterize that as an indication that A&M is a “very good quality” school, but not a “top” school. There are many state universities—Cal Berkeley, UCLA, Michigan, Virginia, etc.—that rankers think have better reputations, including A&M’s archrival UT. With UT, A&M shares in oil money worth literally tens of billions, so why doesn’t it use its share of it to buy academic greatness?

Indeed, because of its outsized and almost irrational fixation with achieving athletic excellence, schools like A&M promote an image of themselves as being more interested in brawn rather than in brains. Don’t they appear far more interested in attaining excellence in running and catching balls rather than in excelling in the discovery of new medicines or AI technology, or more generally, the attainment of superior insights into how the human condition can be improved? In economist jargon, aren’t there “negative externalities” with having an obsession with football? No one thinks of Michigan or Cal or Virginia as “jock” schools—but can the same be said about A&M? Likely not. It’s sports-above-all image hurts the many fine professors and students at A&M excelling in the dissemination, discovery, and acquisition of knowledge.

I enjoy college sports myself, having attended both a college football and basketball game in the past week. But it is at least 90 percent entertainment, at most 10 percent a legitimate activity contributing to the enhancement of leadership skills and workplace discipline for a relatively small number of students. In no other country is there such an emphasis on collegiate sports. To be sure, not all schools are like A&M. No one is complaining about outsized athletic spending at MIT, the University of Chicago, or Cal Tech, not to mention liberal arts colleges where sports are conducted more modestly.

I suspect America’s big-time college athletics is not sustainable for much longer in its current form. The vicious financial exploitation of star athletes has been only partly offset by new name, image, and likeness rules. Attendance at games in some locales has slumped, especially among students who are the rationale for the teams in the first place. The threat of successful big lawsuits over-long term health damages to former athletes is growing. Even changing sport interests among younger children (favoring soccer over football) may play a role. But for the moment, football is king, and the Jimbo Fisher’s of the world are laughing all the way to the bank.

Photo by niyazz — Adobe Stock — Asset ID#: 70957574 & Jag_cz — Adobe Stock — Asset ID#: 33137775


  • Richard Vedder

    Richard Vedder is Distinguished Professor of Economics Emeritus at Ohio University, a Senior Fellow at the Independent Institute, and a board member of the National Association of Scholars.

6 thoughts on “Collegiate Fiscal Insanity in Texas

  1. The fundamental error in this article stems from a misunderstanding about fungibility. The payout for coach Fisher will not come from state subvention, tuition or endowment resources such as the Permanent University Fund (“oil revenues”). It will from the athletic program itself and from unrestricted donor funds that support the athletic program. In other words, the payout will largely come from ticket sales, broadcast revenues and other sources associated with the athletic program. Its not as if there is in any way a competition in any way between football coaches and endowed chairs/academic programs.

  2. Excellent and important. Maybe a Standard of Care, or Due Diligence, or Duty to Perform, or some such liability, on schools and their leaders (Boards as well as admins), and the legislators who fund them, would be worth talking about. You know, to get their attention.

  3. Those Texans know what’s valuable! But they are not so good at getting it. Some things just can’t be bought and sold.

  4. College sports as we know them today evolved out of what once was a physical education requirement that itself was part of the core curriculum that once existed.

    Mens sana in corpore sano and college students once had to take physical education classes much as high school students still do today. And much as high schools today let students meet this graduation requirement by playing on a sports team, colleges did as well — I believe that MIT still has a requirement that every student must play *a* sport and that MIT must provide the student a team to play on — and that’s how you wind up with things like varsity Frisbee.

    The problem with sports in the high schools is — as Professor Vedder points out — exactly half the teams win. There are also scores and statistics on how individual players both did during a specific game and are doing for the season — things like yards passed or points scored. The games also are usually played in public and often photogenic.

    Hence the media doesn’t need to know anything about football or basketball to report that the local high school won (or lost) the game, and a competent photographer can catch an impressive photograph of Johnny sailing through the air doing “something” and if a caption is needed, an assistant coach will be more than happy to explain what the “something” was. Or wasn’t — there’s public accountability for the sports teams.

    Not so for the academics. As long as Johnny isn’t actually flunking US History, no one will know that he can’t place the US Civil War in the correct half century, or honestly believes that Franklin Roosevelt ended the Korean War by dropping the atomic bomb — something that actually once appeared in a US high school history textbook.

    As to understanding the differences between the Progressives and the Populists or the Constitutional issues raised by Lincoln’s suspension of the Writ of Habeas Corpus in Maryland (which never technically was in rebellion) — more likely than not, his teacher doesn’t know either. And how many college professors know that the Constitutional provision counting a slave as 1/5 of a person had to do with Congressional Representation (number of Congressmen) and that the North didn’t want them counted *at all*?

    But Ed, you are talking about high schools…

    Not really….

    The local media lives and dies on its access to the university sports teams. For all the reasons I have mentioned, the young reporterette doesn’t have to know *anything* about a sport she may never have even played in order to report on it accurately — particularly if she is largely plagiarizing university press releases. “Coach Jones thinks that Johnny is a rising star with great potential” — so what if he’s barely passing “Rocks for Jocks” and similar courses, no one’s ever going to know that.

    I believe Jimbo Fisher’s contract was a public document — why did no one report on the $75M buyout provision when it was signed? And as “buyouts” usually consist of having to pay much of the stipulated annual salary for the years remaining in the contract, if Fisher has 8 years left on his contract and is entitled to $75M, that means that he was being paid over TEN MILLION dollars a year!!!

    I say $10M/year not because I am too lazy to do the long division but because every buyout I have seen has been slightly less than what the coach would have earned (in total) had he remained. There are licensing deals, summer sports camps for high school students, and other things which lead to significant sums of money going to the coach.

    So before he got fired, who was mentioning that this guy was pulling in $10M a year — or $9M or $11M — how can one even keep track of that much money, let alone spend it?

    Remember that the local media lives or dies on access to the university’s sports teams. They are not going to p*ss off the university administration — they might report on *students* doing so, but they won’t do it themselves.

    And that, Professor Vedder, is what you are missing. While it does involve a great deal of training and probably no small amount of tactics, at is most basic, football is a bunch of men with numbers on their backs running into each other which leads to numbers on a big scoreboard. It really doesn’t take that much intelligence to copy down numbers and write that up, even if you aren’t cribbing from a press release.

    And Joe Sixpack can understand “won” or “lost” in a way he could never understand “six year graduation rate” or “percentage of faculty with a terminal degree” — more likely than not, he’d confuse the latter with “terminal cancer.”

    So the *real* problem that Texas A&M has is the same problem that East Millinocket High School has — it’s football team’s successes or failures are both highly visible and understandable to the general public, while it’s Econ Department is neither.

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