High-Salary Recipients for Coaching Football Positions at American Universities Explained
Collegiate Football Coaches Often Rank Among Highest-Paid Individuals, But Does the Financial Investment Make Sense?
Football coaches at universities across the United States frequently hold high-paying positions, yet the economic rationale for these salaries has been questioned. Darian Woods and Adrian Ma from Planet Money's the Indicator interviewed key figures in the collegiate sports industry to shed light on the value that top coaches bring to the table.
University of Alabama's athletic director, Greg Byrne, spoke to Woods and Ma during a game, stating that they were ahead of Missouri by two runs in the sixth inning. Last year, Byrne hired football coach Kalen DeBoer for an annual salary of almost $11 million. Byrne maintained that the football team consistently generates substantial profits but also bears the costs of various other sports that may not turn a profit.
Byrne explained that football serves as the engine for the university's athletic department, not only offering outstanding opportunities for student athletes but also pulling in fans and boosting university engagement. Byrne believes a top coach contributes to a better football team, which leads to increased ticket sales and enrollment.
However, sports economist Andrew Zimbalist from Smith College disputed this assertion. Although there might be isolated cases in which high coach salaries positively impact a college's finances, Zimbalist contends that the overall phenomenon does not benefit colleges.
Zimbalist investigated the revenue implications of hiring new coaches with high salaries and found that without a significant revenue bump, the investment is not financially sound. In top leagues, college athletic departments typically bleed $20 million or more annually, according to Zimbalist.
Despite these findings, Zimbalist acknowledged that building a renowned athletic department is widespread within the collegiate realm. He attributed this trend to an artificial market, as college sports lack the competitive forces that regulate traditional business markets.
College sports enjoys various tax benefits, and these programs are publicly-owned. There are often substantial subsidies from universities and state governments, and students indirectly support sports through their tuition. Moreover, until recently, college athletes did not receive compensation for their performances, leaving more funding available for coaches' salaries.
In a 2009 survey of university presidents with significant football programs, 85% felt that football and basketball coaches' salaries were excessive; however, many felt powerless to limit these expenses.
Greg notes that the University of Alabama's football coach does not rely on student contributions for his remuneration. While this may be true for some top programs, it remains to be seen if smaller colleges can replicate Alabama's success without stretching their financial resources.
The government and news outlets often discuss the excessive salaries of college football coaches, raising questions about the economic rationale. In contrast to Greg Byrne's views, sports economist Andrew Zimbalist believes that the overall phenomenon of high coach salaries does not financially benefit colleges, as without a significant revenue bump, the investment in high-salary coaches is not sound. The education-and-self-development sector, however, may find it challenging for smaller colleges to replicate the success of top programs like the University of Alabama without straining their financial resources.
