More Big Ten Football: Sports Teams with a College as a Side Hustle?

 Yes, I am stuck on Big Ten football, despite all the other horrors of the last 24 hours.

Early in the COVID-19 crisis, in March the Ivies started kicking students off campus, followed by other colleges. Both students and faculty began asking questions about the financial hardships that arose to support staff and students alike. Administrators replied that this was affecting everybody, "we all have to make sacrifices," and there was just no way around it. But faculty and students asked, "What about the endowment?"

Administrators reacted as though they were being asked to throw themselves on a fiery pyre as human sacrifices. Apparently the word "endowment" is taboo out of any context except increasing it. When they did answer the question it was to (horrifiedly) remind everybody that the endowment is for an emergency. We were all supposed to understand that a global viral pandemic did not - in fact - qualify as an emergency.

Harvard is often mentioned in this context because it owns the largest endowment, $39 billion. (With a B!) That comes to $1.5 million per student. If I calculate a 5% annual rate of return on investment, which I think is conservative, the university could spend $75,000 per year on each student without shrinking that endowment. They could accept whomever they chose, and - given the brand-value of a Harvard diploma - count on a growing endowment anyway from alumni gifts. Not to mention the large gifts people come up with to put their name on, say, a new microbiology building.

And while Harvard has the largest endowment of any American school it is by no means the largest per student. That would be Princeton, with $2.9 million per student, or approximately double. They could offer free tuition, room and board, and a new BMW 5-Series every year to every student. Just saying.

What about the schools of the Big Ten. Well, they are bigger schools with smaller endowments. Indiana University, for example, is poverty-stricken relative to the Ivies. It's endowment is "only" $2.4 billion. That is a measly $60,000 per student. At my 5% growth rate, that is $3000 per student per year. But for in-state students, who pay $26,000 a year for tuition, room, and board, that's not nothing.

It has been suggested that the elite colleges are actually hedge funds who operate schools as a side hustle. The numbers bear that out. Harvard's total FY 2019 operating expenses were only  12% the size of their endowment. And they were disappointed with the 6.5% return they earned on that endowment. I would say that the absolute refusal to dip into endowments in the face of the COVID-19 emergency makes the same point.

What about the Big Ten? Let's look at events. The conference announced a ten-game conference-only schedule in early August. Less than a week later they canceled football for the fall. There were lots of complaints but the biggest ones came from Nebraska. The coach threatened to play in some other conference. A group of Nebraska players sued. The attorney general of the state threatened a lawsuit. This week the Big Ten announced that it was back. 

 What's up with Nebraska? Their endowment is a mere $1.435 billion or $25,820 per student (less than $3000 per year at 5%) Their operating expenses are the same order of magnitude at $1.27 billion a year. Breaking down those expenses is a challenge. But one comparison stands out for me. University President Ronnie D. Green's annual salary is under $500,000, including housing, travel, and vehicle allowances. Football Coach Scott Frost earns $5 million a year. That's right, the football coach is paid ten times what the university president - his nominal boss - is paid. Perhaps you're wondering what the fans get for that. I'll save you the trouble of looking it up. In Frost's two years as head coach the team's record is 9-15.

This suggests to me that the University of Nebraska is an athletic department (or perhaps just a football team) with a college as a side hustle. That would account for the level of frenzy regarding the Big Ten's postponement. That would account for a coach who is paid ten times the salary of the university president.

But would I call it a professional sports team with a college attached? Only with a big asterisk. Because while they're paying Scott Frost $5 million, their tight end Thomas Fidone, who will almost certainly be drafted by an NFL team, is being paid zero. Highly-regarded strong-side defensive end Tiaoalii Savea is also a probable for the NFL draft, and is also being paid zero. 

By contrast, Cincinnati Bengals defensive end Andrew Brown makes $540,000. The Bengals' head coach, former Nebraska quarterback Zac Taylor's salary is not publicly disclosed, but it is estimated to be about the same as Andrew Brown's (and U. of Nebraska President Ronnie Green's.) I will also note that a top defensive end, like the Bengals' Carlos Dunlap makes $13 million a year.