Is investing in sports worth it for universities?

SPEAKER_1 (0:01)

N-P-R.

Ricky Mulvey (0:06)

College football season is underway, and universities aren't just trying to win on the field, they're also trying to win over prospective students.

Adrian Ma (0:14)

You'll probably notice that in the commercials between plays.

SPEAKER_4 (0:17)

At Ohio State. The University of Maryland has helped me become more fearless. We are the never afraid to innovate team. It's really allowed me to see that the opportunities are really endless.

Ricky Mulvey (0:32)

This is The Indicator from Planet Money. I'm Ohio State alum, Ricky Mulvey.

Adrian Ma (0:36)

And I'm University of Maryland alum, Adrian Ma. Go Terps!

Ricky Mulvey (0:39)

Yes. The football games you watch are also advertisements.

Adrian Ma (0:43)

Look at all these students having fun. And have we mentioned our world class research departments?

SPEAKER_1 (0:49)

I certainly think athletics can be a front door to a university.

Ricky Mulvey (0:51)

That's Jonathan Coffington. He does PR for Indiana University, and it's been seeing a lot of interest since its football team won the national champion.

Adrian Ma (1:00)

Competing for students matters even more now.

Colleges are facing a demographic challenge. In the coming years, fewer American high school students will go to college.

Ricky Mulvey (1:09)

So, how much does a winning football team matter for one of the biggest economic questions in a young adult's life? Where do you go to college, and why should it be Ohio State?

Adrian Ma (1:18)

To tackle this serious subject, get ready and grab your red solo cup. We've got a keg, and we're throwing an economics rager after the break.

Ricky Mulvey (1:31)

Doug Chung remembers being a grade schooler watching Boston College vs. Miami in 1984

Doug Chung (1:37)

This game was actually the first game, first American football game that I saw.

Adrian Ma (1:43)

Three wide receivers out to the right.

The matchup was a back and forth offensive battle. As the game ticked down to its final seconds, Boston College was down by four against the Hurricanes.

Doug Chung (1:55)

I saw it live on TV with my father, and was just blown away by how exciting a football game can be.

Ricky Mulvey (2:02)

Boston College needed to move the football about half the length of the field in just one play.

Doug Chung (2:08)

Doug Flutie, the quarterback from Boston College, threw this miraculous Hail Mary pass. Throws it down.

Adrian Ma (2:17)

Cut by Boston College.

SPEAKER_4 (2:19)

I don't believe it. It's a touchdown.

Adrian Ma (2:22)

Oh, touchdown. I mean, picture the drama. Like, what a magical TV moment to have associated with your school.

Ricky Mulvey (2:31)

Yeah, can you imagine how hard it is to throw a football over 60 yards?

Adrian Ma (2:35)

I mean, back in 82, I used to be able to throw a pigskin a quarter mile.

Ricky Mulvey (2:39)

Yeah, you and Uncle Rico.

Adrian Ma (2:40)

This walk-off touchdown though, it led to a lot of attention for Boston College's football team and the university itself.

Doug Chung (2:47)

The following year in the application process for Boston College, their applications went up tremendously. And so the popular media, the newspapers back then, they call this term the Flutie effect.

Ricky Mulvey (3:02)

Since that play, Doug, the quarterback, went on to play professional football for two decades.

Adrian Ma (3:07)

And Doug, the researcher, went on to find out how much a winning college football program actually mattered for students applying to colleges. He wanted to quantify it.

Ricky Mulvey (3:17)

He found that athletic success functioned like a commercial. A big win created a stock of goodwill for a school.

Doug Chung (3:23)

That's the role of advertising, right? So, you know, a potential high school applicant who's applying to colleges sees that and sees the excitement on that. Never heard of this school, but now you know. You know, that's a big advertising effect.

Adrian Ma (3:40)

So, yes, big wins led to more college applicants. But the results were nuanced.

Doug Chung (3:45)

The number of applications increases. That's true.

Now, it tends to be towards the lower end of, in terms of standardized test.

Ricky Mulvey (3:55)

Doug found that students with lower than average SAT scores had a stronger preference for schools with a lot of athletic success.

Adrian Ma (4:02)

But like so many things in economics, this is on the one hand, on the other hand situation.

Doug Chung (4:08)

Some people would argue then, hey, then that's not a good thing. I could argue the opposite, saying that, hey, maybe standardized test is one of those things, but the more people apply, the school has a better choice set.

Ricky Mulvey (4:25)