(04-10-2019 12:52 PM)MechaKnight Wrote: (04-06-2019 06:36 PM)McKinney Wrote: (04-06-2019 05:39 PM)prisonmike Wrote: I think this is a very interesting concept. In my observations there are 3 main things P5 Univeristy Presidents look at when evaluating expansion candidates (G5 Power Programs)
1. University Endowment
2. Athletic Budget
3. Football Attendance (Fan support)
Endowment really shouldn't play a role in athletics. In some extreme cases, it may, but it should be used as a buffer against changes in economic factors as well as funding line items core to the university's mission (endowed chairs, low-income access, etc.). It's also used in a pissing match context, which I guess is what you're getting at here, but I digress.
An endowment criteria creates a near insurmountable barrier for younger schools. Big endowments come from accumulating and investing donations over time. So there's not much a young school can do to catch up with a school that has a 100 year head start on building it's endowment
Can someone explain how endowment is applicable to football power status? I'm not aware of any programs who use their endowment to pay for athletics expenses. Seems like it's just something that schools with big endowments use to separate themselves from those that don't.
Who would you rather go into business with: a rich trust fund kid or a middle class entrepreneur? Sure, the trust fund kid isn't going to go bankrupt if your joint venture fails, but how does that help you succeed?
in 2017 dem coogs doh spent $17,609,027 in schools funds EXCLUDING student fees that were another $8+ million
dem coogs doh have about a $650 million dollar endowment
in Texas state funds cannot be spent on athletics (that is not the case in all states)
money is still "fungible" though so you can still account for things as you wish
without state funds and without grant money (that does not go to athletics) that leaves athletics income and student tuition (exclusive of the additional student athletics fee)
and often some endowment monies are directed to specific uses as well, but sometimes it is not and sometimes depending on how the money was specified to be used when donated a school can end up with endowment money through long term growth that is not specified for a particular use
IE someone donated $1 million for a professorship and specifies a certain minimum amount of support it is to try and generate every year....and through a few good years of returns that million grows to the point where that min level of support can be achieved and there is still additional money left over from investment returns that COULD go to that professorship with a higher level of support or it COULD go to anything else
some of that income from investment returns could then legally go to athletics
but again money to some degree is fungible so another way to work things is universities (and states) set formulas for the expected expenses in faculty and classroom/lab space to support different types of degree programs
so if you have an engineering program that has a desired formula funding level of X dollars per enrolled undergrad or Y dollars per faculty member (or some combination of that) and you have a high amount if endowment dollars that are legally specified by the donor to go to engineering well using simple numbers as an example
if you have your formula(s) saying that you want to be at $10 million in budget for that engineering program based on enrollment and faculty size and you have no endowment at all for the university well 100% of that $10 million comes from tuition and state funding and you have no money tot take from there to go towards athletics unless you decide to fund that engineering program at a level that is lower than what your desired formula(s) say it should be funded....and even then you can only use an amount equal to the student tuition
so if you had a desired funding level of $10 million and you had $4 million in state funding and $6 million in tuition funding well if you wanted a terrible engineering program you could shift $6 million over to athletics and run your engineering program on state funding only (and probably have accreditation issues down the road)
now lets say you have endowment proceeds that are legally mandated to go towards engineering in an amount of $5 million
so you have a desired level of $10 million in funding, $4 million in state funds and $6 million in tuition, and $5 million in endowment proceeds specified for engineering for a total of $15 million
you can shift $1 dollar to $5 million dollars for money (it would be classified as "tuition" money) from that engineering program to athletics and you would still be at your desired $10 million in formula funding for that program
now that is an extreme example using one program (department, school, college how ever you look at it) using random numbers
but if a university had a large enough endowment even if it was mandated for specific programs they could do those same types of transfers and end up with a large amount of money for athletics and still fund programs at a high level
if a school had $50 million a year coming in endowment proceeds for a college of business and $50 million a year in endowment proceeds for a college of engineering and their formulas said that the very top programs at the universities across the USA were funding their programs at a level of $80 million each and they also had $20 million each in state funding and $30 million each on tuition for a total of $100 million well they could fund their programs at a level similar to the top programs in the USA and still have $20 million each left over to fund something else....like research, other programs with lower endowments, athletics, library resources or many other university uses
this is a general example, but basically you are shifting tuition money and at universities that have large endowments (even ones that have most or all the money with specific uses) you can still fund different departments, schools, and colleges at high levels while shifting other funding to other departments, schools, or colleges or even athletics
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