The latest posts by Andy Schwartz, self-described antitrust economist, give some good perspective on the goings-on in a university budgetary department. Much was made of ODU cutting wrestling amid the pandemic and other budget shortfalls. The university’s consultant projected $1million in savings.
Schwartz, writing on his site SportsGeekOnomics
My basic framework is one I’ve learned through my couple of decades as an antitrust person, where we apply a “but-for” standard, meaning that we attribute gained/lost revenue to an action based on comparing what did happen with what would have happened but for the conduct in question. So when I assess whether wrestling is, or is not, costing a school money, I try to compare the financial situation of the university as a whole with, and without, wrestling. Because the impact for a school like Old Dominion should be assessed at the whole-university level (after all, what’s the point of ANY sport if it’s not good for Old Dominion as a whole), then all revenues and costs are relevant, independent of how they account for them.
The thrust of the piece is that it is important to evaluate the whole cost to the university and not only the athletic department. Does cutting the scholarships of the athletes reduce the cost to the university by the same dollar amount? Or does the university forego revenue when it cuts a sport, etc.
His post does not argue that ODU is wrong, but simply that for us to evaluate the decision, we have to look at it from that perspective. Additionally, here are his “Four Rules for Smart Cost Cutting”