Viewpoint: Griz athletics no different than other national programs

Dick Berrett

In a Missoula Current article posted earlier this week, Cynthia Carranza reports that “the
University of Montana’s Grizzly Athletics Program serves as a major economic driver for the state, generating nearly $100 million in annual income and creating hundreds of jobs across the region.”

This claim is apparently based on the findings of a recent report prepared by the Bureau of Business and Economic Research at the University, but unfortunately, the implications of those findings are badly misconstrued in Carranza’s reporting.

As its authors make clear, the BBER report in question follows a well establish procedure to estimate the impact of Grizzly Athletics on economic performance in Missoula County.

This procedure requires that the researchers first estimate the total spending, by industry, that occurs in the county just because the athletics program is in operation. In this case, the BBER researchers measured those industry totals as the sum of the spending by visiting teams, UM athletes, the athletic program itself, and critically and most importantly, by fans who come to Missoula for athletic events, and who, while they are here, stay in local lodging, patronize restaurants and bars, shop at local stores, fill their cars with gas, and so forth.

Once researchers arrive at those total industry spending figures, they plug them into a computer model that calculates the resulting impacts on jobs, wages, value add (which is about the same thing as income), and gross receipts. Following this procedure, BBER reports that athletics related spending raises incomes in Missoula County by $59 million (of which $41 million is wages), jobs by 728, and gross receipts by $94 million.

Although there are some pitfalls to the BBER’s methodology – for one thing, it fails to account for the well-known problem of economic and job growth being stifled by rising housing prices – can we use these numbers to measure the impact of athletics on the state as a whole, and not just Missoula County?

Unfortunately, no, that won’t work: the impact on the state as a whole will be significantly smaller than the impact on Missoula county alone. How is that possible? It’s because most of those fans coming to games and spending their money in Missoula are coming from elsewhere in Montana and are not spending their money at home.

Montanans traveling to UM games do raise spending, incomes and jobs in Missoula, but they lower spending, income and jobs in Helena, Kalispell or wherever else fans come from. For the state as a whole, the net income impact of athletics is still positive, but it’s significantly lower than it is in Missoula County, at $59 million, and absolutely miniscule compared to total Montana personal income. By no means can it be considered a “major economic driver for the state.”

This should come as no surprise. If rather than evaluating its economic impact on other
businesses such as hotels and gas stations, we think of university athletics as a business itself, we have to recognize that without hefty subsidies it would fail.

According to the NCAA, about one third of Grizzly athletics revenue comes from compulsory student fees and support from the university, including fee waivers for student athletes. Another substantial chunk of revenue comes from donations.

In this respect, Grizzly athletics is no different from other programs around the country: very few are self-sustaining; most have to be subsidized. There may be good reasons to subsidize university athletic programs, but it’s not because they are thriving enterprises that drive state economies forward.