Do Higher Levels of Athletic Competition Benefit Small and Medium-Sized Colleges? Investigating the Causal Effect of Reclassification from NCAA Division 2 to Division 1 on Applications, Basketball Revenues, and Athletic Department Expenses.

This paper analyzes the impact of college athletic reclassification for educational institutions in the United States. Most of America's colleges and universities offer athletic opportunities for their students under NCAA governance. The level of competition and associated resource requirements range from relatively low (Division 3) to high (Division 1). In recent years, there has been an increase in the number of institutions that have either reclassified to a higher division, or publicly considered such a move. The resource obligations of reclassification are significant, and administrators must carefully weigh expected benefits and costs with respect to the institution's mission and vision. While several studies (Bell, 2017; Schwarzber, 2014; Frieder & Fulks, 2007; Tomasini, 2005) have focused on reclassification from Division 1-FCS to FBS—the highest level of competition—less attention has been paid to colleges in Division 2 and 3—which comprise two-thirds of NCAA membership. Our study addresses a gap in the literature by analyzing athletic reclassification among schools moving up from Division 2 to Division 1 (FCS and no-football) during the period of 2001–2018. Drawing upon multiple data sources, we construct a panel of 33 schools (14 treatments and 19 controls) to evaluate the impact of reclassification on applications and athletic department budgets. Results from quasi-experimental methods (difference in differences, event study, and synthetic control models) suggest that reclassification significantly increased basketball program revenues and athletic department expenses among the treatment schools. However, we do not find evidence that reclassification raises student applications in the short term. [ABSTRACT FROM AUTHOR]