Thursday, August 20, 2015

Northwestern University’s Football Players Fail to Unionize, a Credit Positive for the Sector

Crony university power is stronger than union power/

On Monday, The National Labor Relations Board declined to assert its jurisdiction in NorthwesternUniversity’s (Aaa stable) football players’ attempt to unionize.

The decision is credit positive for Northwestern University and other universities because it limits the prospects for increased expenses associated with unionizing student athletes, says the credit rating agency, Moody's.

According to Moody's, public universities comprise a majority (111 of 128) of the Football Bowl Subdivision (FBS), the National Collegiate Athletic Association’s (NCAA) most lucrative and highest level of athletic competition.

A growing disparity between expenses and revenue generated by athletics requires additional infusions of institutional funds into athletic programs to break even. Only 20 of 128 FBS athletic departments generated revenues that exceeded expenses in fiscal 2013. Moody's project that the median generated revenue for fiscal 2015 is $44.5 million, 14.8% higher than five years ago (see below). Over the same period, expenses grew 46.0%.

However, a strong football program results in a stronger overall recruiting and fundraising efforts for the universities.


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