It’s March Madness in the US – the annual NCAA basketball tournament.  And so it’s time to ask the question: what the hell is it with Americans and intercollegiate sport, anyway?

To most of the rest of the world, the American college sports industry – by which we mostly mean Men’s Basketball and Football – is flat-out ridiculous.  There are 420,000 student athletes.  Attendance at college football games is 48 million/year.  Total income for college sports is just under $11 billion per year.

Eyewatering statistics.  And yet, according to most observers, the vast majority of institutions who participate in the big-money sports actually lose money on Athletics.  According to this 2011 USA Today survey, only 22 of 227 Division I schools break-even on their athletics programs.  In total, subsidies from state governments, student fees, and the like, equalled more than $2 billion.

Obviously, there’s some room for interpretation in those figures (notably, how much of the sports infrastructure you choose to assign to intercollegiate athletics, as opposed to facilities for the general student body) – but clearly there’s a heck of a lot of spending going on.  The question is: why? What’s in it for the schools?  Are all these schools just stupid, or is there something we’re not seeing here?

There is no shortage of theories about those “other” benefits sports brings: one theory says that sports teams create school spirit and hence higher levels of engagement; another is that successful sports teams increase prestige, and hence applications.  The former is pretty clearly not true at all; the latter does happen occasionally, but only when a relatively unknown school hits the jackpot with a exceptional player or a deep run in the NCAA playoffs (Butler, for instance, saw applications rise 41% after their basketball team’s wholly-unexpected 2010 playoff run).  That said, if you don’t have a sports team, you run the risk of not being in the public eye.  Among major universities, only Chicago chooses not to compete in football (and even there, the decision to ditch the sport only took place after something like fifteen consecutive losing seasons).

The missing link here is government relations.  College sports is a way of attracting political backing for an institution among people who never have, and never will, attend higher education.  Indeed, particularly in the Southern and Western states where the development of higher education was heavily driven by the populists in the 1890s and early 1900s, providing entertainment to the masses wasn’t exactly a quid pro quo for providing state-funded elite education for the few, but it was pretty close.

And quite apart from its uses as a means of shoring up voter support, big games also serve as a great way for Presidents to meet-and-greet with important legislators, something Charles Clotfelter documented amply in Big-Time Sports in American Universities.  Given the way American politics works, with its dispersal of power and multiple points of influence, presidential schmoozing is an even bigger deal down there than it is up here.  And if you can get some of the governor’s top aides in your luxury box for a full three hours, that’s probably worth some serious dough.  Maybe not the $10 million per institution it’s actually costing, but close enough to it that sensible people are loath to risk it.

In other words, it may be madness, but there’s a method to it.