Riding the short distance from downtown to the University of Houston campus, light rail passengers arrive at Athletics District station in the shadow of a towering 40,000-capacity football stadium that opened in 2014 at a cost of about $125m.

An adjacent $20m, 100,000 sq ft indoor football practice centre opened in 2017. The smart facilities give the impression that you’ve stepped into a big-time institution, and the university’s football team will soon have the cachet to match its bricks and mortar.

University leaders were jubilant earlier this month when it was announced that the Cougars will join the Big 12 conference, along with three others, as the prestigious league restocks after two of the biggest college football powers, Oklahoma and Texas, decided to leave for the Southeastern Conference.

“I love big. I love everything big,” the Houston president, Renu Khator, told reporters.

Houston is widely viewed as a poor relation to Texas’ better-known public universities, the University of Texas at Austin and Texas A&M, and is often dismissed as a “commuter school” – of its 47,090 students last year, 80% came from the Houston area. So football and basketball are central to its profile-boosting efforts, or so the theory goes.

Indeed, the university’s new television commercial debuted on ESPN and is based around a football chant. No one would dispute that a thrilling season – like the Cougars’ run to the Final Four of March Madness this year – brings more media attention than, say, a new library. And some studies have found that successful teams can help increase student applications, at least in the short term.

But athletic prominence comes at a price. President since 2008, Khator has overseen an outlay of hundreds of millions of dollars into athletics: a bet that spending heavily on football and basketball, alongside improved academic offerings, adds value to the institution. A university spokesman declined to comment for this article.

Revenues have risen but Houston’s athletics expenses soared from $39.5m in 2014 to $73.7m in 2019 – less than half the amount that the top 10 schools spend but still a hefty amount. A handful of athletics departments, such as Texas (which has newly renovated one end of its football stadium at a cost of $175m) are profitable. Many others, such as Houston, subsidise sports programmes through funds from the university’s wider budget, mandatory student fees of hundreds or even thousands of dollars each year, and donations.

The spending sprees invite philosophical and practical questions. Are high-level sports teams an investment or an indulgence? Do the trappings of professionalism divorce athletics from universities’ core educational mission, or are sports like football and basketball so embedded in American college culture that they are fundamental to the identity of the institution? And, in the absence of tight regulations, should more be done to ensure income is spent prudently and expenses kept in check, especially at a time when rising tuition costs add to the burden of student debt and many academic departments face budget squeezes?

There is a $10m exit fee to leave the American Athletic Conference – a relative bargain compared with reported penalties of up to $80m facing the Longhorns and Sooners should they leave the Big 12 before 2025. But Houston’s jump to a bigger division means a likely five- or six-fold increase in annual media rights revenue from the current $7m.

As in the professional ranks, pressure to win demands ever-higher spending, abetted by skyrocketing media rights deals and the enthusiasm of rich donors. But in a realm where players are unpaid “student-athletes”, the money is not going on stars’ salaries. Instead the arms race manifests in extravagant facilities, recruiting costs and coaches’ wages. Texas has a $7m locker room. Oregon has a $12m video board and sound system.

The $3m-per-year agreement signed in 2020 by Kelvin Sampson, the Houston men’s basketball head coach, included a range of performance-related bonuses (for academic as well as sporting results), two courtesy cars and up to 40 hours of private plane use per year for recruiting purposes.

Houston’s football head coach, Dana Holgorsen, signed a contract in 2019 that pays him in excess of $20m over five years – more than double his predecessor’s deal and a far more generous package than his peers outside the elite Power Five conferences. Sampson and Holgorsen, who has won 10 games and lost 14 at Houston, are each reportedly in line for a $1m bonus now that Houston is joining the Big 12. Holgorsen is also set for a raise.

“When the College Football Playoff was created, when the conferences began their [broadcast] networks, billions of dollars of new revenues flowed into college sports and those revenues disproportionately were spent on coaches’ salaries, increasing athletics personnel, and facilities,” says Amy Privette Perko, chief executive of the Knight Commission on Intercollegiate Athletics, which advocates for reform in college sports.

“While there were increases in athlete benefits, [they were] clearly not to the degree that money was spent in those other areas and we know there’s still a tremendous unmet need which relates to medical expenses and additional educational benefits for athletes.”

The Commission has released a report that recommends changes to the distribution and spending of the more than $3.5bn given out annually by the NCAA, College Football Playoff and Division I conferences. “At the highest levels there’s just a continuous drive for more revenue but there’s no educational nexus that connects where those additional revenues are going to be spent,” she says.

NCAA figures tell a predictable story of expenses outpacing revenues. Only 25 athletics departments among the 351 Division I institutions generated a surplus in 2018-19. Of the nearly $19bn spent on athletics in 2019 among more than 1,100 NCAA schools, $3.6bn went on financial aid for student-athletes and $3.7 bn was paid to coaches. Altogether, athletics departments generated 56% of their own revenue, with the other 44% subsidised by other sources, such as “institutional support” and student fees.

Rutgers University switched conferences and began play in the Big Ten in 2014: a chance for the Scarlet Knights to face giants such as Michigan and Ohio State and a move touted at the time as heralding a financial windfall for the school. But their balance sheet is as red as their uniforms. The athletics department is $265m in debt, The Record discovered, including internal loans worth $84m to cover annual losses, as coaches’ salaries and operating expenses ballooned.

Another college with a heavily-subsidised athletics department, the University of Cincinnati, is ascending to the Big 12. Last year it eliminated its men’s soccer team, which lost about $700,000 in 2019, the Cincinnati Enquirer reported, while giving its head football coach a privately-funded contract extension raising his annual pay by $1m, to $3.4m.

Dave Ridpath, associate professor of sports management at Ohio University, believes there is a “trickle-down effect of where schools feel that they have to have some type of a premier football program or be in the company of premier football and that somehow makes the university.” He is a past president of the Drake Group, an advocacy network with a stated mission to “defend academic integrity in higher education from the corrosive aspects of commercialised college sports.”

As a large university with a solid sports tradition in a major city, Houston has greater potential than many ambitious smaller institutions. “I think it’s OK to try to be the best you can at the level you can be at, but if you’re trying to reach an impossible dream you can spend yourself into oblivion and you see a lot of schools doing that that really have no chance of breaking into that exclusive club. Even if you’re invited into that club it’s not a panacea,” Ridpath says.

With the future of college sports at a crossroads given the pressures on the amateurism model and the strident demands for governance reform, now might be the moment to refocus the relationship between sports and education – or, perhaps, sever it. “I’m OK if it goes completely professional,” Ridpath says. “Let’s just be honest. Don’t put that cost on the back of tuition-paying students.”