Every athlete building a brand eventually hits the same moment. You’ve bought the logo package. You paid for the photo shoot. You paid for editing, maybe even paid for boosting a few posts, because someone told you that’s how you grow. But the numbers don’t move as you expect. You’re not hearing from businesses or brands to sign deals. And instead of pausing, you think: I’ve already spent this much. I can’t stop now.

That’s the sunk cost fallacy.

In basic economics, a sunk cost is money, time or effort that’s already been spent and can’t be recovered. So once it’s gone, it shouldn’t matter in future decision-making. Rational choice theory says only future costs and benefits should guide decisions. That’s why economists say if you buy a ticket to a terrible movie, you’re better off walking out, even if you paid a lot of money for it. That money is gone. It won’t come back whether you stay or go.

The sunk cost fallacy occurs when people ignore that principle and make decisions based on the past rather than on future outcomes.

Athletes fall into this trap all too often in the NIL era. Branding has become a second job with content calendars, subscription platforms, logo design, trainers, consultants, and more offering solutions to help them grow. Not that these are all inherently bad investments. Some may be perfect for you. The challenge comes when they aren’t.

Athletes are hard-wired to give extra effort. If I just push harder, I will achieve my goals. That logic feels comfortable. The real question you should be asking is: Is the next dollar spent likely to produce a return?

The hard truth is that brand building has diminishing returns. The first professional photo shoot might elevate perception. The fifth one probably doesn’t. The first piece of quality content might differentiate you. The tenth piece that looks exactly the same probably won’t. If the audience isn’t growing and engagement isn’t translating into opportunity, spending more rarely fixes the underlying problem. It just increases the total sunk cost.

Sometimes the smartest move in business is not scaling. It’s stopping. That’s not giving up on your brand. It means you evaluate what you are doing and figure out what is driving your decision-making. Brand building should feel strategic. If your spending decisions are driven by fear of “wasting” what you’ve already invested, you’re letting emotion dictate your decisions.

The sunk cost fallacy thrives on emotion. Smart athletes ask what the next dollar earns, not what the last one cost.

The reality of the sunk cost fallacy is hitting athletic departments as well. The justification is simple. You have to keep up. If your rival spends $10 million, you have to spend $11 million. You can’t expect fiscal restraint when you’re in a bidding war for a five-star quarterback.

Keeping up with the competition has been a rough road for many universities. The most shocking recent example has to be Rutgers University. Rutgers has spent the last decade trying to buy its way into the Big Ten party, and the invoice is staggering. According to a recent report from NJ.com, the university athletic department recorded a $78 million deficit for 2024-25. This brings the total deficit since joining the Big Ten to over $500 million.

They are far from the only example. UCLA is finding out the grass isn’t always greener. Their department has run in the red for the past six years, running up $219 million in cumulative deficits. NCAA financial reporting data from the ACC showed that public member schools averaged operating losses of about $55 million per school in 2024, before direct revenue-sharing.

Revenue-sharing under the House settlement is expected to add tens of millions in additional expected costs for institutions already running large deficits, pushing them deeper into the red even if revenue doesn’t grow.

Athletic programs are chasing revenue they can’t realistically get. Once a program starts spending on facilities, staff, massive donor campaigns to support NIL pools, those become sunk costs. Yet many administrators feel like they must keep spending to justify previous spending, even when the expected returns on recruitment or revenue never materialize.

This is the organizational version of not wanting to admit you spent too much on a project that isn’t paying off. Instead of evaluating their strategy based on future benefits, schools cling to their “commitment” to staying competitive in the NIL marketplace, because the narrative of past investment is so hard to abandon. That’s sunk cost logic at work. The story matters more than the economics.

In the end, programs that make decisions based on a forward-looking, future cost strategy will be able to successfully navigate the unpredictable NIL market.

Even outside major conferences, the trend toward deficits related to expanded athletic compensation for athletes and competitive spending is clear. Smaller programs with limited revenue bases are cutting entire sports or restructuring their budgets because they cannot balance rising costs against stagnating income. Here are a few schools that have made cuts to survive:

Saint Francis University (PA) announced due to pressure from the transfer portal, pay-for-play and budget cuts, that it would drop from D1 to D3.

NCAA D2

According to the NCAA’s D2 Athletic Finances 10-year Trends report, which tracks median revenues and expenses for hundreds of D2 schools. The median report is useful because it strips out the handful of unusually strong programs as well as schools with extreme deficits, giving us a better picture of what a normal D2 program is experiencing.

Based on the 2023-24 data, D2 programs with football reported median revenues of $1.19 million, but total expenses were well above that level. For D2 without football, the pattern was the same, with revenues around $611,000 again with far higher expenses.

This matters because athletic departments often report “net surplus” on public disclosures only after adding in institutional support - a.k.a student fees, direct or indirect funds from the university. So this means that for virtually all D2 athletic programs, the department didn’t generate a profit, and the school covered the shortfall.