Someday It Will be Time To Pay the Piper
The cost of doing business at the highest levels of collegiate athletics continues to escalate. The University of California, Berkeley has been in the news recently as the athletic department cut five men’s varsity sports and then re-instated three of them as it seeks to balance its budget. Ohio State spent over $32 million in football during the 2009 campaign out of total athletic spending of some $120 million.
Athletic departments around the country are constantly looking for new revenue streams to fund these ever growing athletic budgets. The University of Cincinnati saw its football team win the 2009 Big East football title and go to a lucrative BCS Bowl game. Its basketball team has a long history of success on the court and in the stands. Yet it was reported by USA Today that in the 2009-10 academic year the University’s general fund accounted for 34% of all athletic department spending.
The NCAA does not release data on a school-by-school basis. Since schools use different accounting practices it can be difficult to get accurate information suitable for comparing revenues and expenditures across the board. USA Today published a database in April, 2010 that presented a database compiled from various records its reporters had accessed. The data covered several years and reported data for Football Bowl Subdivision schools. This work represents as complete a picture as anyone has presented and clearly shows the financial pressures faced by big-time football schools.
Al.com ran a story in August, 2010 with details about athletic finances at the University of Alabama, Auburn University, and UAB. It showed that Alabama made a profit in the 2009-10 academic year; Auburn lost some money and UAB went even deeper into the red. The article discusses the pressures on major college football playing schools. It reported that for the previous academic year only 14 of the 120 FBS schools reported an overall profit in their athletic departments.
Universities are becoming ever more vigilant regarding locating new sources of revenue. One of the newer sources of revenue that is growing rapidly is the licensing of products using university logos and athletic team emblems. Universities are filing for trademark protection on more and more images relating to their athletic teams. This can lead to the rather awkward situation where a University sues one of its own boosters over licensing issues.
One of the major players in the licensing market today is an Alabama company called Collegiate Licensing Company (CLC). It was started by former Alabama football player and Tennessee coach Bill Battle. It was sold to IMG in 2007. CLC now has licensing agreements with numerous FBS schools, including every Southeastern Conference member except for Mississippi State.
CLC clients are heavily involved in the lawsuit filed in 2006 by the University of Alabama against the sport artist, Daniel Moore. Some 38 CLC clients joined in filing amicus briefs in the case with the 11th Circuit Court of Appeals, which currently has the case under advisement. These universities believe that millions of dollars in precious revenues could be at stake if Mr. Moore prevails in asserting his first amendment freedom of expression rights.
The University of Colorado is currently spending some $35 million on an indoor football and basketball practice facility. California-Berkeley is finishing almost $100 million of work on its football stadium. Michigan completed a $225 million renovation of its football stadium in August, 2010. The University of Alabama is working on construction of men’s basketball practice facilities; and just completed a $16.5 million renovation of historic Foster Auditorium on campus for its women’s basketball and volleyball teams. Auburn opened its new $75 million basketball arena this past season.
The above are just a few examples of the huge amounts of money being spent by FBS schools as the “arms race” in athletic facilities continues. Even smaller programs are joining the race. Florida Atlantic University of the Sun Belt Conference is scheduled to open a new football stadium next year. The University of Charlotte is starting a football program in 2013 and is about to break ground on a 15,000 seat stadium that can eventually be expanded as the school moves towards its ultimate goal of joining the FBS Sub-division. The University of Houston unveiled plans this past fall for a 40,000 seat on-campus football stadium.
The University of California statewide system is facing $500 in spending cuts for next year. The State of Alabama announced recently a 3% spending cut for education for the remainder of this year and is looking at deeper cuts for next year. Practically every state is looking towards education spending cuts as a major way to help balance budgets. Yet on Friday, March 4, the Mobile Press-Register ran a story detailing that Auburn spent some $2.9 million to send 857 people in its official party to the recent BCS National Championship Game.
How long can this growth in spending continue? Back in 2005 few people foresaw the impending implosion of the home mortgage market and the deep recession brought on by this market collapse. Rampant spending increases simply cannot be sustained forever. What will the impact on collegiate sports be when the bubble finally bursts, as will inevitably happen?
Greg Tyler, MPA, JD, MLIS
Mr. Tyler is the Director of the Library/Archivist at the United States Sports Academy. He is also a former practicing attorney. He currently serves as the Editor of The Sport Digest.