College Sports Programs Live in Two Worlds—One Rich and One Poor

 

Nearly a third of the 125 athletic departments that compete just below the NCAA’s elite level increased their spending by more than 40 percent during a recent five-year period, a Chronicle analysis of federal education data has found.

As expenses have ballooned and revenues stagnated, the median deficit at those programs has grown to more than $9-million.

A review of athletic operating expenses in the Football Championship Subdivision (FCS), formerly known as Division I-AA, shows that from 2006 to 2010, public universities had some of the fastest-growing athletic budgets—even as many of those universities grappled with overall financial cuts.

Other research suggests that increased sports spending may be coming at the expense of academics. A forthcoming report by the Knight Commission on Intercollegiate Athletics finds that athletic spending among public colleges in the championship subdivision grew by 42 percent from 2005 to 2009, nearly twice as fast as academic spending. Meanwhile, institutional subsidies to athletics grew by 34 percent, according to the Delta Cost Project on Postsecondary Costs, Productivity, and Accountability, which did the Knight report’s analysis of per-athlete and per-student spending during that period.

Most programs at this level are far from financially independent, relying on institutional support and student fees to cover most of their expenses. Unlike big-time programs, they have smaller stadiums, fewer alumni and fans, and no rich media contracts.

The trends strike many as unsustainable. By continuing to spend so heavily on athletics, universities are overextending themselves, says John R. Thelin, a professor of higher education at the University of Kentucky who has studied the history of college sports.

Breaking even is almost impossible for programs in the championship subdivision, let alone turning a profit, says Daniel L. Fulks, an accounting professor at Transylvania University, in Lexington, Ky., who each year writes an NCAA report on Division I finances. Only half of the programs in the NCAA’s elite bowl grouping can boast the lucrative mix of strong ticket sales, robust donations, and hefty conference payouts. In this lower level, nobody has it.

“On the revenue side, they’re really in a bad spot,” Mr. Fulks says. “But on the expense side, they’re not far off from their big brothers and sisters.”

In 2009-2010 only twenty-two (22) Football Bowl Subdivision (FBS) athletic programs turned a profit.  The median profit at those programs was some $7.4 million.  The other ninety-eight (98) programs at that level had a median deficit (half above and half below) of $11.6 million.  At the top, the school with the largest revenues took in some $143 million; while at the low end the figure was $35 million.

In the FCS division the gap between the schools with the highest and lowest revenues was also quite large–$19 million to $3 million.

USA Today was able to compile a database of 218 Division I public schools’ financial reports for 2009-2010.  These reports were obtained through Freedom-of-Information Act requests.  These schools showed a total, combined athletic spending of $6.2 billion.  Of that amount, some $2 billion came from subsidies from the schools—either from the general operating budget or form school-mandated student fees that go to athletic departments.

There has been a recent rush of schools to start new football programs or to upgrade their already existing ones.  North Carolina Central University is a good example of the issues associated with these moves.  In 2005 the school announced plans to move its athletic programs from Division II to Division I.  The move was designed to use athletics, specifically football, as a way to generate interest (i.e., students and money) in the school.

Over the past six years, as public institutions in the state wrestled with major cuts in support for higher education, the university’s athletic budget has nearly doubled, to just under $7-million. The Eagles have added a baseball team, devoted more money to scholarships, and hired additional staff for academic services, compliance, business, and fund raising.

The football team has a new coach, at an annual salary of $225,000. The 10,200-seat football stadium got new turf, a new scoreboard, and renovated locker rooms. There are plans to do $30-million to $35-million worth of additional renovations to the stadium and the running track, in part to expand the facility’s seating capacity and bring in more money through tickets sales and corporate sponsorships.

The heavy spending on football is strategic. “If football is doing well, pretty much everything is doing well,” says Ingrid Wicker-McCree, North Carolina Central’s athletic director. Indeed, once the university began competing last season in the Mid-Eastern Athletic Conference—whose historically black colleges stretch from Delaware to Florida—ticket sales nearly doubled from the previous year, to more than $500,000, she says.

Still, the athletic department now leans heavily on students to pay its way. With the university poised to trim as much as $14-million from its budget next year—including 100 or so faculty and staff positions—because of cuts in state support, student fees have proved crucial to growth in athletics. The fees, which were $345 in 2006, have climbed steadily; next year, students will pay $621 to support athletics. All told, student support accounts for two-thirds of the athletic budget.

Everywhere one turns there is evidence to suggest that the “arms race” in college sports continues to rush ahead.

The gap between the rich and poor schools seems to be increasing.  Some schools see revenues going up; but every school sees its expenses continuing to escalate.  There is little doubt that many NCAA athletic programs are not on solid financial ground.

Tuition is constantly increasing at NCAA institutions.  Most schools’ athletic programs are not self-sufficient and depend on institutional support to survive.  This “diversion” of money from academics to athletics is a major source of concern on many campuses.

To read more see the recent article in The Chronicle of Higher Education.

 

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