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Curbing Athletic Spending

January 14, 2010

ATLANTA – Arguing that current athletics spending is unsustainable, a group of scholars urged the National Collegiate Athletic Association at its annual convention Wednesday to seek a federal antitrust exemption to limit skyrocketing coaches’ salaries, slash the number of athletic scholarships offered to football players, and ditch postseason bowl games in favor of a football playoff system.

Though overspending on athletics is not a new problem for many institutions, the sheer scale of the money being overspent today is unprecedented. For example, according to the most recent NCAA figures, only 25 of the 119 institutions in the Football Bowl Subdivision (formerly Division I-A) reported a budget surplus during the 2007-8 academic year. Those few institutions operating in the black had an average surplus of $3.87 million; however, the many operating in the red had an average deficit of $9.87 million. Since 2005, the average operating deficit for all FBS institutions has grown by more than 45 percent from $5.6 million to $8.1 million.

“Athletics departments and universities seem to have established a new tradition in the past few years, and the new tradition is setting a budget and then not meeting it,” quipped Jeff Orleans, former executive director of the Council of Ivy Group Presidents, before a gathering of athletics officials Wednesday.

Concerned about this spending, the Division I Athletic Director’s Association proposed a series of cost-cutting reforms for the NCAA to consider this past fall. Among its recommendations, the group suggested shortening the playing seasons of non-revenue sports, reducing team travel squads, restricting off-season practices, eliminating certain sports, ceasing to print media guides and ending the practice (common among the most competitive football programs) of lodging teams in local hotels before games.

Giving the keynote of a colloquium on athletics spending, Andrew Zimbalist, an economist at Smith College, said the recommendations put forth by these athletic directors are only “small steps forward” and run the risk of “being co-opted so that they have no financial impact whatsoever” in the near future. Instead, he offered three sweeping reforms for those NCAA officials and members in attendance to consider.

Photo: David Moltz / Inside Higher Ed

Andrew Zimbalist, economist at Smith College.

Most sweeping of his suggestions, Zimbalist argued that the NCAA should seek a partial antitrust exemption to regulate coaches’ and assistant coaches’ salaries. The NCAA was sued in the 1990s when it tried to limit assistant coaches' salaries as part of a major cost-cutting effort; since the assistant coaches won the case, the NCAA would need just such an antitrust exemption to limit salaries again. Zimbalist noted that more than 100 coaches in the FBS have compensation packages that are in excess of $1 million. In many cases, this means they earn between 5 and 10 times more than their (nominal) bosses, the university presidents.

Most defenders of high coaches’ salaries argue that these generous compensation packages are driven by market forces. Though Zimbalist agreed with this sentiment, he mused about what was driving those market forces and wondered if these salaries were still worth the cost.

“If you consider the average revenue of the top 32 FBS schools, it runs roughly between $40 and $70 million,” Zimbalist explained. “But, the average revenue of the 32 teams in the NFL is $235 million. That’s four times what it is in FBS football.… Under those circumstances, with coaches in college football who are in these enterprises that are generating one-fourth to one-eighth of what NFL teams are generating, how could they be worthy of the same compensation?”

Still, some of the scholars in attendance argued that the NCAA should tread lightly if it attempts to seek government help in limiting coaching salaries.

“We do need to be very clear about what we’re asking beyond coaches' salaries, because we’ll only have one chance to make a request before Congress,” said Orleans. “We have to be certain this is what we want. Second, we should expect Congress will ask us for some sort of accountability in return for whatever exemption we get. … Finally, and here I differ with [Zimbalist], we need to consider whether actually going to Congress and asking for an exemption crosses some sort of threshold and invites Congress to regulate, whether in athletics or more generally [in higher education], in a way that it has been hesitant to do. … I think that could be a difficult result for all of us.”

Another of Zimbalist’s recommendations is to reduce the number of football scholarships offered in the FBS. Currently, there is a limit of 85 scholarship athletes per squad and some institutions have as many as 32 walk-on players for a total team of 117 players. In the NFL, Zimbalist explained, teams may have 45 active players, 8 inactive players and 8 athletes on a “practice squad.”

If the NCAA were to mirror the team sizes of the NFL, only allowing 60 scholarship players, an institution could save $750,000, assuming the scholarships are worth $30,000 each.

Other scholars in attendance echoed Zimbalist’s call for smaller football rosters, arguing that college squads are often larger without much reason.

“If the NFL is the gold standard of the industry and only needs 53 players to compete at the highest levels, then why do college rosters need to be twice that size to produce a quality product?” asked Mary Jo Kane, director of the Tucker Center for Research on Girls & Women in Sport at the University of Minnesota. “The standard reply is that they need this to compensate for players being injured.… According to [the travel policy of certain conferences], a maximum travel squad is 60. Why would a coach truly believe he needs a roster of over 100 to believe he has to compete and double disadvantage himself? What I mean here is that when you’re playing an away game you begin at a competitive disadvantage; why would you want to compound that disadvantage by coming in with a smaller squad to compete with the home team?”

Kane also argued that having smaller football squads would allow institutions to trim the large numbers of support staff needed for a larger team. If they were to go of extra academic advisers, trainers and assistant coaches, she said, the annual savings would be substantial.

Finally, Zimbalist argued that the NCAA should replace the Bowl Championship Series with a playoff system in the FBS. He called the BCS system “flawed, unfair and anti-competitive.” For instance, he noted that from 2007 to 2009, the BCS paid out $410 million to participating teams and that $355 million, or 86.6 percent, of that was given to institutions from the six BCS or “major” conferences.

Zimbalist said the NCAA would be able to make more money from a playoff system – he estimated more than $600 million – than some of its members have from the BCS. For example, he noted that a playoff would allow for an equitable distribution of money throughout the membership of the FBS, giving equal shares to teams from so-called "major" as well as "minor" conferences. Also, the NCAA would be able to distribute some of the profits from a FBS playoff to Divisions II and III, like it does with funds from the major television contract to broadcast the Division I Men's Basketball Tournament in the spring. Currently, BCS profits are not distributed to the other two divisions.

“I think the reforms I’ve outlined are politically possible,” Zimbalist said. “Whether or not they come into fruition depends on the organizational skill behind them. One thing is certain, if reform-minded presidents and others give up before they start, then no productive change will come about.”

 

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