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Up, Up and Away

August 18, 2010

Yet again, nearly every Division I athletics program spent more than it made last year. And at a time when many are feeling pressure to achieve self-sufficiency, these programs are relying more than ever on institutional subsidies to balance their budgets.

Those were among the key findings of the National Collegiate Athletic Association's annual report of athletics revenue and expenses at its Division I institutions. The report, released Tuesday, painted a bleak financial picture for intercollegiate sports and reinforces critics’ charges that the current pattern of sports spending is unsustainable. The data for the 2008-9 report were compiled by Daniel L. Fulks, accounting program director at Transylvania University.

Most emblematic of the slumping economy’s effect on college athletics, only 14 programs from the Football Bowl Subdivision (formerly Division I-A) generated more revenues than expenses. This is down from 2006-07 and 2007-08, when 25 programs turned a profit.

No programs in the Football Championship Subdivision (formerly Division I-AA) generated net revenues in 2009. Similarly, no Division I program without a football team (formerly Division I-AAA) has generated net revenues since 2005.

In a similar vein, the median institutional subsidy for athletics in the FBS rose from around $8 million in 2007-8 to more than $10 million in 2008-9. This reliance on institutional funds has increased as the growth in median revenue generated directly by athletics programs in the FBS — via sources such as ticket sales and media contracts — slowed to nearly 6 percent from 2008 to 2009. This is down significantly from the 17 percent growth in revenue from 2007 to 2008. By comparison, total athletics expenses sped in the other direction, ballooning by nearly 11 percent. This is double the growth in expenses from 2007 to 2008.

The net losses for institutions in FCS and those Division I institutions without football teams also increased notably.

Photo: NCAA

“It continues to be all about an institution’s determination of the value athletics adds to overall operation,” Jim Isch, the NCAA's interim president, said in an association news story. “It appears more institutions are having to face these difficult decisions about where to invest their money. The top end — while it is not as populated as it was a year ago — still does not have to rely on institutional subsidies. But those that do are falling further behind.”

The gap between the “haves” and “have-nots” grew considerably within the FBS. The sports program generating the most revenue in the subdivision — which the report does not identify — produced $138.5 million, whereas the median generated revenue was $32.3 million. Also, the largest total expense by a single program was $127.7 million, in comparison to the median of $45.9 million. The gaps for FCS institutions and those Division I institutions without a football team are significant but not nearly as large.

Photo: NCAA

Remaining consistent, however, was the size of athletics expenditures as a percentage of total institutional budgets. This has hovered at around 5 percent since 2004 for Division I institutions. Isch noted that sports spending is growing at the same rate as overall spending.

“Early on in this period, athletics expenses were growing at rates that were up to 5 percent faster than the rates for institutional expenses,” said Isch in an association news story. “However, in the last year, the median institutional gap has closed to zero. What we don’t know is whether that phenomenon is the result of the economy or some type of behavior modification. The only way to find out is to see what happens in subsequent years.”

Looking at individual sports, only football and men’s basketball generated surpluses in the FBS subdivision as a whole. Still, on the ground, only 60 percent of teams have generated such surpluses in each of the past six years. These “revenue-generating sports,” then, do not always have the funds to support themselves and cannot always support other teams, as some football and basketball supporters argue.

Photo: NCAA

This year’s latest report is chock-full of even more data. Some of the other findings:

  • Ticket sales and donations from alumni and other supporters make up more than half of the revenue generated by FBS programs.
  • Salaries and benefits for coaches and athletic scholarships for players make up nearly half of the total expenses of FBS programs.
  • The highest median head coaching salaries in the FBS are, in order, football ($1.2 million), men’s basketball ($911,000), women’s basketball ($308,000) and men’s ice hockey ($313,000).
  • Only 2 percent of football programs, 6 percent of men’s basketball programs and 2 percent of women’s basketball programs in the FCS generated surpluses.

 

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