College sports face a whole new ball game. The Supreme Court of the United States ruled unanimously in June that “the district court’s injunction pertaining to certain National Collegiate Athletic Association (NCAA) rules limiting the education-related benefits that schools may make available to student-athletes is consistent with established antitrust principles.”
Since then news media coverage has included statements from athletics directors, coaches, conference commissioners, governors, student athletes, marketing agents and lawyers about plans for compliance with the landmark case of NCAA v. Alston. Negotiations about the new rights and responsibilities of student athletes will be crucial to the financial condition of athletics departments.
Yet, for the most part, higher education leaders have been conspicuously silent. An exception was a letter to The New York Times by the president of Endicott College in Massachusetts, who emphasized that NCAA Division III programs were different than those in NCAA Division I.
The general lack of public commentary by presidents at universities that offer big-time sports programs is puzzling, given that the Alston case combined with the NIL (name, image, likeness) legislation in several states signals that commercialism and college sports are on trial. Adding to the uncertain financial outlook is that -- even with resumption of NCAA championship tournaments in such sports as women’s volleyball, track and field, softball, and the College World Series for baseball -- revenues from ticket sales have remained low due to pandemic restrictions on spectator attendance.
While waiting to hear from college and university presidents about the future of intercollegiate athletics, it’s useful to review what these higher education leaders were saying when the case went to court. A good approximation comes from the amicus brief filed by the American Council on Education and 10 other national higher education associations as part of the opening arguments for the NCAA v. Alston hearing held at the end of March.
The ACE brief argued that the case should represent and reflect all colleges and universities offering varsity sports programs. Its other main points included:
- Colleges and universities do not operate for-profit sports franchises;
- Colleges and universities’ mission is education, not sports;
- The educational character of intercollegiate athletics depends on rules that keep student athletes and institutions focused on education, not profit; and
- Colleges and universities, not antitrust courts, should set the requirements for intercollegiate athletics.
The ACE brief was not very convincing. Most disconcerting was its claim “Nor does it matter that a tiny fraction of sports teams at a tiny fraction of institutions generate significant revenue.”
It does matter. The ACE seems to overlook an important legacy from its own 1980 book The Money Game: Financing Collegiate Athletics, written by Robert Atwell, Donna Lopiano and Bruce Grimes. The authors knew what they were talking about. Lopiano was the first director of women’s athletics at the University of Texas and now is president of the Drake Group. Grimes, who was a football player at Tulane University as an undergraduate, was a professor of art and director of athletics at the University of Wisconsin, Green Bay. Atwell, an economist who also had been president of Pitzer College in California, was influential and impressive in working to bring college sports into the national forum on higher education. Since Atwell served as president of ACE from 1984 to 1996, it’s hard to dismiss this report as marginal. One of its major conclusions was that “intercollegiate athletics had become skewed toward a small number of major conferences and university programs.”
A Big Business With Big Problems
The commercialization in the conferences and university programs identified by the ACE team 40 years ago has endured into the 21st century. For example, in 2015, Judge Kevin H. Sharp wrote in his opinion in the United States District Court that “College basketball and football, particularly at the Division I and FBS [Football Bowl Subdivision] levels, is big business. Of that there can be little doubt.”
More accurately, today it’s a big business with big problems. A difference is that whereas in 1980 the American Council on Education was a leader in critically analyzing and reforming college sports, by 2020, it had become much more of a follower.
The recent ACE brief is correct in stating that no college sports program is a for-profit activity. But according to NCAA regulations, all colleges and universities programs belonging to Division I must be “self-supporting.” In contrast, colleges in Divisions II and III have no such obligation or expectation. That means that those with serious concerns about commercialization and the business model for the present and future of college sports should look critically at financial differences within NCAA Division I.
The ACE brief notes the expense colleges and universities face in sponsoring such nonrevenue sports as tennis, swimming, lacrosse, gymnastics and soccer. That includes women’s sports. Are the nonrevenue women’s sports to blame for the budget shortfalls at Division I programs?
In probing that question, college and university officials should look at both legal and financial responsibilities. First, the nonrevenue or Olympic sports are relatively inexpensive. Second, institutions and their athletics departments are required to fund athletic scholarships and teams for women in compliance with NCAA and conference guidelines. At some colleges and universities, such as the University of California, Berkeley, the athletics department and chancellor signed a binding agreement with the federal government that if Cal ever does eliminate any of its 30 athletics teams, it will not be women’s varsity squads.
Using women’s sports as a convenient place to cut expenses probably would put the athletics department out of compliance with Title IX. This then would put the entire university’s federal funding in jeopardy, including National Institutes of Health and National Science Foundation research grants to academic programs and medical centers.
It also would risk the university’s eligibility to receive Pell Grants and other federal student financial aid payments. Paying for women’s athletic scholarships is not merely a nice thing to do: it’s the right and legal thing to do. The complication for higher education leaders is that nonrevenue sports are not the major source of budget shortfalls for Division I programs.
A weakness in the Division I business model is that sports that are supposed to be the golden goose, in fact, often lay goose eggs. Only 22 out of the 120 football programs in NCAA Division I showed a surplus. Big-time college football may be good at generating revenues. It is even better at generating expenses
The net result is that in many NCAA Division I conferences, such as the Mid-American Conference, mandatory student fees provide more than half of the income for annual athletics department operating budgets. This comes at a time when these same universities are cutting tenured professors.
The financial problems of 2021 extend even into the elite FBS conferences, such as the Big Ten and the PAC-12. Rutgers University, a relatively new member of the Big Ten, reported a shortfall of $45.2 million for its intercollegiate athletics budget for 2018-19. It relied on $14.5 million in university funds, $12.1 million in student fees, $15.4 million in internal loans and $3.2 million in direct state support to balance its budget. According to an article in Inside Higher Ed, Rutgers athletics was “losing to win,” with $121.5 million in internal debts.
In the PAC-12, Berkeley’s financial reports for the intercollegiate athletics program represented a recipe for disaster, including a $16 million deficit in 2018 and a football stadium renovation debt of $238 million. This means that its annual debt service payment will be about $18 million -- about $9.5 million of it subsidized by the university’s central campus.
What about colleges’ other major money sport, NCAA Division I men’s basketball? In 2015, about a third of the 68 men’s basketball teams in the NCAA Division I tournament reported that they did not show an annual surplus. They either broke even or lost money for their seasonal operating revenues and expenses. These 68 teams represent the most successful programs, so as one goes down the complete list of NCAA Division I men’s basketball teams, the sobering finding is that most lose money.
A Leaky Front Porch
Higher education presidents and trustees often describe big-time college sports as “the front porch” of the campus, in that it is often people’s first introduction to a college or university. If so, it is a large and leaky porch. One estimate of the limited effectiveness of presidents in tending to repairs came from William E. (Brit) Kirwan, former chancellor of the University of Maryland -- himself a longtime leader in the Knight Commission panels and studies. In his farewell interview in 2015 with reporters from Inside Higher Ed, Kirwan noted that one of the major regrets of his having served as president of the University of Maryland and Ohio State University was that college and university leaders, including himself, had lost control of intercollegiate athletics.
That year, the Maryland athletics department reported $95 million in debt, including $31 million owed to the Atlantic Coast Conference for leaving the conference. Despite such debts, the athletic department was planning to spend $155 million to convert its old basketball arena into a football practice facility. Kirwan noted that intercollegiate athletics “is the one area of a university where presidents are not really in control.” He continued, “There’s sort of the face of their being in control, but can you imagine a president of a big-time football power announcing they were going to de-emphasize intercollegiate athletics and concentrate more resources on academics?”
Kirwan concluded, “It’s a really sad state of affairs, but short of some intervention by a powerful outside source, I don’t see how we move off this trajectory.”
An answer to his question is that the recent 9-to-0 decision by the Supreme Court does represent an intervention “by a powerful outside source.” But while college university presidents may from time to time bemoan the “tail wagging the dog,” most acquiesce -- and also make sure they are center stage for publicity photographs when joining with the coach and team members to cut down the net at the NCAA championship basketball game or accept the Sugar Bowl trophy in football.
If university presidents are torn over emphasis on big-time college sports, many trustees do not seem to have hesitation or reservation about the growth and power of college sports. On balance, these cumulative developments lead to the reality that at many institutions, intercollegiate athletics have become central to their mission and character.
Unfortunately, this reality has not been formally recognized in the ACE brief or in university organizational charts, mission statements and reports to regional accrediting associations. To update and acknowledge this change in institutional mission would show increased transparency, not to mention institutional integrity to numerous constituencies inside and outside a campus.
One recent sign that structural reform of college sports is imminent is NCAA president Mark Emmert’s statement to ESPN last month, in which he emphasized, “This is the right time to consider decentralized, deregulated college sports.” He also recently announced that the NCAA plans to organize a specially called constitutional convention this fall to discuss possible major changes in its governance of athletics programs.
Reform most likely will be complex. At the same time that Emmert is calling for decentralization and deregulation within the NCAA, other parts of athletics reform are pulling in toward centralization. I had a recent exchange with higher education legal scholar Michael A. Olivas, recently retired from the University of Houston Law Center, who has been tracking these developments for his higher education law casebook’s fifth edition. According to Olivas, “For too long, the NCAA was the sole outlet for determining college athletic benefits, and it showed, as the billions earned by the athletes’ sweat was not invested in their welfare. Now, it has (too) quickly swung to the best-organized and most entrepreneurial athletes and their newly-installed representatives.” He cited, for example, the University of Alabama rising sophomore starting quarterback, Bryce Young, “who in his first month, signed up for almost a million dollars of sponsorships.”
Olivas continued, “It is clear that this train is quickly leaving the station, and the crazy-quilt of state laws and institutional opportunities make it impossible to govern the Name/Image/Likeness (NIL) rules that will have to be sorted out. I still believe the only way to organize this frenzy is for Congress to hold hearings, to draft responsible legislation, and to remind fans that they are still student-athletes, yearning to breathe free … Also, I urge the Knight Foundation to help bring thoughtful deliberations to the table, instead of the rush to mine the Yukon gold that appears to be out there for the select few.”
The NCAA v. Alston case reinforces the need for reforms. The chaos of the commercial model for NCAA Division I sports will be increasing in the coming year. Most likely those programs that are struggling financially will face increased problems of reconciling intercollegiate athletics with institutional mission and finances with new definitions of the amateur student athlete. Now is the time for college and university presidents to join the public forum.