NCAA President Myles Brand makes his first appearance on the Double-A Zone with a guest blog about some of the financial issues surrounding intercollegiate athletics.
Critics of college sports never tire of saying that big money distorts the enterprise. Universities have sold their souls in order to make profits from big-time athletics. Their conduct, it is asserted, is unbecoming of institutions of higher learning.
I am not an apologist for intercollegiate athletics. There are things about it that need fixing, and I am willing to say so, loudly. But there is far more that is good about college sports, and its benefits are lost in the din of aggressive commentators and ill-informed critics.
In particular, there is a financial problem with the funding for college sports, but it is not what the critics allege – too much money. The problem is that there is not enough money!
Those who claim that colleges and universities are making money hand-over-fist on college sports are dead wrong. There are more than a thousand universities and colleges in the NCAA in three divisions. Perhaps there is an exception or two, but the only ones who have an opportunity to conduct their athletics programs in the black are in Division I. Of those approximately 350 schools, about a quarter of them say that they are at least breaking even. However, if you do full accounting, and include all the subsidies, for example, from student fees, and all the costs assumed by the universities, for example physical plant maintenance and debt service, my educated guess is that less than 25, and maybe less than a dozen, universities are actually operating in the black and even those are not clearing very much!
Actually, the fact that intercollegiate athletics on almost every campus is losing money is not the real problem! Intercollegiate athletics adds value to the educational experience of those who participate. College is about lectures, textbooks and tests, but it is also about learning how to pursue excellence, to persist in the face of adversity, and to work in teams. College sports teaches these life skills as well as any other university activity, and probably better than the large majority. Even students who are not athletes gain from an athletics program. We know, from long-term research, that success in college is highly dependent on the identification of the student with his or her environment – that feeling part of something larger, not feeling alienated– increases persistence and graduation. A university should financially support those activities, including athletics, that have these types of education value.
The real financial problem facing intercollegiate athletics on most campuses, most especially in Division I, is that the rate of expenditures is growing considerably faster than growth in the rate of revenues. During the past half dozen years, the rate of growth of expenditures in athletics has been approximately three times the rate of growth of the general university budget. And while revenues for athletics are somewhat higher than the general university, it is not nearly high enough to balance the rate of growth of expenditures in athletics.
In Division I, a good part of these increased expenditures are the result of large investments in facilities. The bonded indebtedness – the mortgage – for these facilities will require 20 to 30 years to pay off. In the past, increased revenue from media rights contracts, especially network television, could be used to balance the athletics department budgets. But now, the rate of increase in expenditures, plus the leveling of media rights contracts, mean that student fees and subsidies will have to increase substantially.
Intercollegiate athletics does not have a sustainable business model. Universities are under considerable pressure to control costs and to keep tuition reasonable. As more money is required for athletics departments, that funding will have to come from the academic side of the house. While support for athletics is a good thing, there is a realistic limit on the amount that a university should or would expend on it.
We are not in a crisis in athletics funding. But the problem is serious, and intercollegiate athletics is under stress. We do not need to cut back in athletics, or even stop growth. But we do need to moderate the rate of growth.
Can we do that? Can universities moderate the rate of athletics department budgetary growth when winning is thought to depend on paying coaches more and building new and better facilities? Can the competitive attitudes characteristic of athletics be made consistent with moderating the growth of expenditures?
That’s the problem. In the near future on this site, I will outline an approach that will give rise to a solution.