Big Surprise: Athletic Departments are Bleeding Universities Dry

There's a great op-ed from the Chronicle of Higher Education I just got forwarded. It lays out the case that many athletic departments (especially those in Division I), when their financial books are opened to the sunlight, are draining immense amounts of money from their parent institutions. Money that could be used to fund scholarships, loan repayment programs, and upgrade academic facilities.

No matter if one loves college sports or not, I think the lesson to be learned here is that when budgets are hidden and undemocratic, abuse runs rampant. Whether or not to heavily subsidize college sports programs should be a collective institutional decision, and not the prerogative of those on top. Students - and especially those on sports teams - should be organizing and demanding participatory budgeting.

I've included the article here:

Opinion: Stop Hiding the Financial Truth About College Athletics

A recent report from the National Collegiate Athletic Association, the "2004-06 NCAA Revenue and Expenses of Division I Intercollegiate Athletics Program Report," is an important breakthrough for the organization and for everyone who wants fiscal sanity to rule in college sports. For decades, while athletics departments have claimed that they balanced their budgets, critics have noted that that was true only if the subsidies that the departments received from their colleges and other sources were counted as revenue. Now, for the first time, the NCAA report acknowledges those subsidies, or "allocated revenue," and separates them from "generated revenue," like ticket sales, TV-rights sales, and contributions from alumni and other boosters. The report also places many previously hidden expenses on the books as expenditures.

The result - oceans of red ink - is stunning.

If colleges were wonderfully wealthy institutions and could afford all sorts of amenities and doodads, then such financial losses would not be an issue. But higher education is in dire financial shape, rattling the tin cup in front of often unsympathetic state legislators, taxpayers, and potential donors. The reality,
which the NCAA now acknowledges, is that institutional subsidies for intercollegiate athletics usually come out of funds that could go to academic purposes. To his credit, Myles Brand, the association's president, has publicly discussed that phenomenon in the past and has tried to take steps to curtail it, including the development of new accounting methods and the revision of the financial report. The NCAA's accounting reforms started a number of years ago, and the latest financial report continues the process.

The problem with the new report and previous ones, however, is the lack of openness. The report provides fascinating financial facts but never names individual colleges, not even public institutions with egregious athletics-department deficits. That omission is intentional. Brand and other NCAA officials see the move to realistic figures as a way to provide presidents and governing boards of member institutions with the hard financial facts of college sports. The NCAA officials argue that if those decision makers can see aggregate data, they will be able to figure out where their colleges rank on the intercollegiate-athletics food chain. Then, it is hoped, they will come to terms with the financial situations of their own athletics departments.

Peter Likins, a former president of the University of Arizona and head of a recent NCAA task force on financial reform, told one journalist: "Our purpose is not your purpose. ... Our goal is to facilitate decision making by responsible authorities." Apparently, for him, reporters, taxpayers, and donors are not "responsible authorities" and do not deserve full disclosure on how colleges use their money.

But more public scrutiny is definitely needed. The seas of athletics-department red ink are growing as fast as the oceans are rising from melting polar ice caps. In 2006, when Brand announced the task force led by Likins, he admitted that "research shows that spending in big-time college sports has outpaced that of higher education by two or three times in the last several years."

The new NCAA financial report confirms that, and it shows that the trend line between athletics-department expenses and real income, or "generated revenues," is growing wider. The recent report stops at 2006. Since then the American economy has moved toward recession, and fuel prices have soared. The economic situation will probably whipsaw athletics departments. Local fans, with diminished discretionary income, may buy fewer college-sports tickets and other items; out-of-town fans, because of continuing gasoline-price increases, may attend fewer games; and the costs for the vans, airplanes, and other means of transporting teams to away games will rise significantly. The next NCAA financial report - for 2007 through 2009 - could be bleak indeed. If so, then "allocated revenue" - all those subsidies - will grow even more.

The public needs to know those financial facts, and journalists and other people can discover them by starting with the recent NCAA report. Examining the numbers reveals some astounding items: Did you know that the median annual salary for ice-hockey coaches in the NCAA's top division is $252,000? Did those overpaid hockey coaches - many of them former professional players, from a labor pool with far more job seekers than jobs - help their athletics departments balance their books? Not even close. In fact the median hockey program produced over $900,000 worth of red ink - the difference between expenses and generated revenue, the amount that colleges had to make up with their subsidies.Hey, I'm a hockey fan from Canada, but even I find that situation absurd.

I assume that other taxpayers, particularly people paying ever-rising college bills, would also find it absurd. And hockey is only a small part of athletics-department deficits; other sports, including football and basketball at most colleges, also need institutional subsidies. And what is the situation at individual colleges? If I were paying tuition bills at Big Time U., and I read about its athletics department's red ink and subsidies, I would write to the president of the university and to the governing board to complain.

Brand said that "the comparability of revenues and expenditures among institutions should be transparent to decision makers." How about total transparency, and including the public in those decisions, by providing the detailed information that people deserve? Indeed, the only way that true fiscal sanity can come to college sports is if the public holds the decision makers' feet to the fire. That can occur only if the public is totally informed of the financial situation.

Murray Sperber is a professor emeritus of English and American studies at Indiana University at Bloomington. His four books about college sports and college life include Beer and Circus: How Big-Time College Sports Is Crippling Undergraduate Education (Henry Holt and Company, 2000).