With all of the talk about the commercialization of college sports, there is a common assumption that university athletics programs pay for themselves. A new report from the National Collegiate Athletic Association (NCAA) reveals, however, that most Division I schools are actually footing a significant part of the bill for their sports teams. The report also shows the amount colleges are spending on athletics has been rising rapidly, raising questions for students, faculty members, and taxpayers about colleges' priorities (hint, hint: we're talking about extravagant athletics facilities and sky-rocketing coaching salaries here).
In its new spending report, the NCAA, for the first time, provides a break down of the revenue that intercollegiate athletics programs receive -- distinguishing between those earned by the sports teams themselves ("generated revenue") and those that the colleges provide to the programs ("allocated revenue"). The NCAA's decision to provide these breakdowns represents an important step forward for athletic spending transparency in that it allows us to see the extent to which colleges are subsidizing their sports programs.
However, the usefulness of the report is limited as it discloses only aggregate numbers. As a result, we are left in the dark about how this is playing out institution by institution. At Higher Ed Watch, we believe that the federal government needs to strengthen its institutional reporting requirements on athletics spending, because it doesn't appear that the NCAA is willing to expose its members to that type of scrutiny anytime soon.
Institutional Subsidies for Athletics
Of the 119 schools that participate in Division I-A football, only 19 have athletic programs that generated enough revenue to exceed expenses in 2006. At the other 100 schools, the athletics programs recorded a net loss, meaning that the colleges had to step in and help make up the difference. The median loss for those programs reached $8.9 million in 2006, up from $7.1 million in 2004.
This growing gap between generated revenues and expenses translates into rising institutional subsidies. Median expenses for all Division I teams increased 23 percent between 2004 and 2006, but the median amount of revenue that the athletic programs earned for themselves increased by only 16 percent.
Where's the Money Going?
Spending institutional money on athletics programs isn't necessarily a bad thing. Most sports outside of football and basketball would never be able to support themselves financially without colleges giving them a helping hand. If money on athletics is spent prudently and economically, and the athletics program is run responsibly, then institutional subsidies could be justified.
But unfortunately, at many Division I schools, spending is out of control. The commercialization of college sports has fueled a race among colleges to compete with big-time sports schools, resulting in intense competition for recruits and coaches, and in turn excessive spending on facilities and salaries.
The NCAA report documents the meteoric rise of coaching salaries. At the 119 Division I-A schools, the median head football coach salary rose to $855,500 in 2006 from $582,000 in 2004, a 47 percent increase. The median head basketball coach salary rose 15 percent during that time period to $611,000. The third highest median salary was for men's ice hockey coaches, at a shocking $252,000 (this for a sport that generates revenues of only $689,700, with a median expense of $1.7 million). Regrettably for us, and conveniently for schools, the NCAA report does not track capital spending on facilities -- a gaping hole in the NCAA's efforts at athletics spending transparency.
To read more, please visit www.HigherEdWatch.org