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College Athletics Losing Money

Despite raking in billions of dollars in television, ticket, and licensing revenues, all but 14 of the 106 schools in the NCAA’s top athletic division (FBS, formerly IA) lost money in 2009.   The median loss was over $10 million.

Jon Soloman of the Birmingham News summarizes the results:

[A] new NCAA report that shows fewer schools are making a profit on college sports during a down economy and increased spending. The result: Athletics departments rely more than ever on institutional subsidies.

The NCAA reports only 14 athletics departments from the Football Bowl Subdivision (formerly Division I-A) made more money than they spent in 2008-09, down from 25 in each of the previous two years. The average institutional subsidy for athletics in the FBS rose from $8 million in 2007-08 to $10.2 million in 2008-09, the most currently available year of data.

[...]

The NCAA study shows that the growth of average revenue generated directly by FBS athletics departments slowed to nearly 6 percent from 2008 to 2009, down from 17 percent growth from 2007 to 2008. Meanwhile, the growth of total athletics expenses ballooned to 11 percent from 2008 to 2009, nearly double from the previous year.

[...]

The gap between the “haves” and “have-nots” continues to grow considerably. The highest athletic revenue produced by one school was $138.5 million, yet the average FBS school produced $32.3 million. Similarly, the most money spent by one school was $127.7 million, compared to the average of $45.9 million.

The state of Alabama has at least four FBS programs:  Alabama, Auburn, UAB, and Troy.  South Alabama is trying to join them.  Only Alabama is making money.

Given the ridiculous amounts of money football and basketball generate, how are these people managing to lose money? Basically, they’re spending it faster than they can bring it in:

Another view:

How are they spending so much?  The chart on page 21 of the report, too large and detailed to usefully reproduce here, gives some insights.  34.2% is going to salaries, 17.9% to coaches and 15.6% administrators.  Scholarships are 16.1%.    Game expenses account for another 20.5%.  Facilities management, 15.0%.

In terms of revenues, a whopping 45.8% is generated by football and 13.3% from men’s and women’s basketball, combined.  Men’s sports generate a median $22.56 million; women’s sports, $836,000.

The numbers are staggering.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He has a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. Dave Schuler says:

    The problem, as I have pointed out in other contexts, is the ratchet effect.  Revenue goes up and down.  Wages only go up.

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  2. Trumwill says:

    I think the bigger problem is the arms race. Some schools make a whole bunch of money and so can afford to spend a whole lot of money. Other schools that want to be like those schools (say Colorado) have to spend a lot of money to keep up. Schools that want to be like those schools that want to be like those schools (say Boise State) have to spend a lot of money. The end result is the University of North Texas spending $40 on a stadium for a team that has won 10 games in the last six years while playing in the weakest FBS conference in the country.
     
    This is what people who say “it’s all about the money” are completely missing, in my view. If it was all about the money, most of these ADs would be fired tomorrow. They do not act like organizations in the business of making money. Money is a consideration, to be sure, but I think it takes second string to institutional prestige.

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  3. Dave Schuler says:

    If it were all about prestige wouldn’t the chancellors, athletic directors, and so on be unpaid volunteers?

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  4. Trumwill says:

    Their job is to enhance prestige (and student satisfaction/participation). With presidents, this is true beyond athletics. But they hire AD’s in large part to field successful teams to increase university visibility. Money is part of the equation – it has to be – but most universities would save money by eliminating their athletic departments. This is not only true of the big time schools with large and unsustainable budgets, but all the way down the line. If only 14 FBS schools turn a profit, I expect that maybe 1 or 2 FCS schools do, if that. I would be amazed if any school at Division II or lower is not losing money on their athletic departments. At those levels it’s less about prestige and more about student life.

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  5. Steve Plunk says:

    What effect has title IX had on the scholarship costs versus the revenue?  Should the NCAA put a cap on coaches salaries?  Is it time to revamp the business model from top to bottom?
     
    Athletic directors and conference officials are about to ruin the college game.  Who can stop them?

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  6. just me says:

    Coaching salaries seem to be one of the larger money suckers-although I would be curious to see the salaries actually broken down to sport.
     
    As for how much division 2 and lower spend-not sure about the number of scholarships available at division 2 levels, but division 3 schools don’t generally give athletic scholarships (although a coach may help hook student athletes up with work study programs to help fund college). Students playing at these levels generally just want to participate in the athletics and aren’t looking for athletics to fund their college educations.
     
     

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  7. Trumwill says:

    Steve, Title IX isn’t really applicable since we’re talking about football in particular, I don’t think. I don’t really know what you can do about coaches salaries. It’s one of the things that gives the haves a huge advantage over the have-nots, so any proposals would meet with a whole lot of resistance from the most powerful quarters of the NCAA.
     
    Just me, I would expect that D2 and D3 lose less money not only because of scholarships but also because they can use high school or otherwise inexpensive sports venues. But they also make next to nothing. No TV revenue, limited to no sponsorship opportunities, and so on.

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  8. just me says:

    <i>Just me, I would expect that D2 and D3 lose less money not only because of scholarships but also because they can use high school or otherwise inexpensive sports venues. But they also make next to nothing. No TV revenue, limited to no sponsorship opportunities, and so on.</i>

    Division II and III are in some ways more like what most high school athletes do now-they go to school and play sports.  Also, the coaches probably aren’t demanding or receiving huge salaries.   I don’t think these schools have money with the intention of creating revenue-I think these schools use the athletics as a draw for the student athlete although not the athlete looking for an athletic scholarship.

    <i>It’s one of the things that gives the haves a huge advantage over the have-nots, so any proposals would meet with a whole lot of resistance from the most powerful quarters of the NCAA.</i>

    I think this is a good point.  There are some universities that pay outrageous amounts for coaches-and in some cases comparable to professional coaching salaries.  Probably most of the division I programs can’t compete with the big program schools at least in drawing and keeping elite level coaches.  With the drive to win championships at some of those schools I am not sure losing money is a big deal.

    I grew up in Kentucky where UK basketball was as popular if not more popular than professional basketball.  In that area of Kentucky the UK basketball team was the professional team.  Tickets to UK basketball games were hard to come by.  Fans would pay tons of money for tickets to go and watch certain practices.

    I am just not sure UK or the fans are going to care if the program is losing money, because their desire is to win championships.

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  9. Trumwill says:

    //Also, the coaches probably aren’t demanding or receiving huge salaries. //

    Very true. It’s not infrequent that head coaches at lower levels take jobs at big programs as mere position coaches (coaching just QB’s or linebackers or whatever). Even minor coaches at the top levels are worth more than head coaches at the bottom ones.

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  10. James says:

    I think Title IX does apply…when the vast majority of profits are made by one then isn’t it obvious that the one sport subsidizes the others?  Especially since you cannot disband the sports that lose money because of, among other things, Title IX.

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