THE BLOG

Show Me the Money: The Growing Financial Crisis in College Athletics

06/01/2015 08:16 am ET | Updated Jun 01, 2016

Last week, Erik Brady, Steve Berkowitz and Christopher Schnaars wrote about the growing money pressures faced by "non-power 5" college athletic programs in USA Today.

They found that "by the NCAA's benchmark for self-sufficiency, just 24 of the 230 public schools in Division I stand on their own, up from 20 a year earlier, " based on data compiled by USA Today Sports in cooperation with Indiana University's National Sports Journalism Center. Those universities meeting the self-sufficiency benchmark were from the Southeastern, Big Ten, Pac-12, and Big 12 conferences.

They noted that the NCAA defines self-sufficiency as "operating revenues -- not counting money from student fees, university funding or direct government support -- at least equal to total operating expenses." In short, a college athletics department spends less than it takes in to support the athletic program.

They also indicate that "the deficits get smaller and the number of self-sufficient schools gets larger if viewed another way. Though athletic departments get money from student fees, university funds and government support, they also send money to their schools through payments for scholarships and facilities and through transfers" of revenue back to the general university operating budget.

When these amounts are reconciled, "all 50 of the public schools that were in a Power 5 conference in 2013-2014 were self-sufficient. But only three Bowl Subdivision schools outside the Power 5 and two non-FBS schools were self-sufficient." To illustrate the growing gap further, NBC Sports also reported last week that SEC schools will likely receive $31 million each for the 2014-2015 fiscal year and that Big 12 universities will get roughly $27 million for their schools with full shares, with slightly less awarded to the newer members.

Let's separate out the financing of college athletics from the emotion, loyalty and pride that its fans display. Let's also put NCAA internal politics and the lucrative media deals aside. What's left is a fundamental policy question. Do most college athletic programs -- as currently constituted -- continue to make financial sense?

Let's also be clear about the question raised. There is a persuasive case to be made for fielding college teams in a variety of sports, great value in assuring fair and equitable gender treatment, and enormous gain from athletes who learn valuable life skills like structured competitiveness, leadership, time management, and collaboration in highly charged environments like the playing field.

As such, college athletics is consistent with the ethos of the university offering these athletic programs to meet critical student developmental goals in a comprehensive learning environment.

The real question -- highlighted so well in the reports last week -- is who will pay for college sports not within the "Power 5" conferences? It may be that the guiding principles that have historically defined the role of athletics in campus life are now irrelevant in "Power 5" style athletic programs. Have different trajectories emerged, particularly within Division I, to assure that institutional scale, politics, tradition and money intersect to create "haves" and "have-nots?"

If so, who will provide the revenue for those colleges and universities seeking competitive programs to imitate what lucrative media contracts make possible for only a few? Indeed, do the supporters at these institutions -- many with strong, loyal alumni and fan bases -- fully appreciate the likely future of their beloved programs? Will support for athletics from fans and donors detract from efforts to build other programs at the university, particularly academics? Can the annual support picked up from the local community and corporate sponsors really offset the remaining costs of increased competition, especially if the university is undisciplined about the number of sports that it sponsors?

What is the true "all in" cost of athletics, including the full complement of staff, facilities, -- notably operations, maintenance and depreciation --sponsored sports, intramural and wellness programs, and scholarships? Does dipping deep into a university's budget to pay for athletic scholarships in more sports, for example, make any sense as conference competitive pressures build? Should comprehensive campaigns really assign priority and staff to the new "jockplexes" emerging at many schools?

There can be good reasons for college boards of trustees, administrators and faculty to subsidize their athletic programs. A number of programs working off an "admissions/yield" model, for instance, can bring in significant student revenue at tuition-dependent schools at which athletics is a fundamental admissions building block. These are decisions that should flow directly from a comprehensive institutional strategic plan.

The bottom line is that revenue must meet expenses in college athletics. The reports last week suggest that many athletic programs are pursuing an unsustainable fiscal path. It's unlikely that most Division I athletic programs can stand on their own without a lucrative media contract that few will ever negotiate.

It's time for a conversation about how to find a better fiscal path that prevents athletics from being drawn into the growing consumer tuition sticker price sensitivity battles, competing alumni demands and enrollment priorities. At some schools not among the SEC equivalents, it may mean fielding fewer sports, concentrating more on wellness programs for the general student population, and better differentiating college academic and student life programs.

It will be a shame if the growing fiscal morass at most colleges and universities tainted the good intentions from which college athletic programs originated.