The College Athletics Money Pit
In May, at a meeting of the Knight panel, which promotes sports reform, NCAA officials offered a first look at their biennial report on Division I revenues and expenditures, the 2004-5 version of which begins to incorporate some aspects of the new approach. For the first time, for instance, the report differentiates openly between “generated revenues” — funds that athletics departments produce themselves, such as ticket sales and booster contributions — and “allocated revenues,” which are the various institutional subsidies and state funds (like tuition waivers) that sports programs receive.
The NCAA report finds that programs in the NCAA’s top competitive level, Division I-A (the so-called “football bowl subdivision"), reported an average net revenue of just over $1 million in 2004-5. The Division I-AA (the “football championship division") average was $40,000, and Division I-AAA (colleges that compete in basketball but not in football) saw an average loss of $115,000. But when looking just at generated revenue, only 22 Division I-A programs, fewer than one in five, operated in the black. And not a single Division I-AA or I-AAA program came out on top in that category. (Petr said the data is an example of what the NCAA is looking to collect, but that one year of figures shouldn’t be taken out of context.)
Ticket sales (25 percent) and alumni contributions (20 percent) make up the greatest revenue source in I-A, while direct institutional support (nearly 50 percent) greatly surpassed any other source for the other two subdivisions. Salaries made up nearly a third of expenses for all three.
Congress Needs to Review College Sports Finances
The NCAA’s best estimate of total college sports revenues is that they exceed $4B/year. But who knows what the NCAA numbers really mean? Without across-the-board use of a detailed and uniform chart of accounts and public access to non-aggregated “numbers” that are approved by verifiably independent auditors, there is no telling what’s going on in the secretive world of college sports finances.
Doug Lederman’s article: “A Better Look at Sports Budgets,” [InsideHigherEd.com, June 23, 2006], tells us that the NCAA’s new accounting system provides a step in the right direction. In the article, Peter Likins, president of the University of Arizona, was quoted as saying: “Our purpose is not your purpose” — meaning (according to Lederman) that the NCAA’s goal in collecting improved financial information is not to help journalists delve more deeply in the fiscal situation of big-time sports.
Likely Litkins meant this to also apply to reform-minded faculty and others — including congressional and IRS investigators. If so, Litkins apparently has little appreciation of the fact that the federal government helps support all of America’s colleges and universities in one way or another, both public and private. Therefore, the government has inherent responsibilities re: college sport finances. These responsibilities include oversight and enforcement with respect to Unrelated Business Income Tax (UBIT) as well as the assessment of the validity of the NCAA cartel’s claim that college sports are not professional.
Here, I would argue that, with few exceptions, big-time (DIV-IA) college athletes are professionals pretending to be students, aided and abetted in this ruse by the schools that have become dependent on the revenues these athletes generate. Academic corruption and just plain cheating abound; however, lofty sounding speeches and press releases, as well as secrecy, mask the need for accountability.
In the end, the NCAA cartel is not about education, but rather about maximizing tax-free revenue generation and providing related tax-breaks for wealthy boosters. Key sucess factors include perpetuation of the “student-athlete” myth and avoidance of any responsibility for payment of Workman’s Compensation to their exploited athletes
Unfortunately, the Congress does not as yet have a source of independently verifiable evidence that can prove that athletes at a given school are really students and not professional athletes. Consequently, it has no real basis for continuing the tax-exempt status of the NCAA and the athletic ‘divisions’ of its member schools. All it has are assertions by Myles Brand, the NCAA PR department, and the schools — all of whom have a vested interest in perpetuating the “student-athlete” myth.
Hopefully, the Congress will soon provide President Brand with an opportunity to present verifiable evidence in support of his assertion that college sports are not professional. For more, see http://www.thedrakegroup.org/splittessays.html.
Frank G. Splitt, Member at The Drake Group, at 11:35 am EDT on July 10, 2006
Parasites
and those that [are] given to the department “freely and specifically” by other parties: state and local funds, student fees, and direct institutional support.
Freely??? Every time I think that the arrogance of the college sports establishment must have reached its limit, something even more outrageous comes along.
Since when are student fees “freely” given? Division I athletics at many institutions is not only a cesspool of corruption, but also a financial parasite of the highest order. The parasitic sports establishment bilks students out of millions of dollars that they do not “freely” give, but that the shake-down artists in the sports establishment require them to pay if they want to continue as students.
R.J. O’Hara, at 11:30 am EDT on June 23, 2006
Whining won’t change a thing
The fact of the matter is, as long as the people of good ole USA are willing to pay $50 and up for a ticket to a game, this will continue. It’s the way our economy is built. Get used to it! Or, be like me and don’t support the big three sports. Encourage others not too either and start a sweeping change.
Who’s the idiot?
“Who’s the idiot? The 25 year old with a $40,000 job and $30,000 in student loans? The 23 year old with no college debt and making $1,000,000 a year.” Neither.
The idiot, dear friend, is the 23 year old with two surgically repaired ACLs, three concussions, no college degree, no health insurance, a broken dream of playing in the NFL, and the 8th-grade reading level with which he came into college on a “scholarship.” The poor guy isn’t really an “idiot,” either, just a victim, and he outnumbers that rare millionaire jock 1,000 to one. As if any D-I athletic director, or his 80,000-per-Saturday rooters, give a rat’s ass.
Peter Plagens, at 6:25 pm EST on January 18, 2007
The above comments are from readers of insidhighered.com
