As Athletics Spending Escalates, College Presidents Call for Increased Financial Disclosure
The Chronicle of Higher Education
Brad Wolverton, October 31, 2006
By most accounts, the business of college sports appears as healthy as ever. The National Collegiate Athletic Association earns more than $500-million a year from its contract with CBS to televise the men's basketball tournament -- money that helps support hundreds of athletics programs. A record 64 football teams in the NCAA's top division will receive a financial lift by appearing in a bowl game this season. And corporate sponsors and generous alumni are infusing millions more into athletics programs across the country.
But escalating coaches' salaries and the long-term bonded debt required to finance new arenas and stadiums have a growing number of university leaders worried that college sports might not be as financially sound as it appears.
With those concerns in mind, Myles Brand, the NCAA's president, established a task force last year to discuss the future of intercollegiate athletics. On Monday the group completed its work by releasing a report, "The Second-Century Imperatives: Presidential Leadership -- Institutional Accountability," which presents more than two dozen ideas for improving college sports.
The group, made up of 50 college and university presidents and chancellors, tackled a broad range of issues, including athletes' welfare, the integration of sports into the university's mission, and the roles of governing boards and faculty members.
But at its core, the task force focused on ways that athletics programs should become more fiscally responsible and transparent to avert a spending crisis in college sports.
The 63-page report's most significant recommendation is to require institutions in the association's top division to report to the NCAA detailed financial data, including salaries and capital expenditures, as a condition of NCAA membership. The NCAA said it would publish those numbers in aggregate -- and make available a set of "dashboard indicators," or key financial warning lights -- to help presidents track financial trends in athletics and make better-informed decisions about where they spend their colleges' money.
Except for a few top programs where revenues are outpacing expenditures, most athletics departments are struggling to balance their budgets and are increasingly doing so with university subsidies, the report says. While the presidents agreed that institutions should spend money on intercollegiate athletics, they cautioned that there is a limit to how much universities should give their sports programs without threatening the academic mission and values of institutions.
Several groups -- including the American Council on Education, the Coalition on Intercollegiate Athletics, and the Knight Foundation Commission on Intercollegiate Athletics -- praised the presidents for their efforts. The Knight Commission commended the task force for its "groundbreaking" work to collect more-accurate financial data.
But even with more data, it is unclear whether athletics programs will slow their spending, said Peter W. Likins, president emeritus of the University of Arizona and the task force's chairman. "It's going to be very difficult," he said in an interview on Monday, to get universities to rein in their sports spending.
Among other ideas, the task force:
·
Encouraged colleges to require academic advisers and rules-compliance officers to report to academic leaders instead of to the director of athletics.
·Suggested that universities provide better guidance to trustees about their proper role in intercollegiate athletics.
·Asked the NCAA to consider whether athletics scholarships should be awarded for more than one year or should automatically be renewed from year to year.
Who Profits From College Sports?
Excerpts from The Wall Street Journal, 10/13/06
Alarm bells usually go off any time the government thinks about taking more money out of people’s hands, including the hands at nonprofit organizations. So it’s easy to imagine that the National Collegiate Athletic Association (NCAA) freaked out when it received a letter this month from a congressional committee that has been investigating the tax-exempt status of nonprofits.
Writing on October 2 to NCAA President Myles Brand, House Ways and Means Committee Chairman Bill Thomas (R, Calf.) asked enough probing questions to keep Mr. Brand and his university associates busy for ages. The NCAA claims tax-exempt status because their underlining mission is educational in nature – the basis on which college sports revenue has been sheltered from the taxman.
Questions:
-Rep. Thomas notes that under the NCAA’s deal with CBS for broadcast rights to the men’s basketball tournament, the NCAA is set to earn a yearly average of $545 million in tax-free money. Then he asks: “How does the transformation of the NCAA men’s basketball championship into commercialized entertainment further the educational purpose of the NCAA and its member institutions? Ouch, ouch, ouch. Hey, Rep. Thomas. It’s College Charlie’s motto: “ It’s all about the money and has nothing to do with education.”
-What about the favorable tax treatment that corporations and others get in return for “sponsorship payments”.
-Then there’s the $100 million that the NCAA doles out each year among Division I championship basketball teams. What is the educational purpose of that?
-Now that leaves $445 million in just TV money. Where does that go?
-“From the standpoint of a Federal taxpayer, what benefits does the NCAA provide taxpayers in exchange for its tax exemption?”
-Why should the Federal Government subsidize the athletic activities of educational institutions when that subsidy is being used for escalating coaches’ salaries, costly-chartered travel and state-of-the-art athletics facilities?
-What percentage of NCAA revenue is spent by your institutions on solely academic matters?
It is our belief that the NCAA and its six most power conferences have made a joke of amateur athletics. Athletics in the SEC, Big 10, Big 12, Big East, Pac-10, and ACC is nothing but professional at every turn. The BCS, bowl games, the NCAA basketball tournament and generous corporate and private donors drive them. Nothing is motivated by education.
As we have said before, the Ivy League should be the model. In order to take the waste and abuse out of college athletics it has to be under the control of the university. College coaches should be paid the same as full professors. The institution should provide a reasonable budget for athletics. Athletic revenues should go into the institution’s general fund and can be used to buy microscopes, computers, shoulder pads or whatever. The athletics department should not be a separate corporation. Its finances should be under institutional control the same as any other department. If an athletic activity is deemed worthy to be sponsored by the institution, then the institution, regardless of the revenue generated by the activity, should fund it.
There are programs that generate millions in revenues, so why shouldn't those coaches not make a million or two for themselves. The market sets the price. Even those who graduate less than 50% of their athletes? Those fans, alumni, and big donors don't care about graduation rates! They have removed the college athlete in most cases from the educational process.
And what about those full professors who make 1/10th or 1/20th of the coaches salary? Well, 100,000 fans have never shown up to watch them teach a philosophy class even though their labor and influence on students will have a lasting affect. Who produces doctors, teachers, social workers, and nurses? It ain't the football coaches. Sad, sad, sad.
