“For years spending within college athletics has continued to escalate while instructional spending has remained stagnant and even decreased at many institutions,” said William E. (“Brit”) Kirwan, Knight Commission co-chairman and chancellor of the University System of Maryland.
Long before the global economic crisis began making headlines, higher education and intercollegiate athletics have been struggling with threats to their bottom line. State appropriations for public colleges and universities have remained flat while costs associated with salaries, energy, travel, and other expenditures have been on the rise. At the same time, intercollegiate athletics expenses at institutions in the Football Bowl Subdivision are growing at a rate that is three times as fast as overall university expenses. While revenues generated by tickets sales, donations, and television contracts have increased a healthy 16 percent over the last two years, they have not kept pace with a 23-percent increase in expenses. As a result, colleges have had to spend more money from institutional funds to subsidize athletics programs.
Daniel L. Fulks, an NCAA research consultant and professor of accounting at Transylvania University, offers ample evidence of the expenditure problem in intercollegiate athletics in his latest analysis of budgetary trends in intercollegiate athletics, Revenues and Expenses of Division I Intercollegiate Athletics Programs. In 2006, only 19 Division I athletic programs generated revenues that exceeded expenses. These institutions had an average operating income of $4.3 million. The other 311 athletic programs surveyed reported deficits that were covered by institutional support. The deficits ranged from an average of over $6.5 million for institutions without football to nearly $9 million for the 99 programs participating in the Football Bowl Subdivision, formerly known as Division I-A.
“For years spending within college athletics has continued to escalate while instructional spending has remained stagnant and even decreased at many institutions,” said William E. (“Brit”) Kirwan, Knight Commission co-chairman and chancellor of the University System of Maryland.
In response to these issues, as well as the growth of commercial activities that are compromising traditional collegiate standards in an effort to generate new revenue streams, the Knight Commission will begin a year-long examination into the finance of college sports.
This examination began at the Knight Commission Oct. 27 meeting in Washington, D.C. At this meeting the issues of commercialization, new media platforms, and an overview of the financial structure of college sports were discussed. The agenda and press release from the meeting can be found here.