Economies of Scale: Division I Reacts to Troubled Times

The NCAA News published an article relating to how the current business model in intercollegiate athletics may lead to changes in priorities, and an increasing divide between major college athletic programs and smaller programs. Critics question the sustainability of the current business model and worry about what additional unappealing financial decisions may lie ahead.

Financial pressures on public institutions are a result of reduced funding from state government, while private institutions are experiencing reduced interest income in their endowments during the current economic downturn. Notable cost-cutting moves have made included required furloughs for all staff – including athletics administrators and coaches (including Clemson, Arizona State and Maryland), layoffs in athletics (including Florida Atlantic and Stanford), and cutting entire teams. The NCAA has also changed its championships travel policies.

What institutions at major conferences do over the next several years could determine whether the divide between the high- and low-resource institutions will continue to grow. “If the big conferences feel that baseball and soccer and field hockey and swimming are relatively immune, whereas the rest of us are going to tighten our belts, that will make Division I seem more and more like two subdivisions trying to find a common ground,” said Jeff Orleans, the Ivy League’s Executive Director. “If the big conferences say, ‘It’s one thing to do what we do in football and basketball because they bring in revenue, but otherwise we, too, will be constrained,’ that’s another thing. Then it would be easier to find ways to change. If they are never going to actually think about these things, we will be driven further apart.”