An article published by AnnArbor.com on July 25, 2009, demonstrated how the University of Michigan athletic department continues to be one of the few college sports programs where revenues outpace expenses. Michigan’s athletic department is one of just six in the country to show a budgetary surplus in each of the past five years. In fact, it has finished nine straight years with a surplus and anticipates an $8.8 million surplus next year.
Michigan’s regents recently approved the athletic department’s budget, which projected expenses of $85.6 million, a number up $5.5 million from the previous year, and revenues of $94.4 million, up from $90.4 million last year. Of those revenues, it is expected $1.6 million will be transferred into the university’s general fund.
Michigan athletics has accomplished the feat despite the economic recession in the state, a three percent reduction in state appropriations, deeper cuts ahead in future budgets, a proposal to increase student tuition 5.6 percent, and coming off last year’s 3-9 record from its football team, the worst in the school’s history. Football accounts for more than half of the total athletic department revenue, and not even last year’s poor performance could dent the collections: 95 percent of people involved in preferred seat donations for football games renewed their donations. Looking ahead to the opening of a $300 million renovation of Michigan Stadium in the 2010 season, 70 percent of the premium seating available has already been sold, according to University of Michigan’s senior associate athletic director Joe Parker. In addition, 57 of 82 available suites are committed to interested parties.
The article noted the recent meeting of the Knight Commission, which “sounded the alarm bells on overspending in college athletics, saying revenues cannot sustain the ‘runaway train of spending.'” Yet, the University of Michigan athletic department’s positive financial status represents the complexity of the issue of finances in college athletics, where few major college athletic programs are able to withstand economic difficulties that significantly affect most other colleges.