College Sports Programs — Not Exactly What We Thought

Here’s something from the “not quite what we expected” department –

The National Collegiate Athletic Association released its annual review of Division I athletics revenue and expenses.  A major conclusion of the report is that nearly every Division I athletics program spent more than it made last year.  Athletic programs are relying more than ever on subsidies from their colleges to balance their budgets, not the other way around.

Here are some other interesting stats:

• For the schools that participate in football bowl games (also known as Division I-A), only 57% of the men’s football programs turned a profit.  Interesting for a category where the eligible participants are defined by their emphasis on football.
• The only other sport in Division I-A for which there are profitable programs at all is men’s basketball.   
• No women’s sports are funded to the level that they can adequately pay for their expenses. 
• The largest category of expenses in athletics programs is for salaries and benefits (typically about 33%), followed by athletic scholarships and grants (about 15-25%). 
• The number of programs turning a profit in 2009 was down considerably from 2008 (for Division I-A, as an example, about 14 out of 125, down from 25 the year before).

Based on the report’s data, it is clear that almost all college athletic programs, far from being the “cash cows” that some assume them to be, are financial losers for their institutions.  Reliance on institutional funds has increased as the growth revenue generated directly by the athletics programs— from sources such as ticket sales and media contracts — slowed.  

One thing this report did not measure is the effect that having athletic programs may have on the enrollment of non-athletes to these schools (the “name factor” – prospective students may be familiar with a school, not because they play basketball themselves, but because they saw the team play in the NCAA tournament).  It seems to me that popular college sports programs may, from a business standpoint, be “loss leaders” for the school – not profitable in themselves, but promoted anyway for the potential of other sales.  In that case, the challenge to each university will be to determine when each program is no longer a “loss leader”, but just a financial “loss”.

Any other thoughts?