16.5.08

THE POSITIONAL ARMS RACE. Inside Higher Ed begins to analyze the NCAA financial statement.

College leaders and sports officials often argue that it is a mistake to require sports programs to be self-supporting, as that can only increase the pressure on them to cut corners to win if they believe winning teams will be more profitable. But it is also true that in tougher economic times, as higher education is surely entering, questions of what colleges spend on sports — particularly out of funds that could conceivably go to other institutional purposes — are likely only to grow louder.

The new report suggests that sports program budgets are growing quickly, as are institutional subsidies. For the 119 universities that compete in the NCAA’s top competitive level, the Football Bowl Subdivision (formerly known as Division I-A), total revenues grew by 25.5 percent from 2004 to 2006, slightly faster than the 23 percent growth in expenses. But in the more important category — generated revenues, those actually earned by athletics departments, excluding other institutional support — rose by only 16 percent over the two-year period.

In the 2006 fiscal year, the latest of three examined in the study, only 19 of the 119 Football Bowl Subdivision institutions had positive net revenue, while for the rest, expenses exceeded generated revenues. (For the entire three-year period, only 16 athletics department turned a net profit.)

The article does not address the central economic puzzle, which is whether making what appear to be uneconomic investments in college sport is actually the dominant strategy. I will return to this point once I've had a chance to review the report, which, now grades are in, is a possibility.

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