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July 27, 2009 - Economic recession is changing the face of college athletics

In the Orlando Sentinel, a July 27, 2009, article presented a look at the college athletics landscape and how it is being impacted by the current economic recession.  A 2008 NCAA study showed the average net operating deficit among FBS schools was $8.9 million in 2006, a figure that rose 25 percent in two years.  The article noted the significant increase in salaries of  football and basketball head coaches and their assistants, despite the economic recession and decreased money generated through external support (donations, booster clubs, ticket sales, licensing, merchandising, broadcast rights and conference revenue sharing).   In addition, at most colleges, athletics are subsidized with money from the universities and student fees: for example, 46 percent of the University of Central Florida's $35.5 million athletic department budget is derived from student fees.

"Universities across the country are on the horns of a dilemma," said Dr. William "Brit" Kirwan, co-chairman of the Knight Commission and chancellor of the University of Maryland system. "We've built this enterprise with an insatiable appetite but we no longer have the revenue to feed it. We're going to have to come to grips with that fact and move to a more rational model."

The article presented data from the NCAA's recent economic study:

  • Football Bowl Subdivision (formerly Division I-A) programs increased their operating budgets by 11 percent annually, increasing their spending by more than a third from 2004 to 2007.
  • Spending on athletics is three to four times higher than the rate of total spending for universities at all Division I schools.
  • 19 NCAA institutions made more money than they spent in 2006 in all of Division I. Those 19 are FBS schools. Only six of the programs that made a profit have done so for the past five years.

The disparity between the haves and have-nots seems to be widening.  Large television contracts given to the major conferences may leave the smaller conferences at a competitive disadvantage. The Southeastern Conference recently signed $3 billion worth of deals with ESPN and CBS. The Big Ten Conference also has a 10-year, $1 billion agreement with ESPN and a 25-year, $2.8 billion deal with the Big Ten Network.

"College athletics is different than the [professionals], but in this phenomenon we have in disparity of revenue it needs to be addressed by the governing body — which all those pro leagues did — and I believe collegiate athletics has to as well, surely at the Division I level," said Steve Orsini, athletic director at Southern Methodist University.

"Unless we want it to be six or eight programs that just compete amongst themselves, it is our responsibility to somehow regulate that economic model," said Sandy Barbour, athletic director at the University of California at Berkeley.

"The discrepancies between what's happening with universities and the ability to support their core mission, versus the expenditures in intercollegiate athletics are creating such a distortion of priorities that I think there's probably more of a willingness to consider alternatives now than any time in the past," Kirwan said.