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August 22, 2009 - Economic hard times forcing college athletics to make major cuts

The Austin American Statesman published an article on the economic difficulties affecting intercollegiate athletics, with a particular focus on how those college athletic programs with and without resources are attempting to withstand the current recession.  The Chronicle of Higher Education reported that in the 2008-09 school year, 13 NCAA Division I athletic departments dropped a total of 29 men's and women's teams. Yet, institutions making the greatest revenue seem to be able to withstand the problems. "The top 25 or 30 schools just might be recession-proof," said Daniel Fulks, an accounting professor at Transylvania University in Lexington, Ky.

According to Fulks, between 2004 and 2007, athletic department spending by the 119 schools at the highest level of college football (Football Championship Division, or FCS) grew nearly 11 percent per year, with 25 programs finishing with a positive balance sheet. On average, those adding revenue averaged a surplus of $3.9 million, while those other 94 FCS schools lost an average of $9.9 million. And all of the athletic departments at the other 900 or so schools competing in the NCAA lost money. Over the same period of time, total university spending increased at 4.9 percent per year.

Those athletic departments who may be hit most significanty are at schools which built endowments as a hedge against fluctuations in financial support for athletics and academics. Michael Cross, executive associate athletic director at Princeton University, pointed out that the losses suffered by the endowment at Princeton will force the institution to look for $170 million in savings over the next two years, and the athletic department is going to be hit with its share of the cuts.

Still, the University of Texas, which was one of the few institutions which returned an athletic budget in the black, posted athletic revenue of $120 million in 2007-08, is looking to trim costs because of the uncertain future of the economy.