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January 14, 2010 - Subsidizing big-time college sports: An analysis of revenues and expenses

On January 14, USA Today published a report on the cost of big-time college sports, and detailed the increasing use of institutional subsidies to support athletic expenses.  The paper published the revenues and expenses of 99 out of 120 members of NCAA's Division I Football Bowl Subdivision (FBS) from 2004-2005 to 2007-2008, and found only two institutions over the four year period did not receive institutional subsidies: Louisiana State University and the University of Nebraska at Lincoln.  In aggregate, the subsidies grew about 20% in four years, from $685 million in 2005 to $826 million in 2008, after adjusting for inflation. At more than a third of those schools, the percentage of athletic department revenue coming from subsidies grew during the four-year period studied.

According to the report, subsidies for athletics at the University of Cincinnati (UC) grew more than for any other school from a conference belonging to the powerful Bowl Championship Series.  Subsidies at UC grew from 26.7% ($5.6 million) of athletics revenue in 2005 to 33.1% ($10.7 million) in '08.  UC athletics also has a $24 million operating debt.  Of all the 99 schools studied, the University of Hawaii had the greatest rise in the percentage of athletics revenue from subsidies from 2005 to 2008 - a 16.9% increase, from 9.4% of its allocated revenue in 2005 to 26.3% in 2008.  The USA Today's NCAA Athletics Finance Database demonstrated that at some institutions, such as the University of Akron, student fees made up as much as 70.8% ($13.3 million) of the $18.7 million athletics budget.

An additional article in the report noted that the UC recently convened a task force to consider raising tuition and fees, and to use more general fund money to support high-profile athletics and erase the $24 million debt if it wants to remain competitive in the Big East. The school switched from Conference USA in 2005.  "We are thrilled with the success of the football team, both academically and athletically," UC faculty chairwoman Marla Hall told the paper. "But we are concerned about the use of general fund money for anything that is not central to the academic mission of the university.

Student fees for athletics at Auburn University helped the athletic department improve its bottom line.  During the period of the survey, the percentage of revenue coming from student fees grew even though the department moved from operating at a deficit to operating at surpluses. In 2004-05, the Auburn University athletic department received $982,349 from student fees and operated at a $3.9 million operating deficit. By 2006-07, athletics received $4.9 million from students, nearly four times as much, and the overall surplus increased to $12.9 million. In 2007-2008, the Auburn athletics surplus grew to $19.5 million.  According to the Auburn athletic department, much of the student fees will help the institution build a new $86 million basketball arena.

The USA Today noted the lack of standardization among higher education institutions in reporting the cost of college sports, and that institutions use different accounting methods to report revenues and expenses.  For instance, the University of North Carolina does not report as a revenue the $1.2 million value of tuition waivers it receives under state legislation passed in 2005 that allows scholarships to out-of-state athletes to be charged at the in-state rate.  At, the University of Alabama, University spokeswoman Deborah Lane said via e-mail "an inter-governmental transfer" of $25.3 million from Alabama's athletics booster club to the athletics department was doubled-counted, thus inflating revenues by 41% and expenses by 59% over the previous year.

Article: Big-time college athletics: are they worth the big-time costs?

Analysis: Amid funding crisis, college athletics soak up subsidies, fees

Database: NCAA athletics finance database (99 of 120 Division I-FBS schools)