Chapter 3: Revenue
While universities and even the biggest athletics programs are not-for-profit organizations, some can generate significant sums from ticket sales, television contracts, and other sources. Most, however, depend on institutional transfers from general funds, student fees, and state appropriations to cover the expenses discussed in the previous section. The NCAA has begun to make this distinction in its reports as one between “generated” revenue--or that coming from external sources--and “allocated” revenue, which consists of intra-institutional transfers.
- External sources of athletics department revenue stand, generally, in this order:
- Cash contributions from alumni and others (30 percent);
- Ticket sales (28 percent);
- Payments from conferences, which include revenue from regular-season television contracts, royalties from the NCAA’s basketball tournament contract, and football bowl game payouts (17 percent);
- Local marketing income, such as in-stadium signs and payments from corporate sponsors, local radio-TV rights fees, etc. (10 percent).
The remainder comes from food and program sales at games, sports camp income, guarantees paid out by opponents for road games, and payouts from athletics department scholarship endowments.
While these are overall figures, breaking them down yields a much clearer picture of disparities among institutions. At the bottom of the revenue-producing rankings among FBS programs, ticket sales—driven, of course, by far lower attendance and cheaper prices—account for less than 10 percent of their total revenue. At the top-revenue producers, ticket sales in large stadiums at high prices generate about 30 percent of all revenue. In 2007, half of big-time programs sold less than $5 million in tickets to all contests. But the other half sold more than $10 million in tickets, with the top 20 percent of programs exceeding $20 million in ticket sales, most of that attributable to football.
Half of all top-flight athletic programs rely on at least $9 million in institutional and governmental subsidies to balance their budgets. Even in the most prosperous conference, its members received a median subsidy of $3.4 million.
This is separate from the donations from fans. Most of these take the form of contributions to “ticket priorities”: Especially at major institutions, ticketholders make annual donations on top of the price of a season ticket to secure prime seating or luxury boxes. These donations are 80% tax-deductible under Internal Revenue Service guidelines. The University of Georgia received some publicity in 2008 when, on the eve of a season in which its football team was ranked No. 1 in early polls, a first-time season-ticket buyer would have had to donate $10,651 for the right to purchase tickets. There is some evidence that this and other forms of fundraising in athletics may compete with overall university fundraising for gifts, according to a recent study by The Chronicle of Higher Education (Wolverton, 2007).
On top of revenues generated from ticket sales, universities belonging to the BCS conferences receive significant funds from television contracts through complex arrangements. Essentially, the major television networks sign contracts with the NCAA to televise championship events, including men’s basketball, the primary money generator. They also sign deals with the conferences to broadcast regular-season contests in football, men’s basketball, and occasionally other sports. Finally, they sign contracts to broadcast the assortment of football bowl games and pay royalties to the conferences whose teams are involved. All of these funds are distributed to conferences, which then have their own revenue-sharing arrangements with member institutions. Conferences also reap revenue from their own conference championship events, both from ticket sales and broadcast rights. The television networks then sell advertising and marketing rights to make good their revenue commitments in these broadcasting agreements. (For a more-thorough description of this process, particularly with relevance to bowl games visit ESPN. For more data on the finances of college football, visit the NCAA.)
The end result may or may not be of significant benefit for the institutions involved. For example, the Big Ten Conference distributed $154 million to its 11 members in 2006-7; at the other end of the scale, the Sun Belt Conference distributed roughly $1.2 million to its nine members. This disparity reflects, once more, the gap between the “haves” and “have-nots.”
Whether or not they earn significant revenue from these sources, virtually all athletics programs receive some form of institutional subsidy. According to 2007 NCAA financial data, half of all top-flight athletic programs rely on at least $9 million in institutional and governmental subsidies to balance their budgets. Even in the most prosperous conference, its members received a median subsidy of $3.4 million.
Such allocations come from student fees, support from a university’s general fund (covering indirect costs such as utilities), state support, staffing or facilities maintenance. In 2006, that average subsidy from central funds stood at 20 percent of total revenue for bowl subdivision programs (Fulks, 2006).
As financial burdens on typical college students have increased, the rise in student fees to fund athletics has stirred debate and controversy. At all levels of big-time college sports, students are funding their campuses’ athletics programs with mandatory fees; NCAA data shows that, generally speaking, programs at the lower end of expenses and revenues rankings tend to rely more heavily on student fees than financially successful programs.
In 2007, FBS programs with median expenses of $19.7 million saw students pay a median of $4.7 million, or nearly 24 percent of those athletics budgets. On the other end, in the top decile of programs with budgets in the $83 million range, students typically paid for less than 2 percent of their universities’ sports costs. In 2006, Fulks found that, across the board, six percent of total revenues at bowl-subdivision institutions were paid by student fees. At universities without football and, so, without substantial revenue-generating opportunities, students bore a higher burden; 18 percent of athletics budgets came from student fees (Fulks, 2006).
Battles over fees have triggered campus-wide referenda. In 2008, at California State University, Fresno, students voted against an increase from $7 to $50 per semester; the university president overrode that result and upped the fee to subsidize athletics to $32 per semester. At Utah State University, about 53 percent of students voting approved a 100 percent increase from $113 to $243 annually to help lift the university’s athletics department out of debt. In 2009, students at the University of New Orleans, a non-football-playing Division I institution, soundly rejected a doubling of student fees for athletics from about $200 per year to nearly $400.
Student fees often subsidize all or part of ticket prices for events; a typical arrangement is for such fees to cover admission to games for nonrevenue teams and enable students to buy lower-cost season tickets to men’s basketball and football games. While such fees generally are mandatory for full-time students, the number of students who attend such games or purchase tickets varies from campus to campus.