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June 15, 2011 - Financial gap in college athletics widens

In a press release from the NCAA, its most recent annual report found a widening financial gap in Division I between institutions with self-sufficient athletics programs and institutions which rely on subsidies to balance their athletics budgets. The NCAA stated that generated revenues exceeded expenses for athletics programs at 22 institutions. The report found the median net surplus at the 22 self-sufficient institutions was $7.4 million (ranging from $211,000 to $41.9 million), compared with the median net deficit for the remaining Football Bowl Subdivision (FBS) schools of $11.3 million. The difference between the two sets of schools – a gap of almost $19 million – was significantly higher than the $15.6 million separation in 2009.

The report defined “generated revenues” as ticket sales, NCAA and conference distributions, concessions, contributions, media rights and other sources not including institutional or governmental support, or student fees.

Significant disparities were shown after separating revenues and expenses by quartile. The median expenses in the top quartile were about $80 million, compared with median expenses of about $21 million in the lowest quartile. The median revenues in the top quartile were about $86.9 million, compared with median revenues of about $6.8 million in the lowest quartile.

Sources of revenue were also presented in quartiles for FBS-member institutions. The top three quartiles relied mostly on ticket sales and alumni contributions, while the leading revenue categories for the lowest quartile in the FBS were student fees and direct institutional support.

NCAA President Mark Emmert said, “That gap in revenue, either from self-generated or institutionally allocated sources, is significant. Indeed, it is coming to redefine what we mean by competitive equity. This will undoubtedly be a discussion point at the August presidential retreat.” The retreat will involve approximately 50 institution presidents and will be held August 9 and 10. The retreat will discuss academic performance and the NCAA’s Academic Progress Rates (APR), maintaining the principle of amateurism, and fiscal responsibility.

The NCAA stated that the 22 self-sufficient programs was greater than last year’s total of 14 and, that last year’s drop may have been a recession-driven anomaly. In addition, the press release stated the “number of self-sufficient athletics programs may actually increase, given recent media rights agreements from some of the major conferences. In the FBS, 10 percent of programs showed net losses of between $40,000 and $2.9 million. Increases in conference television revenue could move many of these into the group with positive total revenue.”

As for trends in spending, the NCAA stated that since 2004, the amount of generated revenue in the FBS grew by 54.6 percent, while total expenses grew by 61.4 percent. However, these trends were getting smaller over the past two years, when generated revenue grew by 15.9 percent and total expenses by 12.9 percent.

Other aspects of the report included:

  • the median institutional subsidy necessary to balance the athletics budget was about $9 million for Division I schools, which is consistent over the past three years;
  • in the FBS, 58 percent of football programs showed revenues that exceeded expenses by about $9 million; and,
  • the percentage of total revenues that come from either direct or indirect institutional support, or student fees is 26 percent in the FBS, 73 percent in the Football Championship Subdivision, and 80 percent for Division I institutions without football.

For the complete report, link here.