Magazine article The Presidency

Myth: College Sports Are a Cash Cow

Magazine article The Presidency

Myth: College Sports Are a Cash Cow

Article excerpt

Outside my office door, there it looms. Sanford Stadium, complete with its fabled privet hedges and 93,000 screaming fans on fall Saturdays, lies in the very center of the University of Georgia (UGA) campus, with the humanities and social sciences buildings on the hill to the north and Ag Hill to the south. It's quiet this time of year, but the video advertising boards that flicker on periodically are an LED reminder of the South's year-round love affair with college football.

This is the most visible symbol of the UGA Athletic Association, a not-for-profit organization that in fiscal 2011 recorded operating revenues just shy of $90 million. That money enables the association to send its golf teams to Puerto Rico, track teams to Washington State, and Gym Dogs to Utah. Here and there, the Athletic Association also endows professorships and funds a few campus-wide projects.

As munificent as this is, this kind of spending is typical of big-time college athletics programs at universities across the country. The Chronicle of Higher Education recently estimated that college athletics is a $10-billion marketplace. What sets UGA athletics apart is that it can pay for its expenses without turning to the university for help.

Only seven other athletics programs at public universities broke even or had net operating income on athletics each year from 2005-2009, according to data provided by USA Today to the Knight Commission on Intercollegiate Athletics (for which I consult). The others were Louisiana State University, The Pennsylvania State University, and the universities of Iowa, Michigan, Nebraska, Oklahoma, and Texas at Austin.

Like these peers, Georgia's athletics department is flush because it can depend on donations, ticket sales, royalties from rights fees and sponsorships, and distributions from lucrative television contracts. It is no surprise that the other members of this elite fraternity belong to the Southeastern Conference, the Big Ten, and (at the time these data were collected) the Big 12.

For almost every other university, sports is a money-losing proposition. Only big-time college football has a chance of generating enough net revenue to cover not only its own costs but those of "Olympic" sports like field hockey, gymnastics, and swimming. Not even men's basketball at places like Duke University or the University of Kansas can generate enough revenue to make programs profitable.

As a result, most colleges and universities rely on what the NCAA calls "allocated revenue." This includes direct and indirect support from general funds, student fees, and government appropriations. In other words, most colleges subsidize their athletics programs, sometimes to startling degrees.

The six elite leagues in Division I are those that participate in the Bowl Championship Series: the Atlantic Coast, Big East, Big Ten, Big 12, Pacific-10, and Southeastern conferences. Even with bowl-game revenues and television contracts, however, public institutions in those conferences provided an average of $5.9 million to athletics in fiscal 2009, including $2.4 million in direct general-fund support and another $2.4 million in student fees.

In other Division I conferences, public institutions subsidized athletics programs with $9.6 million on average in 2009. …

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