The Bottom Line
DEFICIT OR SURPLUS?
The accounting variables in college athletics make it difficult if not impossible to know whether a big-time sport pays for itself, much less whether it generates net receipts to finance the deficit sports. Actual cost accounting, in the sense of a hard-nosed business analysis, isn't done.
—Walter Byers, Executive Director of the NCAA, 1951–87
Even the best and most regularly collected of the data we examined (the NCAA Surveys) are fraught with problems of definition of elements, response bias, lack of weighting, and misleading interpretations.
—Report submitted to the U.S. Congress by Lamar Alexander,
Secretary of Education, October 1992
DO INTERCOLLEGIATE athletics drain or support university budgets? The answer depends on whom one talks to and the occasion. University athletic directors trying to persuade a school to build a new sports facility or upgrade to Division I or IA (in football) invariably talk about the expected financial payoff to big-time college athletics. Academic economists, arguing that the NCAA is a cartel (independent producers joining together to form an effective monopoly), seem to feel compelled also to assert that big-time athletic programs are profitable. Why? Because monopolies, economic theory tells us, generate higher profits than competitive firms. Yet critics, such as Murray Sperber, James Thelin, or Francis Dealy, insist that intercollegiate athletics are a serious financial burden to the university.
While reality, not surprisingly, is more complex and lies somewhere in between these extreme views, there are certain truths that can be unequivocally asserted. First, of the six hundred–plus athletic programs in Divisions II and III, none generates more revenues than expenses. That