Starting a football program is never cheap. But when the University of North Carolina at Charlotte fielded its first team, in 2013, it tried to keep a lid on spending. The first season, the head coach made just $250,000. The second year, the team didn’t step foot on a plane, playing 10 of its 11 games within the state.
But by last year, when the 49ers began competing at the NCAA’s top level, the head coach’s pay had climbed to $600,000, while the department’s travel costs, including charter flights for football, exceeded $1.7 million. Athletics officials were also paying $2.4 million a year toward debt service on a new stadium.
The addition of football led Charlotte’s athletics expenses to rise by more than 75 percent between 2010 and 2014, one of the biggest increases of any major-college program.
While Charlotte’s spending may be exceptional, it is hardly alone. At least six other programs, including the University of Louisiana at Lafayette, the University of North Texas, and Washington State University, saw their expenses climb by more than 60 percent during the same time, even when adjusted for inflation.
The median athletics expenditure among a group of about 200 Division I public universities rose by nearly 30 percent between 2010 and 2014, according to a Chronicle analysis of financial statements those institutions provided to the National Collegiate Athletic Association, obtained through public-records requests.
Many of those programs — including 104 of the 128 athletic departments in the NCAA’s Football Bowl Subdivision — do not bring in enough money through ticket sales, donations, or other outside revenue to offset their costs.
The average deficit for those 104 programs was nearly $16 million in 2014, according to the NCAA. That’s more than twice as much as it was a decade ago for the programs that had shortfalls.
The losses have strained college budgets at a time when some campuses are experiencing declines in tuition revenue and many states have reduced their support for higher education.
That has prompted one institution, the University of Idaho, to take the unusual step of withdrawing its athletics program from the NCAA’s top level.
Many athletics officials say they can no longer afford to spend as much as they have in recent years. But they are still figuring out how to contain costs without harming their teams’ competitive chances or alienating their boosters.
An Ambitious Move
When Scott Farmer arrived at the University of Louisiana at Lafayette, in 2007, its program had one of the smallest budgets in the NCAA’s bowl subdivision, with less than $10 million a year in expenses. Last year it spent $23 million on sports.
The sharp increase came as a result of Mr. Farmer’s efforts to put Ragin’ Cajun football on the map. A big part of the athletic director’s strategy was to overhaul facilities. He drew up plans for $115 million in building improvements, an ambitious move in a state where higher-education appropriations have plummeted.
The university completed a new $17-million athletic performance center last year and spent another $13 million renovating a track and soccer complex and adding 6,000 seats to its football stadium. In coming years, it plans to add football luxury suites and a multistory structure that will house an athletics Hall of Fame Museum and 23,000 square feet of office space for athletics administrators.
Football got the bulk of the money. In 2014, following two nine-win seasons, Mr. Farmer signed Mark Hudspeth, the head coach, to a six-year, $950,000 extension. The deal, which increased his base salary by $200,000, made him the highest-paid coach in the Sun Belt Conference at the time.
The team has appeared in four bowl games in the past five years, exposure that Mr. Farmer says has contributed to the university’s 40-percent increase in out-of-state enrollment.
Unlike many athletics programs that rely heavily on student fees, Louisiana-Lafayette has leaned on its donors to finance much of its growth. Since Mr. Farmer’s arrival, donations to the annual fund have increased from less than $1 million a year to nearly $10 million in 2015. (Part of that growth has come because of a capital campaign.)
The team’s on-field success has paid off in ticket sales. In 2007, Mr. Farmer’s first year, the team sold fewer than 5,000 season tickets. In 2014, it sold nearly 14,000, more than tripling its revenue.
Despite those increases, the athletic department still requires a nearly $8-million university subsidy to balance its budget. And the football team has stumbled of late, winning just four games last year and just one through the first week of October this season.
The team also suffered a blow in March, when the university announced plans to vacate 22 wins from 2011 to 2014. The move came in response to an NCAA investigation that found that a former assistant football coach had falsified ACT scores for five players.
Mr. Farmer knows he can’t count on revenue to increase as fast as it has in recent years, leading him to modify his goals.
“It is not realistic to think we can keep up with the Power Five conferences,” he says. “Their media money is just increasing their budgets way faster than we could ever increase our budgets, and they’re using that money to improve their facilities more than we can.”
But he does plan to keep up with programs in his own conference.
“If you don’t show your recruits that you are charging forward, it’s harder and harder for your coaches to recruit the quality of athletes they need to be successful,” he says. “Then you start getting disgruntled fans and apathetic students who stop attending your games.”
A $20-Million Deficit
The University of North Texas has seen its athletics expenses climb nearly as fast, from $18.5 million in 2010 to more than $31 million in 2014.
But its lack of success in football — its team has had just one winning season in the past 10 years — has led to significant revenue shortfalls. North Texas had a $20-million athletics deficit last year, and its longtime athletic director, Rick Villarreal, recently stepped down.
During his 15-year tenure, the university added more than a dozen athletics facilities, including a new $78-million football stadium, which was completed in 2011.
Football’s losses have left many fans disillusioned. Despite having 250,000 alumni who live within 50 miles of campus — close enough to drive to home games — the athletics program has just 1,000 annual donors. And this year the team sold just 4,000 season tickets (its stadium seats more than 30,000).
“If you call us to buy tickets, we’ll sell you a ticket,” says Wren Baker, who was named North Texas’ new athletic director in July. But he says the program has done a poor job with outreach.
The athletic department has also failed to capitalize on its multimedia rights, Mr. Baker says, bringing in just $600,000 a year from those rights. He believes the program can at least double that revenue.
But even if outside revenue goes up, Mr. Baker is still concerned about the program’s reliance on student fees and institutional subsidies, which grew from about $5 million in 2010 to more than $20 million last year.
“I can certainly understand the concern when that is growing faster than noninstitutional support,” he says. “We’re hoping to raise our revenue streams for athletics so we’re not dependent on the institution every time there is an unexpected cost or drop in revenue.”
[[atlas atlas_id="ry6skBeC” height="" width=""]]He realizes those increases hinge on football’s success. But what worries him most, he says, is not whether North Texas can win.
“It’s keeping up with that next round of growth,” he says. “Nobody in this industry gets to a place and stops and says, OK, let’s wait for everyone to catch up.”
‘Slow the Horses’
The growing gap in the NCAA’s top level could not have been more obvious than in the first week of the season, when the University of Louisville’s football team defeated the University of North Carolina at Charlotte by a score of 70 to 14.
Darin Spease, Charlotte’s deputy athletic director, summed up the game this way: “Sometimes you bite off more than you can chew.”
He was referring to the department’s decision to schedule a powerhouse program before its team was prepared for a top-ranked opponent. But he could have just as easily been talking about Charlotte’s big spending appetite, which has not been met with a robust ability to generate revenue.
Since 2010, the athletic department’s expenses have climbed from $16 million a year to nearly $30 million. But beyond a $10-million donation to name its stadium, and $15 million from seat licenses, ticket sales, and other outside income, the department’s main offset has come from increases in student fees.
Since 2010, student fees have nearly doubled, to more than $18 million a year. Those fees represent nearly 70 percent of the department’s revenue.
But that revenue source is getting squeezed, as North Carolina’s legislature has tried to contain costs for students. The state’s new budget includes a provision limiting any future increases in student fees to 3 percent a year.
Charlotte’s enrollment is growing, so even without any increase in student fees, the athletic department’s revenue from those fees will still go up.
But there is one significant number that isn’t going up: Charlotte’s share of its conference’s television agreement, which recently declined by about $900,000 a year.
“That’s not a little bit of money for a program like ours,” says Judith W. Rose, the university’s athletic director.
Mr. Spease says the changing media environment, with more cable customers cutting their service and ESPN and other big networks de-emphasizing their commitment to midtier leagues, has changed the calculus for programs like his.
“We’ve seen our spike,” he says, of his department’s big run-up in expenses. “We would not and could not sustain the path we were on.”
For now, he expects spending to be relatively flat for the foreseeable future.
That’s led to some tough conversations with coaches.
“I say, Look, coaches, I don’t have additional money for you because the deal’s not as good,” Mr. Spease says, referring to the TV contract. “We have to tell them, Everybody slow the horses down a little bit.”
Shane Shifflett provided additional reporting. Mr. Shifflett, a former Huffington Post reporter who collaborated with The Chronicle on an article last year, now works at The Wall Street Journal.
Brad Wolverton is a senior writer who covers college sports. Follow him on Facebook and Twitter @bradwolverton, or email him at brad.wolverton@chronicle.com.
Dan Bauman is a reporter who investigates and writes about all things data in higher education. Tweet him at @danbauman77 or email him at dan.bauman@chronicle.com.
