Nearly a third of the 125 athletic departments that compete just below the NCAA’s elite level increased their spending by more than 40 percent during a recent five-year period, a Chronicle analysis of federal education data has found.
As expenses have ballooned and revenues stagnated, the median deficit at those programs has grown to more than $9-million.
A review of athletic operating expenses in the Football Championship Subdivision, formerly known as Division I-AA, shows that from 2006 to 2010, public universities had some of the fastest-growing athletic budgets—even as many of those universities grappled with overall financial cuts.
Other research suggests that increased sports spending may be coming at the expense of academics. A forthcoming report by the Knight Commission on Intercollegiate Athletics finds that athletic spending among public colleges in the championship subdivision grew by 42 percent from 2005 to 2009, nearly twice as fast as academic spending. Meanwhile, institutional subsidies to athletics grew by 34 percent, according to the Delta Cost Project on Postsecondary Costs, Productivity, and Accountability, which did the Knight report’s analysis of per-athlete and per-student spending during that period.
Most programs at this level are far from financially independent, relying on institutional support and student fees to cover most of their expenses. Unlike big-time programs, they have smaller stadiums, fewer alumni and fans, and no rich media contracts.
The trends strike many as unsustainable. By continuing to spend so heavily on athletics, universities are overextending themselves, says John R. Thelin, a professor of higher education at the University of Kentucky who has studied the history of college sports.
“It’s like the Austro-Hungarian Empire,” he says. “They were the most loving of empires. They did everything by marriage and by granting wishes to every province and country. But at some point, you just knew it was going to implode.
“It’s not just an athletics problem,” he adds. “It turns into an institutionwide budget-and-mission issue.”
Breaking even is almost impossible for programs in the championship subdivision, let alone turning a profit, says Daniel L. Fulks, an accounting professor at Transylvania University, in Lexington, Ky., who each year writes an NCAA report on Division I finances. Only half of the programs in the NCAA’s elite bowl grouping can boast the lucrative mix of strong ticket sales, robust donations, and hefty conference payouts. In this lower level, nobody has it.
“On the revenue side, they’re really in a bad spot,” Mr. Fulks says. “But on the expense side, they’re not far off from their big brothers and sisters.”
Expenses and Ambition
Many of the fastest-growing programs in the subdivision—including the University of Northern Colorado, which increased its sports spending 58 percent over the recent five-year stretch, after adjusting for inflation; South Dakota State University (48 percent); and the University of Central Arkansas (47 percent)—are new to Division I in the past decade and are still experiencing the rapid uptick in costs that comes with more scholarships and heightened competition. Others, like Georgia State University and Old Dominion University, have recently started football programs.
The four athletic departments where spending grew the most—Winston-Salem State University, the University of Arkansas at Pine Bluff, Southern Illinois University at Carbondale, and Georgia State—more than doubled their expenses.
For Winston-Salem State, the costs of Division I sports proved too great. In 2005, the university had begun the five-year process of moving up from Division II. During that time, its annual athletic budget nearly tripled, from just over $2-million to more than $6-million. The Rams added four sports, invested heavily in financial aid for athletes, and joined a prestigious league for historically black colleges.
But revenues, largely dependent on student fees, failed to keep up with the increased expenses. In the fall of 2009, the journey came to an abrupt end: With its deficits mounting, Winston-Salem State became the first program in NCAA history to abandon, midswitch, a transition to Division I. To continue the campaign, the chancellor said at the time, would have had to come at the expense of academic programs.
Meanwhile, Winston-Salem State’s neighbor and former competitor down the road, North Carolina Central University, was charging ahead with its own ambitions to leap from Division II to Division I.
Over the past six years, as public institutions in the state wrestled with major cuts in support for higher education, the university’s athletic budget has nearly doubled, to just under $7-million. The Eagles have added a baseball team, devoted more money to scholarships, and hired additional staff for academic services, compliance, business, and fund raising.
The football team has a new coach, at an annual salary of $225,000. The 10,200-seat football stadium got new turf, a new scoreboard, and renovated locker rooms. There are plans to do $30-million to $35-million worth of additional renovations to the stadium and the running track, in part to expand the facility’s seating capacity and bring in more money through tickets sales and corporate sponsorships.
The heavy spending on football is strategic. “If football is doing well, pretty much everything is doing well,” says Ingrid Wicker-McCree, North Carolina Central’s athletic director. Indeed, once the university began competing last season in the Mid-Eastern Athletic Conference—whose historically black colleges stretch from Delaware to Florida—ticket sales nearly doubled from the previous year, to more than $500,000, she says.
Still, the athletic department now leans heavily on students to pay its way. With the university poised to trim as much as $14-million from its budget next year—including 100 or so faculty and staff positions—because of cuts in state support, student fees have proved crucial to growth in athletics. The fees, which were $345 in 2006, have climbed steadily; next year, students will pay $621 to support athletics. All told, student support accounts for two-thirds of the athletic budget.
The challenge ahead, especially as the state of North Carolina weighs further cuts to higher education, is to bolster the athletic department’s earning power—and its independence, Ms. Wicker-McCree says. The department aims to earn more through corporate sponsorships, online sales, and private donations.
Student fees also help pay for major capital improvements. That’s what happened at Southern Illinois University at Carbondale, where fee income covered more than half of $76-million in recent construction, including a new football stadium and major renovations to the basketball arena—both completed this year—and an academic-services building for athletes. (The city of Carbondale chipped in $20-million for the project, and athletics raised $10-million in private donations.)
The projects coincided with cuts on the Carbondale campus—$13-million as of last year—and across the state, as Illinois lawmakers grappled with one of the worst budget deficits in the nation. William Recktenwald, a senior lecturer in the university’s journalism school who serves as president of Southern Illinois’s Faculty Senate, says the new buildings for sports raised a few eyebrows on the campus—especially as employees took furlough days and fretted over the possibility of layoffs: “We were very hard-pressed. At that point, when you’re taking unpaid days, people say, ‘Well, gee, they could afford a new stadium,’” he says. “We’re not a rich school.”
Mark Scally, the athletic department’s chief financial officer, defends athletics’ growth and the methods used to pay for it. “There isn’t any money that we’re using for this project that they could use for the department of history,” he says. “It wasn’t like we were taking food out of their mouths to do this.”
Making a Commitment
Thirty years ago, when higher education was plodding through a similarly dire financial landscape, athletic programs in the NCAA’s elite level—the very ones now pulling in a median of $35-million in annual revenue—faced questions about their financial future, too.
Mr. Thelin, the Kentucky professor, says he remembers poring over documents from that time in which athletic officials struggled with questions of how to increase revenue, keep pace with escalating expenses, and wean themselves off university dollars.
Three decades later, the dilemma has resurfaced at the next level down. But while many of the elite programs eventually found ways to make more money, for the ones just below them—especially the smallest in the group—there are no clear answers.
“The easy solutions are gone,” Mr. Scally says. “There’s a certain limit to how much you can cut before you run out of options. Once we get to that point, where there isn’t anything left to cut and there isn’t any revenue to go get. ... " He trails off. “I have no idea. I have this nightmare of this cataclysmic explosion at the end.”
In this climate, growth can be a mixed blessing. Southern Utah University was barely scraping by at the low end of the Division I budget spectrum five years ago, and a growth spurt in spending felt like a lifesaver. “We were masquerading as a Division I program,” recalls the athletic director, Ken Beazer, whose budget grew by 68 percent from 2006 to 2010.
In 2007 the university’s Board of Trustees decided to direct more resources toward athletics. Mr. Beazer hired more staff, added two sports, and funneled money into scholarships—especially in football, which won its first conference championship last year. The investment has paid off in another way as well: Last fall, Southern Utah accepted an invitation to join the Big Sky Conference, a league that Mr. Beazer had eyed for years.
Yet despite the growth, he still feels behind. Expenses show no sign of slowing. Tuition has increased 11 percent for each of the past three years, adding greatly to scholarship costs, which are already the department’s biggest expense. Revenue has been sluggish. And he worries about where the money will come from when the university is in a less generous mood.
“The budget has increased exponentially,” Mr. Beazer acknowledges. “But we’re still heading into a conference where we’re the lowest budget. So now what are we going to do? It has to come through earned revenue. We can’t go to the university with our hand out anymore.”
For the time being, athletics at Southern Utah stands to benefit from a universitywide campaign to improve academics. Those tuition hikes that Mr. Beazer has been wrestling with are part of a broader institutional plan to devote more money to faculty salaries and academic programs. If enrollment goes up, as it has by 3 or 4 percent this year, athletics—along with other university departments—can vie for the additional money on top of what it already receives from the general fund, says the provost, Bradley J. Cook.
Mr. Cook, who played football at Stanford, says faculty so far have not protested Southern Utah’s decision to spend more on athletics—probably because spending on academics has not flagged, he says. But that could change.
“If we hadn’t made a very intentional decision to invest in academics, then I think people would go, Wait a second, where are the institution’s priorities?” he says.
For the past few weeks, as the budget season progresses, all Mr. Beazer can think about is money. The numbers are slowly moving in the right direction, he says: Six years ago, Southern Utah’s athletic department received 81 percent of its funds from the university and student fees. Today, thanks to a slight increase in corporate sponsorships and other revenues, that proportion is down to 76 percent.
But as Mr. Beazer and others in his world know, the road to self-sufficiency in Division I is anything but smooth. With its endless cycle of costs and few clear sources of revenue, it’s not all that different from running laps around Southern Utah’s sinkhole-riddled track. The condemned facility is being replaced this summer, at a cost of nearly $700,000. Mr. Beazer sighs: Another expense to add to the list.
