Sports Budgets Outpace Overall College Spending

The explosive growth of college sports budgets in recent years has far outpaced the increase in spending at universities over all, according to a new study commissioned by the NCAA.

The study showed that from 2004 to 2007, operating budgets for athletics increased at an average annual rate of nearly 11 percent. During the same period, total spending for universities rose by an average of just under 5 percent a year.

In dollar amounts, the average athletics operating budget climbed from $31-million in 2004 to $42-million in 2007, the report said. Revenue grew as well, from $27-million to $37-million during that time.

The study also contained a few surprises — some of which explain the penchant for lavish spending, and some of which call it into question. It is possible for some athletics departments to spend their way to better win-loss records in football and basketball, the report found. But devoting more money to coaches’ salaries had no effect on a team’s success.

Though the spending increases in athletics are significant, the amount of money devoted to sports programs still remains a small piece of the financial pie. Athletics expenses from 2004 to 2007 were between 5 percent and 6 percent of overall university spending, up from 4 percent in the 2003 study. But on some campuses, athletics expenses were as much as 15 percent of total budgets.

In Division I-A, athletics departments usually operate independently from their universities, relying on private fund raising, gate receipts, and other commercial sources of revenue to pay for much of their programs.

Their spending practices have come under closer scrutiny by college presidents recently, however, as universities take big hits to their endowments and public universities grapple with reductions in state support.

http://chronicle.com Section: Money & Management Volume 55, Issue 36, Page A18