The Hill May Get Steeper

[50's PONY]

NCAA recognizes growing problem with costs
By Erik Brady and Jodi Upton, USA TODAY
Division I-A schools spent about $3.8 billion on athletics in 2004-05, a number that could nearly double in the next 10 years if spending continues at its current pace.
Athletic expenses rose about 8% a year between 2002-03 and 2004-05, according to a USA TODAY analysis of reports schools filed last month with the Department of Education. The NCAA says it found about a similar rise in spending for the two years before that.

That means while the Class of 2005 was in college, athletic spending rose by about a third, according to a USA TODAY analysis of federal reports.

The rate of increase "is what everyone's working on," said Transylvania University accounting professor Dan Fulks, who is studying the issue for the NCAA's biennial report due out in 2006. "I think it's probably flattening out."

The rate of athletic spending is roughly double the increase in overall college spending, which has been 3% to 4% during those years, according to the NCAA. Athletic spending at that pace "is not sustainable in the long run," NCAA President Myles Brand said.

"We have a system under stress. Revenue streams have been increasing as well. But it's unrealistic to believe (they will) increase at double the rate of the general university for the foreseeable future," he said.

Even so, at a flat rate of 8%, spending is up by about a third in reports filed between 2002 and 2005. A draft report from the NCAA's fiscal responsibility subcommittee calls the rise in spending "a looming crisis."

The report says if presidents don't rein in athletic spending soon "it will be too late to avoid problems that will seriously threaten the survival of intercollegiate athletics."

The tone is alarming. Brand says while the committee's word choice may be too strong, the current spending patterns represent "a system under duress."

"They are strong words," he said. "While we are not in crisis right now, we are using a business model that is not sustainable over the long term."

The 119 most prominent football schools had revenues of more than $4 billion in 2004-05, based on reports schools are required to file to comply with the Equity in Athletics Disclosure Act. Three schools did not report 2005 figures: Navy and Air Force, which are exempt, and Tulane, which received an extension because of Hurricane Katrina.

Those revenue increases help offset much but not all of the spending: USA TODAY research showed 2004-05 revenues increased about 7% compared with the year before.

But the big question is how much of that revenue comes from university coffers, as opposed to ticket sales, donations and broadcast rights, according to Arizona President Peter Likins, who chairs the fiscal responsibility subcommittee.

At many schools "the most rapidly growing revenue stream is the transfer of funds from the parent university. And we all know as university presidents we can't continue that pattern. We're having a hard time paying the English faculty," said Likins, who said such transfers are not made at Arizona.

Brand agreed that's where the trouble lies. "Over the long run for all these schools, it's unlikely those sources will be able to sustain this rate of increase. ... As time goes on, funding from the academic budget of the institution will have to be redirected to athletics. Or students will be charged directly with (more) athletic fees. That is problematic."

It is difficult to untangle true spending increases due to reporting vagaries in the federal reports. It's clear, though, construction projects, salaries, insurance and the tuition cost of scholarships are among things driving the increases.

Duke, for example, spent about $10 million in scholarships in 2004-05, roughly one-fourth of the school's $40 million in athletic expenses. That and other costs were not captured on earlier federal reports, making it appear as if Duke's spending increased dramatically, according to Chris Kennedy, senior associate athletic director.

The NCAA, which collects more detailed information than the federal figures, says adjusting for one-time anomalies such as Duke's doesn't change the rate of increase. The NCAA does not release its figures because many of its member schools ask for confidentiality. That could change.

"Perhaps by the end of this fiscal year, around July, we may have a better idea of what we could make public as permitted by our members," Brand said.

More transparency in the numbers — which would be a major philosophical change for the NCAA — may help schools be more open about spending, and avoid a crisis down the road, Likins said.

"But it's hard to get people excited about a financial problem that you see on the horizon."

[Water Pony]

Unfortunately, the BCS contributions to Check Book sports. Huge coaching salaries (significantly greater than professors and, often, more than Administration/College Presidents. Huge staffs and recruiting budgets create an apetitite for even greater funds.

Non-revenue sports athletes, who remain amateurs for the most part, add to the dilemma. College sports are unsustainable with 8-10% annual growth in budgets. And the problem for Non-BCS conference schools is even worse.

Don't ask me to be King for Day. It wouldn't be pretty.

[SmooPower]

I hear everyone at SMU is rich, so it shouldn't be a problem.