Friday, April 27, 2007

Athletic Department Finances Scruitinized by College Paper

The Daily Tarheel has a smart piece about athletic department finances that attempts to dispel the "popular belief" that athletic departments are profitable. The article cites NCAA President Myles Brand's statement in January that 52 percent of all Division I-A programs require subsidies greater than 5 percent every year. It also probes the discrepancy between figures like this and recent financial data filed by universities under the Equity in Athletics Disclosure Act, which for 2004-05 suggest that most (110/120) DI athletics programs broke even or made a profit. NCAA data show a less impressive financial picture, a difference the paper attributes to accounting methods.
The EADA counts direct institutional support, unrestricted funds allocated to an athletic department by a university, as revenue, when in fact it is a subsidy. The EADA data does not include certain administrative costs, such as the cost of renting or owning facilities and some staff - costs that have risen dramatically as the years go by.
The article goes on to probe the arms race of coaches salaries, particularly football and men's basketball and recruiting costs.

The problem with this picture, in my opinion, is not that too many colleges lose money on athletics. It's that they are spending as if they were profitable when in fact they are not. If you believe the mission statements of university athletic departments, they exist for the sake of the student athlete. By that rationale, a team should be under no greater expectation to turn a profit than an English literature class, since both are opportunities that universities provide for the purpose of student education and enrichment. But only in a world where athletic departments don't spend like the pros will the pressure to generate revenue -- or the those mythical profits -- subside.

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