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Archive for Thursday, August 26, 2010

Athletics value

As revenue slows down and costs go up, college athletics are depending on even larger subsidies from their universities.

August 26, 2010

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Interim NCAA President Jim Isch may be a little too quick to dismiss growing deficits in college athletic programs as primarily a result of the nation’s slumping economy.

There are other ways to interpret a newly released report that shows just 14 of 120 schools in the Football Bowl Subdivision schools made money from the athletics programs in fiscal year 2009.

The number of programs in the black was down from 25 the year before. From 2008 to 2009, the median subsidy paid by the universities to support their athletic programs rose from around $8 million to more than $10 million.

The increased subsidies were needed to make up for slower revenue growth and ballooning athletic expenses. Growth in ticket sales and the all-important media contracts slowed to 6 percent from the previous year’s 17 percent. At the same time, athletic expenses rose by 5.5 percent in 2008 and another 11 percent in 2009.

What’s wrong with this picture?

Isch specifically rejected the idea that the fact that so few college athletics programs were in the black had anything to do with “runaway spending” in those programs. To support that contention, he noted the report’s finding that athletics expenditures as a percentage of universities’ total budgets has remained fairly constant at about 5 percent since 2004.

We don’t know about all 120 universities covered in this report, but these figures don’t ring true when it comes to Kansas University. Because of state budget cuts in fiscal year 2009, KU had to cut about $43 million from its budget. If the university’s athletics subsidies were rising during that time, how could the percentage of the university’s budget going to athletics remain constant?

The bigger question is, perhaps: Was the university having to trim even more from its academic programs in order to cover larger-than-expected deficits in its athletic programs?

In an NCAA news story, Isch ducked responsibility for rising costs, saying that how institutions choose to invest in athletics is their decision, not the NCAA’s. “It continues to be all about an institution’s determination of the value athletics adds to overall operation,” he said.

That’s another good question. “What is the value athletics adds to the overall operation of KU or other universities?” They certainly have value, but how valuable are they? How much money should be diverted from academic programs to subsidize athletic programs that are operating in the red?

If growth in revenue from ticket sales and media contracts is slowing down, maybe it’s an indication that the “value” of college athletic programs is leveling off. Perhaps the investment universities are making in those programs should do the same.

Comments

Robert Rauktis 4 years, 3 months ago

But where will the junkies get their fix if not subsidized by the government?

gccs14r 4 years, 3 months ago

Maybe we need to go back to the days of the $30,000/yr football coach with one assistant. It's criminal that football coaches are often paid more than is spent on entire academic departments.

think_about_it 4 years, 3 months ago

Yeah, I long for the days of Glen Mason and Terry Allen when we were lucky to win 2 or 3 games per season and had game attendance in the hundreds.

Jack Martin 4 years, 3 months ago

When it comes to KU, Kansas Athletics actually provides a net benefit to the university.

For example, net support and benefits provided by Kansas Athletics to the university totaled $11.8 million in FY 2009. This total includes the tuition Kansas Athletics pays for student athletes’ academic expenses. A large number of these student-athletes are from out-of-state, meaning their nonresident tuition helps subsidize the education of Kansas students.

kusp8 4 years, 3 months ago

What a crock... So what if KUAC is paying for players' scholarships? That does nothing for the University, all it does is provide the same amount of funding that a regular student provides, regardless of residency. If anything, Jack, "the tuition Kansas Athletics pays for student athletes’ academic expenses" is revenue neutral. KUAC isn't paying MORE than an average student would, so that figure can't be entirely accurate.

Also, I'd like to know who pays for the extra tutors those scholarship players require. IF it is KU and NOT KUAC then the 11.8 million is even less accurate because those people wouldn't be on payroll and KU would be saving even more money. Also, who pays the student-workers wages who work in KUAC? I would assume that it is KUAC. However, I ask because KU gets a federal stipend for each student employed at KU and if KUAC isn't eligible for that I wouldn't be surprised if KU is paying their wages, and then the number goes down even further.

I don't really expect an answer, but it would be nice to know.

Jack Martin 4 years, 3 months ago

In terms of tuition, as you can see from the presentation at http://www.tuition.ku.edu/ out-of-state students pay 141% of the cost of their education. Therefore when Kansas Athletics pays the tuition of an out-of-state student-athlete, it is in effect subsidizing the education of in-state students.

Tutors for student-athletes are paid by Kansas Athletics, as are student workers who work at Kansas Athletics.

grimpeur 4 years, 3 months ago

Thanks, Jack.

Now, perhaps you can provide a more complete balance sheet or point us to one:

KAI revenues from TV, ticket, concessions, donors, parking, advertising, and contributions by the University, i.e, subsidies, in answer to the question, "how much does KAI bring in?"

Then the total outlays: travel, salaries, advertising, cash contributions to KU, rent to KU, licensing fees, in answer to the question, "how much does it cost to run KAI?"

But the main question is, "how much does it cost KU to be associated with KAI?"

The $55M in/$55M out figure has been bandied about. It's to the point now that football is so huge that even a return to reasonable spending levels will seem like a draconian measure.

gccs14r 4 years, 3 months ago

So are you saying that KU is one of the fourteen schools where athletics is in the black? If that's true, fine, but just because KU can afford an expensive D-I program doesn't mean that higher ed in general can afford it, nor can the taxpayers.

kusp8 4 years, 3 months ago

Kudos for responding Jack, it isn't often that a KU person ventures out here to risk taking on the people of the LJWorld message boards.

pace 4 years, 3 months ago

Let's spend out education dollars on encouraging drunk riots.

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