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An August Few in the Black
As athletic departments geared up for their Fall seasons, there were a few news items of special interest that hit the wires as August unfolded: 1) very few athletic programs show positive net income, 2) most athletic programs require subsidies from their universities, and 3) IMG is one of the few positioned to make serious money from collegiate athletics.
According to a report issued by the NCAA, “just 14 programs from the Football Bowl Subdivision generated revenues over expenses in 2008-09, compared with 25 such programs in 2006-07 and 2007-08. In addition, the median institutional allocation for athletics (total expenses minus revenue directly generated by the athletics department) at the FBS level rose from about $8 million in 2007-08 to $10.2 million in 2008-09… That fuels a trend that the NCAA’s 2006 Presidential Task Force warned as being unsustainable over time …Yet, as many Division I institutions continue their quest to be self-sufficient in athletics, more are finding just the opposite to be true – that a balanced budget requires increased allocations from the institution.”
The report opens by suggesting that much of the downturn is a result of the down economy, which surely is true, but which also implies that the situation will improve once the nation is finally on the road to real recovery. But there’s no doubt that the wealth destruction of the past few years is going to have a long-lasting impact on the psyches and discretionary spending of fans and alumni contributors alike. The economy will eventually improve, but that doesn’t mean folks are going to return to their free spending ways any time soon thereafter, especially if costs (e.g. $40 parking fee at Penn State) continue to escalate.
If this pattern continues, you can bet that the pressure will grow from the broader academic community as well as state legislatures demanding that publicly funded athletic programs stand more firmly on their own. If athletic departments truly hope to become their own profit centers, some of the measures they’ll have to take to achieve that end will not be popular or easy.