SBD/May 2, 2013/Colleges

Rise Of Spending In College Athletics Again Outpaces Revenue; Subsidies Jump Sharply

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Subsidies for college athletics rose dramatically in '12 after two years of decline
Major-college athletics departments last year “increased the amount of money they generate" by nearly $385M, but “increased operational spending" by more than $665M, according to Berkowitz & Upton of USA TODAY. Only 23 of 228 public schools in NCAA Division I generated "enough money to pay for athletics, a figure basically unchanged for three consecutive years.” This marks the “fifth time in the last six years sports programs have added more to their annual operating expenses than they have to their revenue.” Subsidies for athletics in the form of student fees, school or state support "rose dramatically" in '12 after the rate of increase "had declined in the two previous years.” The subsidies rose by nearly $200M "compared with what the athletics programs received" in '11. That marks the “greatest year-over-year dollar increase in the subsidy total” since FY ’04-05. Rising scholarship costs “continued to play a major role in athletics spending increases” last year, but “outlays for coaching compensation rose faster.” There were 11 schools whose athletics programs generated at least $100M in ’12, while “there were nine such schools” in ’11. There were 10 schools whose athletics programs spent at least $100M in ’12, while “there were seven such schools” in ’11 (USA TODAY, 5/2).

RED INK RISING: In Birmingham, Jon Solomon noted the Univ. of Alabama and Auburn Univ. were two of the 23 Div. I schools “operating in the black.” The Univ. of Alabama-Birmingham, "when factoring out subsidies," lost $18M on athletics last year, after losing $16.2M in '11. Elsewhere, the Univ. of South Alabama lost $15.3M, while Troy had a deficit of $11.6M. The efforts to control costs in college athletics “remain tied largely to two line items: salaries/benefits and scholarships.” Ticket sales and contributions remain the "highest sources of generated revenue.” As TV contracts “increase, the line item for NCAA/conference distributions is getting increasingly closer" (AL.com, 5/1).
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