Menu
Colleges

While Revenue Continues Increasing For Power Five Schools, Some Still Operate At A Deficit

Some big-time college sports departments are "making more money than ever before," but many also "are losing more money than ever," according to a front-page piece by Hobson & Rich of the WASHINGTON POST. ADs are choosing to "outspend rising income to compete in an arms race that is costing many of the nation’s largest publicly funded universities and students millions of dollars." A review of financial records from 48 public universities in the Power 5 conferences show that from '04 to '14, the "combined income of the 48 departments nearly doubled," from $2.67B to $4.49B. The median department "saw earnings jump" from $52.9M to $93.1M. However, after a decade "marked by surging income, 25 departments still ran a deficit" in '14. Twelve departments "actually lost more money" in '14 than in '04. ADs at money-losing departments "defend their spending as essential to keeping pace with competition." They said that their programs "benefit universities in ways that don’t show on athletics financial statements ... like media exposure that can cause increased applicants and help fundraising." To critics of big-time college athletics in America, however, the "persistent inability of programs to profit despite continually rising income is evidence of systemic, wasteful spending." The "frantic spending race is playing out differently across the country." Higher coaches salaries, "while common, are just part of an array of expenses soaring at athletic departments that fail to profit." To some critics, the spending decisions the people running these operations have made, and the way they are financing them, "illustrate fatal flaws in the financial arms race of big-time college sports." Ohio Univ. professor David Ridpath said, "The current model does not work. Some day it will implode.”

RICH GET RICHER: Hobson & Rich note Ohio State, Texas and Alabama are part of the 1% of college athletics departments that annually bring in more than $140M -- "enough to cover seven-figure salaries for head coaches and a near constant process of building and upgrading facilities without losing money." NCAA data shows that the number of profitable athletics departments "has remained remarkably stable for years: about 15 to 25 every year." Auburn Athletics COO David Benedict said that his department "lost more money" in '14 than it did in '04, even though its income "nearly doubled during that time." In '04, Auburn athletics "nearly broke even on earnings" of $57.5M. (All '04 figures are adjusted for inflation.) By '14, income "had risen" to $109.3M, but "spending soared" to $126.5M. Benedict "disagreed with an analysis based on the school’s annual financial report to the NCAA, which he said overestimated the department’s losses." He acknowledged that Auburn athletics "lost money" in '14, but "internal figures" showed losses at only $8.2M. Auburn athletics "is normally profitable, and Benedict expects the program will return to the black" in '15. Auburn in '14 "drew from its cash reserves to cover losses which Benedict attributed to a few unique situations" (WASHINGTON POST, 11/24).

SBJ Morning Buzzcast: March 18, 2024

Sports Business Awards nominees unveiled; NWSL's historic opening weekend and takeaways from CFP deal

ESPN’s Jay Bilas, BTN’s Meghan McKeown, and a deep dive into AppleTV+’s The Dynasty

On this week’s Sports Media Podcast from the New York Post and Sports Business Journal, ESPN’s Jay Bilas talks all things NCAA. Big Ten Network’s Meghan McKeown shares her insight into the Caitlin Clark craze. The Boston Globe’s Chad Finn chats all things Bean Town. And SBJ’s Xavier Hunter drops in to share his findings on how the NWSL is making a social media push.

Learn more about your ad choices. Visit megaphone.fm/adchoices

SBJ I Factor: Nana-Yaw Asamoah

SBJ I Factor features an interview with AMB Sports and Entertainment Chief Commercial Office Nana-Yaw Asamoah. Asamoah, who moved over to AMBSE last year after 14 years at the NFL, talks with SBJ’s Ben Fischer about how his role model parents and older sisters pushed him to shrive, how the power of lifelong learning fuels successful people, and why AMBSE was an opportunity he could not pass up. Asamoah is 2021 SBJ Forty Under 40 honoree. SBJ I Factor is a monthly podcast offering interviews with sports executives who have been recipients of one of the magazine’s awards.

Shareable URL copied to clipboard!

https://www.sportsbusinessjournal.com/Daily/Issues/2015/11/24/Colleges/College-Spending.aspx

Sorry, something went wrong with the copy but here is the link for you.

https://www.sportsbusinessjournal.com/Daily/Issues/2015/11/24/Colleges/College-Spending.aspx

CLOSE