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SBJ/September 18 - 24, 2006/This Weeks News
NCAA wants schools to square up accounting
Published September 18, 2006
The NCAA polices everything from recruiting to academic performance, but athletic department budgets aren’t within its jurisdiction. There likely won’t ever come a time when the NCAA puts a school on probation for excessive expenditures.
There is a way, however, for the NCAA to help schools decelerate spending by compiling and sharing more financial information, according to a report from the NCAA’s Presidential Task Force to be released next month.
NCAA President Myles Brand estimates about 20 or so athletic departments out of more than 300 Division I schools operate in the black. Expenditures have raged skyward, while athletic directors search under every rock for new revenue streams.
During the last two decades, athletic department budgets have grown 8 to 12 percent each year, Brand said. In comparison, university budgets during that same period are up only 3 to 4 percent a year.
Brand’s message to athletic administrators: “Balance your budget.”
“Don’t spend more than you’re taking in,” he said this month at a college symposium at Elon (N.C.) University. “We’ve got to moderate growth. We’re working toward a goal of financial responsibility.”
The Presidential Task Force spent the past year examining ways to put the brakes on athletic spending. Peter Likins, president emeritus at the University of Arizona, chaired the task force and the subcommittee on fiscal responsibility. He said next month’s report will encourage more shared budgetary information so that administrators can make more informed decisions.
The problem now is that each athletic department has its own accounting structure, which normally differs from school to school, making it difficult to obtain apples-to-apples comparisons. Football game revenue might be recorded under football revenue by one school and event revenue by another.
“There seems to be an unsustainable trend in financing athletics,” Likins said. “The only way to change this is through changing patterns of behavior. That’s very hard, and it’s impossible without good information. … You can’t make good financial decisions in a competitive environment without knowing more facts about what other people are doing.”
Likins said income and expenses need to be packaged into what he termed “dashboard indicators” to make them more relevant to each school. For example, what percentage of an athletic department’s budget is subsidized by the university? How does the subsidized money compare to generated money (TV revenue, ticket sales, etc.)? Athletics accounts for what percent of a university’s debt service?
If the NCAA could compile summary data from schools and act as a clearinghouse, administrators would have a valuable tool in their effort to control costs. Likins cautioned that the task force’s report won’t tell schools how to spend money, but instead will offer guidelines on how to adopt common accounting practices.
“There’s a huge demand for it,” said Iowa State athletic director Jamie Pollard. “I’ve often wondered why the NCAA didn’t do it. When I made inquiries in the past, I was told that it wasn’t their responsibility. I’m glad to hear that they are going to do it. … Being able to benchmark yourself against other schools is very valuable, and it’s very tough to get accurate information right now. There’s not a reporting structure that everybody follows.”
Pollard formerly owned Collegiate Financial Services, a private data research company that provided financial information to administrators. He no longer operates the company, but he said he had requests from 100 to 150 schools each year from 2000 to 2004.
“If the NCAA could come up with a database that we could all access, it would be very valuable,” Pollard said. “It’s long overdue.”