The Money Bowl

The real competition in big-time college sports is over who can spend the most.

“College sports is the only business in America that has no bottom-line responsibilities,” says Rodney Fort, a sports economist at Washington State University. “Even nonprofits have to watch the bottom line to some degree.” In his 2000 book Beer and Circus, which takes a critical look at the world of university athletics, Murray Sperber, an emeritus professor at Indiana University, called college sports “the most dysfunctional business in America.” Six years later, Sperber says it’s as true as ever.

Haves and Have-Nots

According to an analysis by the Indianapolis Star newspaper of the 2004–05 budgets of 164 public universities, just 9 percent of these Division I schools had athletic departments that were able to support themselves. The rest received a total of more than $1 billion in student fees, general school funds, and other subsidies. Without the financial assistance, the average school would have lost $5.7 million, according to the Star.

“Except for a handful, they are all losing money,” confirms Daniel Fulks, a professor of accounting at Transylvania University in Kentucky. Fulks, who analyzes athletic budgets for the NCAA, adds that the gap between the haves and the have-nots is getting wider. Many have-nots are trying to keep up, he says, but are destined to fail. “It’s not so much difficult as it is impossible,” says Fulks. “I call these schools ‘the pretenders.’”

Consider the disparity between Ohio State, which competes in the Big 10, and Iowa State, which belongs to the Big 12. Ohio State has the largest athletic budget in the country, spending more than $90 million last year. For 2006–07 it has budgeted $97.5 million with a full-time staff of 300 to support 36 sports, with more than 900 student-athletes participating. The Buckeyes athletic department is completely self-supporting and usually operates in the black. “We are very lucky. Ohio State [football] has such a following that even in a down year we can expect to have sellouts,” says Susan Henderson, senior associate athletic director, who acts as CFO of the athletic department.

The picture at Iowa State, which made ends meet last year with just over $28 million, is much bleaker. “We haven’t been competitive,” admits athletic director Jamie Pollard. He says that while you don’t have to be the biggest to be the best, Iowa State, which has the smallest athletic budget in the Big 12, is too far from the median. “We just have to try to be the best we can be with what we have,” says Pollard. It’s not easy. Iowa State still supports 18 varsity sports played by more than 450 student athletes. While the athletic program reported a $700,000 surplus for the 2004–05 academic year, it was far from self-sufficient. Data from the Indianapolis Star shows the school relied on $2.6 million of general university money and more than $1 million in student fees.

Smaller schools in big conferences are forced to make do with what they have or spend money they don’t have to keep up. “We basically have two choices,” says Dave Marmion, assistant athletic director for finance at Wake Forest University in Winston-Salem, North Carolina. “We can either spend out of control and go into the red, or spend smarter, which is what we try to do.” Wake Forest, which competes in the Atlantic Coast Conference, doesn’t release budget figures, but Marmion says larger conference rivals like Florida State and the University of Miami spend far more.

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