The two recent posts on college finances hit upon one of my pet subjects. With Mel Borland and Bob Pulsinelli here at WKU, I conducted an in-depth investigation trying to get at the real economic costs and benefits of our athletic programs– a surprisingly difficult and idiosyncratic job. (It reinforced Ronald Coase’s point about many important facts are in the details). This appeared in Gerald Scully’s Advances in the Economics of Sport. Later, I published a review and extension of efforts to assess the financial status of schools in the Journal of Sport Management (April 2000). These studies along with one by Skousen and Condie from
Institutions with no excess capacity, more common at very selective private or elite public institutions like
Why would schools under-report revenues and over-report costs? In some places, that’s just the way the accounting structures are setup. They are tradition-bound and so opaque as to mask true relationships. In other cases, my guess is that the practice evolved by design or happenstance so as to permit the big revenue producers to hide just how much of a commercial enterprise they are in. For one thing, it helps stave off calls for paying players. I recall magazine reports from the 1980s describing how Notre Dame and Michigan were “losing money” on football. Let’s see, they operate wildly popular (semi) professional sports operations without having to dole out 60% of revenues to athletes –if only I could land such a money losing operation!