Hand-Wringing At the Knight Commission

This from the Knight Commission. From 2001 to 2003, athletics spending grew at a rate four times faster than overall institutional spending, even without a full account of facilities and salaries.

“It’s clear that all those interested in the future of intercollegiate athletics must find a way to bridle escalating expenses,” said Thomas K. Hearn Jr., president of Wake Forest University, in his first meeting as chair of the Knight Commission. “As the Knight Commission indicated recently in opposing the addition of a 12th Division I-A football game, we cannot resolve our fiscal challenges by burdening athletes with an additional game to generate revenue… ”

The tone makes it sound like there is some sort of fiscal crisis in college sports. But the NCAA’s own Revenues and Expenses Reports 02-03 show that (including institutional support) athletic departments typically break even. And it is well-known that athletic departments are allowed to spend all of their revenues. So, expenditures equal revenues, plus direct instituitonal support of athletics out of the general university budget.

So let’s see what the above mentioned survey shows for revenues (Table on p. 30). First, at the average report, real revenues (by my calculation) grew 21.7% from 1999-2003, and 12.9% from 2001-2003. At the top end, the increases are 9.0% and 6.2%, respectively. Since spending equals revenue typically, then it must be the case that institutional spending grew at pretty small amounts! [Really, this is more of an indictment of low spending on higher ed than on freewheeling college sports spending.]

This makes me wonder about the fretting and hand wringing. Revenues are increasing at a healthy rate for college athletics. Since ADs are allowed to spend what they make, so spending goes up. Butthere is no current “crisis.” And even if revenues fall off, so what? Coaches and ADs will take pay cuts, but it’s clear they already are earning far more than it takes to just keep them involved in college sports as opposed to their next best non-sport option. And spending on facilities would fall. ADs and members of the press often put the “arms race” stamp on the growth in spending but “arms reduction” will happen just as fast if revenues take a downturn.

Finally, we have yet to witness dramatic changes, either increases or decreases, in institutional support for college athletics (by the same NCAA commissioned survey) and we won’t. Universities will never pay more than the value that college athletics generates for the university, not in terms of direct revenue, but in terms of indirect budget increments from legislatures tied to the service universities provide through college sports. It is no accident that governors and politically powerful boosters always attend the intra-state college rivalry games. And apparently the value of that hasn’t changed much for universities.

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