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Don’t Put Too Much Stock In “Athletics Subsidies” Report

When it comes to athletic budgets, no two schools keep their books in the exact same manner.  One school will lump the electricity bill for women’s basketball in with the football expenses.  One school’s “small” budget might not reflect private money and funds used to pay coaches.  And another school might have so little or so much debt that its budget is vastly misleading.

With that in mind, we present USA Today’s latest investigation into the finances of college athletics.  According to the paper’s website, a growing number of athletic departments across the country are being subsidized by their academic counterparts:

“Subsidies account for $1 of every $3 spent on athletics at NCAA Division I schools.  Since 2005, athletics budgets at 219 Division I public schools have increased 22%, and subsidies — the part of the budget that comes from student fees and university money — have increased 26%.”

But before too many folks start harrumphing over those numbers, remember what we said up top — schools don’t report things equally.

According to The Knoxville News Sentinel, the University of Tennessee is a perfect example.  USA Today listed UT as needing the fifth-largest amount of subsidized funds (nationally) to balance its 2009-10 budget.  But Andrew Gribble of The Sentinel writes:

“Of the $13.552 million claimed to have been subsidized to the UT athletic department — through student fees, direct and indirect institution support, and direct state support — only $1 million was actual cash that it used to fund all that goes into the 20 varsity sports it supports.  The rest came from “indirect facilities and administrative support,” a category on the NCAA-submitted financial report that UT and its team of auditors interpreted differently than the majority of its peers.

No matter what way it’s broken down, the UT athletic department continues to be one of the few in the nation that is not only self-sufficient, but also gives back to its university.”

There is nothing wrong with looking at the financial numbers provided by the NCAA or reported by its member schools to the Department of Education each year.  Those are the only numbers any of us really get to see.  So USA Today isn’t guilty of shoddy reporting or any other such nonsense (that it will no doubt be accused of).

But when dealing with 120 different schools, 120 different budgets, and 120 different bookkeepers overseeing said budgets, it’s best to study such data for “ballpark” type information, not hard facts.

With that in mind, we looked at the major football conferences to see who is receiving subsidies — for the most part — and who is not.  Here’s what we found:

 Conference Avg % of 2010 revenue (per school) coming from subsidies
ACC 12.12%
Big 12
Big East
Big Ten
Conf. USA
Sun Belt

(These numbers reflect data from public schools only.)

There likely aren’t too many of you out there who are surprised to learn that — in ballpark figures — the more successful the conference the smaller the subsidies.  Sort of a no-brainer.

But these numbers will lead many academics to suggest that schools need to start cutting back on sports spending.  Unfortunately, that’s a very simple way of looking at things.  Fans count wins and losses, but school administrators count applications and donations.

Think of athletic departments as nothing more than advertising for a school.  As we showed you earlier today, the University of Kentucky — according to John Calipari — had a record number of applications this past year and doubled its revenue from merchandise licensing.  Wildcat fans are happy to have the wins, but UK administrators are likely just as happy to see such an increased awareness in the school’s brand.

For better proof of the overall value of athletics, consider George Mason.  According to USA Today’s data, the Patriots’ portion of revenue from subsidies was 83% in 2010 and 86% in 2006.  George Mason happened to reach the Final Four in ’06.

According to the school, in the year following that 2006 Cindarella run:

* Freshman applications increased by 20%
* The number of campus tours for prospective students nearly tripled
* There was a 25% increase in the number of active alumni
* New gifts and pledge payments went up by $4 million
* Donations to the athletic department increased by 25%
* The general scholarship fund nearly tripled
* And unrestricted gifts to the school went up by nearly 45%

Think those subsidies from the school to the athletic department paid off in the long run?

USA Today has collected some interesting data.  But as is always the case with data, there are lots of different ways one can interpret it.


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