Sunday, November 29, 2009

Using Student Fees to Pay for Losing Teams

While most people think that university athletic departments make money, it turns out that most of them lose money, and many lose large sums that result in using student tuition dollars to subsidize insolvent athletic departments. According to the recently released Knight Commission Report on NCAA sports, “the vast majority of athletics programs reap far less money from external sources than they need to function. Virtually all universities subsidize athletics departments through general fund allocations, student fees, and state appropriations, and the NCAA estimates in a given year that only 20 to 30 athletics programs actually generate enough external revenue to cover operating expenses. Institutional subsidies to athletics can exceed $11 million, according to data provided by the NCAA.”

Not only are these athletic departments losing money, but their expenses continue to spiral out of control: “In 2009, the National Collegiate Athletic Association published a report that found median operating spending for athletics increased 43 percent between 2004 and 2008, but median revenue generated by athletics programs grew only 33 percent over the same time period (Fulks, 2008). In another telltale spending reality a few years earlier, the NCAA reported in 2005 that athletic expenses rose as much as four times faster than overall institutional spending between 2001 and 2003 (Orszag & Orszag, 2005).” What is shocking about this study is that universities are raising tuition at record rates, and part of the reason is to bail out these athletic programs that are too big to fail.

According to the Knight Commission, the expenses breakdown in the following way:
Salaries and benefits, especially coaches’ salaries (32 percent of total expenses);
Tuition-driven grants-in-aid—or sports scholarships (16 percent);
Facilities maintenance and rental (14 percent);
Team travel, recruiting and equipment and supplies (12 percent combined);
Fund-raising costs, guaranteed payments to opponents, game-day expenses, medical costs, conducting sports camps and other miscellaneous costs (12 percent).


The irony of baling out sports programs, while tuition increases and educational quality decreases was recently brought to a head at Cal Berkeley when it was discovered that the university had been for years using millions of dollars to subsidize the athletic department. The San Francisco Chronicle has reported the following: “This year, UC Berkeley's Department of Intercollegiate Athletics - whose football team is in the Bowl Subdivision - is projected to run a deficit of nearly $6 million, rising to $6.4 million next year. To make ends meet, Chancellor Robert Birgeneau expects to lend the athletes more than $12 million by the end of next year.” Not only is Cal lending the athletic department millions of dollars as it raises student fees, cuts classes, layoffs teachers, and reduces in-state enrollment, but it in 2007, UCB forgave the program over $31 million in debt.

In response to this crisis, the UCB senate voted to stop subsidizing athletics, and it is time for all campuses to do the same. Moreover, we need each school to come clean and tell us how much they are spending and who is paying for the bill. People like to blame the state for all of UC’s problems, but this is one that is completely self-generated.

22 comments:

  1. Much money goes into training and upkeeping the athletes, and only minimal help comes from sponsors. In addition, only few members can be placed in professional careers, resulting in limited returning contributions.

    I suspect that the avoidance of this problem emerges from the universities' pride that is sometimes associated with it's athletic teams' performances.

    ReplyDelete
  2. I personally believe that athletic programs should be subsidized by universities but never at the expense of education related programs. These programs enrich the college experience and bring together current students and alumni. However, these programs should never take priority over education. The primary reason that universities fund athletic programs to such an extent is publicity. The media will never report on how the average test scores improved at UCLA but there will be hours of coverage on UCLA’s loss to USC. For example, the football funding at UCLA will never be cut because of the attention the program generates, but a smaller program such as the men’s rowing team can lose all varsity funding after winning a bronze medal at nationals.

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  3. I always just assumed that UCLA funded sports programs because they were highly profitable. But if this isn't the case, then why are they being funded? Is it because of pride? I can only assume that this money is being spent to keep UCLA image strong as a competing university. I don't agree with UCLA using my money to fund the achievements of programs I will never be involved in.

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  4. I also assumed that the sports programs were rather profitable since it it UCLA athletics which is most highly publicized on television and media. While looking for the academic achievement of a college takes time and research, their achievements or failures in the athletic realm are constantly publicized in local and national television. I would not mind if this money was going towards successful squads, but teams that cannot even defeat the Cal State Fullerton basketball program should not be rewarded next year with even more spending money. Academics should the the first priority of college funds.

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  5. I am not really sure if athletic programs are the right thing to attack while discussing university budgets. Athletics are a way for students to demonstrate excellence; grades are not the only way to measure someone's talent. Yes, the programs have budgeting issues, but cutting the programs completely is not the only solution. Why should someone who is talented in a sport not get the same opportunities as one who is a gifted writer or mathematician?

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  6. Sure, I’ll agree and say that universities fund athletic programs as a form of publicity. Depending on the school though, the funds used to promote them, if done well enough, can help gain the same amount back if not more. Sports attract attention and people. The more people that are interested in the sport, the more willing they are to pay x amount of money for tickets to watch.

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  7. I can relate to this post because I work in the Athletic Department at UCLA, and my boss told me that the Athletic Department is experiencing financial trouble. However, I did not make the connection to how the Athletic Department funds affect the entire university.
    However, I will admit (although I don’t entirely agree that it’s correct) that strong athletics can bring national acclaim to schools. For instance, University of Oregon has gained tons of popularity since the success of the football team in the 2009 season.

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  8. This seems like yet another way for the University to reallocate funds meant for undergraduates. Undergraduate students are obviously at the bottom of the UC’s priority list even though they bring in most of its funds. Also, why do universities need to continue athletic programs that aren’t profitable? How does it benefit the school? They should cut the budgets of unpopular sports rather than undergraduate classes.

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  9. Why is it always the students that have to pay? Taking student’s tuition money to pay for athletic department is ridiculous. Plus they even charge us to attend the games; how ironic. Why not get rid of the athletic departments? The point of school is education not athletics. Education should not suffer because of athletics. It makes not sense to keep program money that loses money year after year.

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  10. All the UC’s need to stop subsidizing athletics; I do not feel that the quality of education should decrease in order to fund the athletic department. Education comes first, therefore the athletic department should find their own ways to get funded instead of causing more financial struggles to the educational system.

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  11. I understand that UCLA has a legacy to maintain, but I agree with you when you say that the UC's must stop subsidizing athletics. You know something's wrong when we lose to USC in basketball, anyway.

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  12. students should never feel dejected by the opinions of others, always have to be positive about yourself

    ReplyDelete
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