Athletics Departments Face Financial Issues
July 10, 2008

Many college sports fans share a common misconception that all athletics departments make millions of dollars in profits each year. In reality, only a handful of institutions are self-sufficient or generate revenues over expenses - most athletics departments are actually in the red on an annual basis and rely on subsidies from the university to balance their athletics budgets. Duke is the latest athletics department to speak publically about its financial struggles.

Yes, that's right, Duke University, home of one of college basketball's most successful and well-known programs. New Duke Director of Athletics Kevin White recently said that the athletics department is "financially challenged." In fact, the school has doubled its annual subsidy to the athletics program to $15 million a year to help fund the department's operations.

Duke isn't the only high-profile school in this situation. In 2006 only 19 Division I FBS (Football Schools)schools had greater revenues than expenses in their athletics departments. Additionally, only 16 of these schools had net positive cash flows over the three-year aggregate from 2005-07.

Financial matters in large part prompted the formation of an NCAA presidential task force two years ago to discuss a disturbing trend in which the rate of growth in Division I athletics spending was tripling the rate for university spending overall. While athletics budgets on average represent only about 5 percent of a university's budget, presidents agreed that current trends could not be sustained over time. Big-time athletics is not in a fiscal crisis, they said, but the growth in spending is adding pressure on institutions already strapped for cash.

On this week's Monday's with Myles NCAA President Myles Brand said "the cost of doing business...in intercollegiate athletics is going up." Not only is the high price of gas affecting the finances of athletics departments, but as Dr. Brand suggests, the rising cost of other factors like market conditions, salaries and facilities play a major role in this struggle.

The situation at Duke should be a wake-up call to those who think college sports is awash in money. Athletics departments are going to need to find creative ways to increase revenues or reduce expenses, and I hope that the answer doesn't manifest itself in the cutting of athletics teams.


Richard D. Salyer