What is the role of athletic in higher education?
- Should athletic departments be self-sustaining?
- Is this the mandate?
- What about other scholastic entities?
U.S. Intercollegiate Overview
- Approx. 100 member institutions…
- Over 30 conferences
- Over 460,000 athletes compete
- 260+ ...
10/4/24, 12:23 AM SPMA 2P27 Test 3 - Finance/accounting
SPMA 2P27 Test 3
Tues, Nov. 7
NCAA/ USports Class
What is the role of athletic in higher education?
- Should athletic departments be self-sustaining?
- Is this the mandate?
- What about other scholastic entities?
U.S. Intercollegiate Overview
- Approx. 100 member institutions…
- Over 30 conferences
- Over 460,000 athletes compete
- 260+ member universities
- focused ‘small athletics programs” NAIA
- In 2015, over 60k athletes
- 23 conferences situated in locations geographically spread across the country
- NJCAA National junior college athletic association- D1,D2,D3
- 2 year college structure
- 525 schools, 221 Div.1
- 24 regions
Consider NCAA v Usports
- pac-12 $3 bill 12 year TV deal
- all power 5 have TV deals that average over $200 million
- Power 5: ACC, Pac 12, Sec Big 10, Big 12
- Individual schools average over $17 million per year from TV contracts
Why do athletic departments still need institutional support (i.e., student fees) to balance their
budgets?
Why only a handful of public FBS programs were deemed self-sustaining?
What about “Pay-to-Play” discussion?
- Most NCAA D1 athletic departments take subsidies
Is accounting accurate?
- Analysis, documentation and adjustment of chargers made between related parties for
goods, services or use of property
- Transfer pricing:
most athletic programs get charged Market rates for facilities on
- Facility Rental
campus
- Student aid “List Price” athletic departments pay the full list price on tuition
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- Licensing Who gets the money from licensing?(Allotments and % split) all money
goes back to the university
- Gift assessment many people do give money specifically to the athletic dept. Fees
on gifts 5%...6.5%...12% of gifts go to the universities
- AD fees make up 50% of all assesments at many NCAA schools
- Discounted Tickets Oregon and staff get a 20% discount…students get a 50% discount
on football and basketball with a cap on amount of seats
Athletic-produced revenues are often attributed to non-athletic accounts (i.e., parking, and
concession sales). This is another example of transfer pricing which reduces the revenue shown
by athletic departments.
In Sum…
- Based on previous studies and accounting for transfer pricing a mere 10% of athletic
departments lose money
**Transfer pricing practices can drastically alter the athletic departments financial picture
Three more considerations
1. AD status
- NPO status
- There is a lack of incentive for athletic departments to maximize profits
- If surpluses are experienced or anticipated, most directors will increase expenditures to
fully utilize their budgets
2. Title IX and policy
- Presents additional complaints
- Oregan law states “ universities will receive lottery proceeds.”
- Athletic departments cannot refuse these funds or relocate them
- NCAA’s requirement that Div. 1 schools sponsor 16 sports…creates a certain “
cost of doing business”
3. Advertising Effect
- 2016-2011.. Out-of-state freshmen increased from 13.5% to 34%
- BSU Out-of-state tuition was $10,400 higher per student (2012).. $8 million more
annually
- 2007 and 2010 Fiesta Bowl appearances.. enrollment increase of 9.1% and 5.6%
respectively
- More selective too. In 2006, over 70% of applicants were admitted vs. only 54% in
2011 quality of students was enhanced
Paying Athletes
- One of the greatest paradoxes of college athletics is wanting athletic departments to be
self-sustaining and wanting greater compensation for student athletes
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Tues, Nov.14
Key questions from USports
1. Are scholarships sufficient? AFAs- Athletic Financial Award
2. Where are the fans?
3. Why don’t broadcasters carry games?
4. Is this the best development system?
5. Could/ should/ will more USports schools compete in the NCAA?
6. Should U Sports develop a PAC-10/12? What would consequences be?
Canadian Context of Intercollegiate Sport
- Four regional associations (Canada West, OUA, RSEQ, AUS)
- 56+/- member schools
- accommodating 11,000 athletes
CCAA
- Five regional associations
- 94 member associations
- Ten national championships
- Seven sports (ccaa.com)
“No rink on campus”
- At Brock there is no rink on campus… big challenge but not the answer
- USports schools face a revenue challenge each and every year….
- Lots underlying this
Naming rights?
- Alcohol and Canadian schools’ scholarship?
- UofT and Labatt Blue….
“Scholarships” in Canada
- AFAs… “ about” 70% of roster
- Decision came from university presidents votes
- Academic All-Canadians Athletes who achieve an 80% average while being a full time
student and athlete
- Each individual USports team decides how it will divide its AFA’s among its student
athletes Reification
- i.e., you don’t have to max offer
- **Also, it must be noted that schools are not required (or able) to give away all AFA’s
each year (like NCAA minimums)
How do teams pay for AFA’s?
- Largely team driven…. Golf tournaments…
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