Expenses outpace revenue in Division I Athletics

Some Division I athletics programs are living beyond their means. Athletics spending has increased so much that only 19 Division I programs reported more revenue than expenses in fiscal year 2006, according to the Knight Commission on Intercollegiate Athletics . According to the NCAAâÄôs 2007-2008 financial audit, the University of Minnesota athletics department outspent its revenues by $6.4 million in 2007. Athletics director Joel Maturi said itâÄôs the first time the budget has been in the red since he was hired, but attributed the deficit to the buyout of former coaches Dan Monson and Glen Mason. Maturi said the athletics department had to borrow money from the University to buy out their contracts, with every intention of paying them back. Athletics spending is getting out of control, he said, but itâÄôs the nature of the beast. âÄúI believe the arms race is real and the salary race is frightening as to where it is and where it can go,âÄù he said. âÄúBut if youâÄôre going to be competitive in this arena, thereâÄôs no way around it.âÄù However, for the fiscal year of 2008, revenues for the UniversityâÄôs athletics department reached about $71 million, almost $9 million more than reported expenditures for the year. The athletics department at the University is self-sufficient, for the most part, he said. But each institution is different. The UniversityâÄôs athletics department has to pay for all utilities and the band, but it does not receive parking revenues that would make a large impact, Maturi said. However, it can be hard for the NCAA to curb athletics spending without encountering legal problems. Because of these legal issues, the NCAA leaves it up to institutions and conferences to relegate spending, Maturi said. The Knight Commission met last week to discuss strategies addressing the financial struggle. âÄúI donâÄôt know how many times weâÄôve given this presentation, IâÄôve lost track after 20 or so,âÄù NCAA Chief Financial Officer Jim Isch said at the meeting. The NCAA put together a presidential task force in 2006 to look at the future of athletics, and it concluded the best way to fix the spending issue is education and assessment tools, Isch said. Athletic budgets are increasing three or four times that of school spending, Isch said, and that has created stress on universitiesâÄô ability to maintain focus on their missions. Dan Fulks, NCAA consultant and faculty athletics representative from Transylvania University said the data tells him this is a definite financial crisis. âÄúIf we want to know how sick the patient is, we have to have a thermometer that works,âÄù Andrew Zimbalist, professor of economics at Smith College, said. Finding, reporting and measuring hard accurate data will be the only way to assess the problem, Fulks said. One of the goals is to have the financial reporting be reviewed by third party institutions. Zimbalist said that is not enough. âÄúWe need to know who is doing the review, on what basis are they doing the review and what penalties do they face if they report false information,âÄù Zimbalist said. The Knight Commission will dedicate meetings throughout the year to addressing the issue of athletics spending.