KANSAS CITY, Mo. (AP) — Despite rising revenues, most athletic programs in Division I and Division II continue to lose money, the author of an NCAA study said Monday.
The reason, accounting professor Daniel L. Fulks said during a telephone news conference, is that expenses are rising at a faster rate than revenues. Therefore, schools that make money are making less than they did two years ago, and schools losing money are losing more.
But a higher spending level isn’t necessarily a bad thing, Fulks said.
“I think some of this is real positive,” said Fulks, the accounting program director at Transylvania University in Lexington, Ky. “Some of the increased expenditures are a result of increased participation, and increased spending on women’s programs.”
Ticket sales accounted for the most revenue in Division I-A, the organization’s highest level for athletics. At other levels, student activity fees provided the most income.
“Ticket sales are up. Donor contributions are up, which I think is a reflection on the economy,” Fulks said. “But there’s a ceiling on revenues at some point.
“Once you reach the capacity on a stadium, you can’t sell any more tickets,” he said. “You can only raise ticket prices so much, and there are limits on what TV networks are willing to pay. Those limits don’t exist on the expense side.”
Fulks stressed that his study did not take into account any institutional support — revenue transferred to an athletic department from a university’s general fund.
“The impact of that is significant,” he said.
For example, Fulks’ report showed that in Division I-A, the average athletic department profit was $437,000 when institutional support was included. But without the support, the average program showed a deficit of $823,000.
In 1995, the average profit was $1.1 million with institutional support; without it, the average deficit was $237,000.
The other divisions — I-AA, I-AAA and Division II with and without football — all showed deficits with and without institutional support.
Football and men’s basketball carry much of the revenue load at most schools, Fulks said.
The study showed that about three-quarters of the football and men’s basketball programs turned a profit in Division I-A, the top level.
At the time of the study, there were 110 schools in Division I-A. Ninety-nine of them responded to the NCAA’s survey. The NCAA declined to say which schools did not respond.
Seventy-one percent of I-A football teams reporting turned a profit in 1997 — up 4 percent from 1995 — with the average profit around $5 million.
Men’s basketball teams turned profits at 74 percent of Division I-A schools, up from 70 percent in 1995. The average profit rose from $1.9 million to $2.2 million.
But those schools in I-A that didn’t make money in 1997 lost more money than they did in 1995, the report said. The average football deficit went from $969,000 to slightly more than $1 million, and the average basketball deficit went up from $227,000 to $282,000.
Women’s basketball showed a decrease in schools making profits at the I-A level, from 6 percent in 1995 to 2 percent in 1997. But that statistic is misleading, Fulks said.
“It’s important to see that in Division I, the total number of programs showing a profit went up from 11 to 20,” he said. “So that’s an increase of from five percent to eight percent.”