Summay of the Money Bowl

Article Summary

The Money Bowl

By Joseph McCafferty

CFO, August 2006

According to Rodney Fort, a sports economist at Washington State University, college sports is the only business in America that has no bottom-line responsibilities. College athletic departments are under pressure to do everything they can within the rules to win, including spending all their resources. Anything less means they didn’t try hard enough.

Without university or student-fee subsidies, only a handful of athletic programs manage to break even. In a 2004-2005 analysis of budgets conducted by the Indianapolis Star newspaper, only 9 percent of Division I schools had athletic departments that were able to support themselves. The University of Texas usually operates in the black and is unapologetic about the sums the school athletic department spends. Ed Goble (associate athletic director for business at the University of Texas) oversees a $93 million budget and states that schools “need to have great facilities if they are going to remain competitive.” Texas spent $90 million in 1999 to upgrade and expand its football stadium and the school has recently approved a stadium upgrade project for $150 million. Upgrades are also occurring at the University of Michigan for $226 million and Oklahoma State for $102 million. All the upgrades are in the name of competition.

As programs vie to outspend one another, many go deep into the red. Smaller schools in big conferences are forced to make do with what they have or spend money they don’t have to keep up. Iowa State made ends meet last year with a budget just over $28 million, but athletic director Jamie Pollard concedes that the sports haven’t been competitive. To ease budget pressures, some schools have decided to eliminate sports such as men’s swimming and track and field. While few schools break even, a handful actually sends money back into the general university fund. Ohio State pays the university a fee of more than $4 million annually to support basic campus infrastructures. Susan Henderson, CFO of the Ohio State athletic department credits the Ohio State football following. Fans seem to have an appetite for college sports. Even in down years, the school can expect sellouts.

To help boost their budgets, schools are focused on developing additional