Recently, CFO Magazine ran a cover story, titled "The Money Bowl," that chastised the level of and motivation behind athletics department spending in a number of U.S. universities and colleges.

Even though the topic of the article is far from new and CFO Magazine claims a savvy, albeit narrow, readership niche (executives such as chief financial officers who aim to affect their organizations in a broader strategic sense, beyond the functions of accounting controls and raising capital), it would likely strike a chord with anyone who closely follows university athletics. Admittedly, my visceral response to the CFO article was partly due to the sight of my alma mater (the University of Texas at Austin) being skewered on the front cover, but the bigger issue I want to explore is the way CFO suggests a cookie-cutter approach to how athletics should be managed in the larger context of today’s universities.

"The Money Bowl" wants us to believe that the measure of an athletics program’s success is its profitability and points to many money-losing programs as evidence of widespread problems.

Based on this, one conclusion the article draws is that since so few programs turn a profit, athletics programs are unique from the standpoint that they appear to have no bottom-line responsibilities. I can be as cynical as the next person regarding the role and funding of athletics in universities (perhaps even more cynical given that I am on the academic side). However, I disagree with the notion that there is a one-size-fits-all measure — like profitability and wins — of program success.

The assumption, of course, when we ask any university unit (or any organization, for that matter) to justify its budget based on profitability is that it is in fact a "profit center." Sure, a university is a business (that is, it should have a clear strategy, be responsive to stakeholders and operate within agreed financial constraints), and athletics is an important facet of that business. But that does not mean that athletics has to be a profit center — unless that is a university’s strategy. Strategy is the starting point, not a budget.

Since we are extending analogies between athletics programs and business, it is useful to put the money spent on sports programs into context. There is no denying that it is a great deal of money, though we might want to look at the amount spent on athletics as a percentage of a school’s overall expenditures, differences between capital expenditures and operating expenses, the difference between cost and profit centers, and the strategic choice that organizations make about treating an activity as a cost or profit center.

Wichita State University’s annual athletics operating budget of $12 million is distinct from the $25 million or so it has invested in new and upgraded facilities (spread over several years). That all compares to Wichita State’s total operating budget of about $169 million in 2005. For Ohio State University — the school that CFO cited for having the highest 2005 athletics budget (more than $90 million) — the total university operating budget is more than $1.7 billion in that same year. My own University of Wisconsin, Madison, spent about $59 million on athletics in 2005 versus total university operating expenses of $2.1 billion (Wisconsin does have one of the highest paid athletics directors and spent more than $100 million over the last five years to renovate its football stadium, though this latter figure is dwarfed by the the institution’s ongoing CAPEX investment in science, engineering and medical facilities).

That brings me to cost versus profit centers. Universities share much in common with many of today’s global businesses, including coping with the challenges of offering a differentiated service, red-hot competition for talent and customers, new and ever-changing information technologies, the need for crafting and defending a unique and socially complex brand, and cost pressures amid rapidly declining state revenue support (particularly for public universities).

The profit- vs. cost-center label is attractive because it is easy, but we don’t live in an easy world. A budget or a spreadsheet is never a substitute for a viable competitive strategy (though it is a necessary complement). Ask most organization leaders what goes into a strong brand, and they will respond that much of it is intangible. Athletics programs just happen to have a lot of intangible benefits, but those benefits come into play only when coordinated with the university’s overarching strategy and investment plan.

Before jumping to the conclusion that each organizational activity (like athletics) should be a stand-alone profit center, let’s step back and put a university’s athletics program in the relevant financial and strategic context — just as any savvy CFO or CEO would do with a critical business activity.

Answer the question "What is the university’s strategy?" and then you can begin to excise, cull, nurture or grow a supporting or core activity like college athletics. Budgeting, balanced scorecards, financial transparency and good governance are part of this strategy process, not substitutes for it.

By the way, I asked my MBA students in class recently if they wanted to be the university’s next profit center. In many colleges, tuition generally covers only a fraction of what it costs a university to educate students, and dropping athletics entirely would not bridge the gap. You can probably guess their response.