During a recent joint meeting of the Division II Management and President Councils, an interesting question was posed about the self-sufficiency of our athletics programs: “How many of your athletics programs are self-sustaining?”

As the only person in the room to raise my hand, I quickly realized that I may be using a different definition of “self-sustaining.”

This is a question that needs to be fully explored — to determine the balance between athletics costs and the subsequent benefits of the enterprise — because in this particular meeting, the majority response did not match this different perspective.

When our athletics programs are defined by the collegiate model, a different economic perspective emerges that restates the value of intercollegiate athletics in a way that allows our internal and external constituents to respond with a more positive and student-centered perspective. More than the financial bottom line must be considered when assessing the true value of our athletics

programs. We simply need to re-evaluate our current definitions and look beyond a rigid revenue vs. expenditure analysis.

The collegiate model clearly requires us to re-examine the way we define and discuss the costs, benefits and returns on the investment that our colleges and universities make in intercollegiate athletics. Today, we measure the financial value of our athletics programs in terms of how much revenue our programs generate from ticket sales, student fees, sponsorships, licensing and boosters. Then we compare those costs against the dollars we budget for such things as scholarships, travel and compensation.

However, if college athletics is to be redefined within the collegiate model, then it should be viewed as a fully integrated part of the co-curricular campus community with revenues and expenditures that are more completely defined by concise yet broad definitions of the benefits — or return on investment — to our programs and institutions.

The distinguishing feature of our Division II campuses is our use of athletics as a co-facilitator in the learning environment. Character and interpersonal development, teamwork and service are expanded through the student experience in the classroom as well as on our fields and courts. These components are valuable to the collegiate experience for all students, but enhanced by the student’s ability to actively engage beyond the classroom. Research has confirmed the relationship between student involvement and the increased success of acquiring a college degree.

If intercollegiate athletics are defined by the collegiate model, then the allocation of resources must be defined and assessed in the same way that we allocate resources to other curricular and co-curricular initiatives. Within this model, direct benefits enhance the student experience while indirect benefits include building reputational value and community engagement.

New definition of revenue

Within our existing model, the cost of intercollegiate athletics programming is assessed by the scholarship costs and operating budgets that include expenses such as travel and insurance. Revenues are measured by receipts from ticket sales, corporate sponsorships and fund raising. The implications are simply this: Very few Division I and even fewer Division II programs generate a profit considering all traditional sources of revenue and expenditures. However, within the collegiate model, students make their college choice based upon both the academic and athletics programs offered, as well as the reputation of the institution and cost of tuition. The choices made by our 380,000 NCAA student-athletes are motivated by the expectations of a collegiate experience that balances and blends academics and athletics.

As members of NCAA institutions, we generate our own running lists of the direct and indirect benefits of college athletics. Why do we need to account for the cost of intercollegiate athletics differently? The common response is that other institutional programs are not capable of generating the same level of revenue as intercollegiate athletics. That may be true on some campuses, but the opportunity to generate substantial revenues that can provide self-sustaining support for the program is not the underlying objective of intercollegiate athletics. Therefore, the full integration of our athletics programs may be an objective reached through an alternative definition.

I began to understand the need for new a definition of athletics revenue several years ago while working at a private Division I-AA institution. At that time, I realized the singular purpose of fiscal decision-making at that institution was to keep athletics expenditures under control while providing a quality educational and athletics experience for students. Conversations about athletics initiatives requiring additional resources generally circled around to the chief financial officer’s use of the current dollar value of the “athletics deficit” and usually continued until that athletics deficit was “addressed” and it was decided that additional spending should not be considered given the university’s other priorities. 

The “athletics deficit” we examined at that institution was defined by comparing the traditional sources of revenue, including ticket sales and private giving, against operational and capital expenditures. By using that traditional equation, we never thought to include what the student-athlete provided to the institution, including tuition as a direct source of revenue, or made any attempt to quantify the indirect benefits that are provided by a quality athletics program. Important factors such as student experience, institutional brand, identity, alumni affinity and postgraduate involvement, potential donorship or institutional/community relations were not considered.

The athletics deficit on that I-AA campus would have been substantially reduced had we considered the net tuition revenue generated by the nearly 400 student-athletes on that campus. Additionally, the bottom line would have been further complemented by the indirect benefits of a nationally competitive program.

Students as revenue source

Today, using a definition congruent within the collegiate model, Pfeiffer University’s athletics deficit, for example, would be redefined annually as the 308 student-athletes who generate nearly $6.8 million in gross revenues in the form of student tuition and fees along with other traditional forms of athletics department revenues. From that revenue, Pfeiffer spends $2.5 million on institutional scholarships (both athletics and academic), $500,000 for housing and food, and $1.2 million for athletics program operating costs. Instead of an annual institutional deficit, intercollegiate athletics generates $2.6 million in revenue over expenditures.

The revenue generated by these student-athletes, most of whom would not have attended Pfeiffer without the opportunity to enroll as a student-athlete, represents 60 percent of the total full-time tuition revenue generated on our residential undergraduate campus. Within Division II institutions, our revenue model includes a majority of student-athletes who receive financial aid. These students are provided a strong reason to choose our institutions because they are recognized as scholarship athletes and scholarship students. Also, most of these Division II student-athletes receive only partial athletics scholarships. They then provide an additional source of revenue through the tuition and fees that they ultimately invest in their own collegiate experience.

Division II public and private institutions are positioned to celebrate the many positives that are directly attributed to our athletics programs, and it is the total collegiate experience that defines the investment we make and the dividends these programs yield.

The NCAA is helping Division II to use new ways to express the value of athletics by developing financial dashboard indicators that can assist us in effectively communicating to our internal and external constituencies the meaning and value of the “collegiate experience” for student-athletes.

That type of stewardship is required by decision-makers and influential advocates, including donors, university trustees, state boards and legislators, to help build our institutional resources and make higher education both accessible and affordable. We must remember that the collegiate experience is broadened and supported by college athletics and that students make their college choice based upon the entire collegiate experience. When our calculations include all of the benefits that come with our support of student athletes — including access for many students to a college degree and the resources they bring in the future as engaged alumni — intercollegiate athletics may be more than self-sustaining and should become a more fully integrated part of the collegiate model.

Charles M. Ambrose is president of Pfeiffer University.