National Collegiate Athletic Association
NCAA News Archive - 2007
« back to 2007 | Back to NCAA News Archive Index
CFO backs financial report changes
Letter
The NCAA News
Letter
|
The NCAA News
I read with keen interest the June 4 NCAA News article on the Division I Oversight and Monitoring Group and the NCAA presentation to the Knight Foundation Commission on Intercollegiate Athletics in May 2007.
As the chief financial officer for athletics at the University of Maryland, College Park, I look forward to reviewing the first set of financial data to be sent out later this summer. This includes the “dashboard indicators” that are designed to provide us a new way to compare our institution with other conference and peer institutions.
However, as I pointed out to NCAA representatives last fall while we were compiling our data, I believe the “dashboard indicators” can be improved to provide a more accurate analysis, if two modifications are considered:
The calculation/measurement of the student fees is somewhat more complex, but I encourage the NCAA to attempt to represent this information more accurately. Not all student fee revenue should be considered as a “subsidy” to athletics, especially at programs where their games are sold out and have waiting lists for tickets or those that do not have the opportunity to “sell” student tickets.
Larry W. Leckonby
Senior associate director of athletics
University of Maryland, College Park
I’m pleased to see knowledgeable people engage in the dialogue necessary for the success of our effort to establish national standards for financial reporting. Mr. Leckonby raises some important issues.
I agree that net revenues generated at athletics events from parking and concessions should be classified as athletics department revenues, whether or not the particular university practice allows the athletics department to keep that money. Income from licensing cannot all be attributed to athletics, so this matter needs further informed discussion.
I disagree with Mr. Leckonby’s view that student-athletics fees should be treated as “Generated Revenue” rather than as “Allocated Revenue.”
Such fees are levied by the governing boards, with or without student consent. They are from a board perspective additive to tuition as revenues received by the university administration and allocated to athletics.
I see Mr. Leckonby’s reference to free seats allocated to students in prescribed numbers as an important issue to be resolved apart from the categorization of student-athletics fees. More broadly, I suggest that free seats allocated to students, faculty, administrators and trustees might possibly be properly considered as equivalent to fund transfers from athletics to the university central administration, effectively reducing the value of centrally allocated funds.
In some cases, such seats are used to court or reward benefactors of other programs of the university, and in other situations such seats are perquisites of office for university administrators. It seems to me that some recognition of the value of these seats should be accommodated in our financial reporting, at least in principle. However, difficulties in determining the value of such seats awarded to others outside of athletics, recognizing the significance of unmet demand as well as price, may make such adjustments impractical on a national scale.
The most disturbing aspect of Mr. Leckonby’s letter in my eyes is the premise that allocated funds are “bad” and athletically generated funds are “good.” In my view, the value of athletics competition to participating students and others fully justifies the allocation of money to support athletics. Moreover, funds generated by inappropriate athletics commercialization are not healthy for the total enterprise. What is deemed as “bad” and what is deemed as “good” depends on the specific campus culture.
The purpose of our campaign to adopt national standards for financial accounting in intercollegiate athletics is to improve the capabilities of local college officials to make good financial decisions based on trends in their own institutions and those of peers. There is not to be any standard that defines the right way to operate intercollegiate athletics in an American university.
As the chief financial officer for athletics at the University of Maryland, College Park, I look forward to reviewing the first set of financial data to be sent out later this summer. This includes the “dashboard indicators” that are designed to provide us a new way to compare our institution with other conference and peer institutions.
However, as I pointed out to NCAA representatives last fall while we were compiling our data, I believe the “dashboard indicators” can be improved to provide a more accurate analysis, if two modifications are considered:
- One key category that should be included as “General Revenue” by each athletics department is the revenue provided to other departments on campus that are made available solely from the athletics events held on campus. These revenues include parking, concessions and licensing. At Maryland, more than 50 percent of the revenue generated in these areas is allocated to the campus, rather than to the athletics department. Obviously, this revenue would not be available without the athletics events. Unfortunately, based on how the financial information has been requested, there is no means by which to rightfully credit each athletics department for this funding provided to the campus.
- The current financial data report has generically programmed all student fees in a negative light as “Allocated Revenue” (transferred by the camps to athletics) while programming student ticket sales in a positive light as “Generated Revenue” (generated directly by athletics). Institutions within a respective conference or peer group differ on whether to sell student tickets directly to their student body, or to provide “free” student tickets, in exchange for the revenue received from the student fee. At Maryland, we provide 4,000 excellent basketball seats and 10,000 football seats to our student body in return for the revenue from the student fee. Interestingly, were we to sell our students seats on the open market, we would project to generate more income in sales than we receive from the student fees. Therefore, I believe it would be fair to compare our institution to others with our student fee revenue designated as ticket sales revenue generated by the athletics department. There are other institutions that have this dynamic, too.
The calculation/measurement of the student fees is somewhat more complex, but I encourage the NCAA to attempt to represent this information more accurately. Not all student fee revenue should be considered as a “subsidy” to athletics, especially at programs where their games are sold out and have waiting lists for tickets or those that do not have the opportunity to “sell” student tickets.
Larry W. Leckonby
Senior associate director of athletics
University of Maryland, College Park
Peter Likins’ response
The NCAA News asked Peter Likins, president emeritus of the University of Arizona and a member of the Division I Oversight and Monitoring Group, to address the issues raised in Leckonby’s letter to the editor:I’m pleased to see knowledgeable people engage in the dialogue necessary for the success of our effort to establish national standards for financial reporting. Mr. Leckonby raises some important issues.
I agree that net revenues generated at athletics events from parking and concessions should be classified as athletics department revenues, whether or not the particular university practice allows the athletics department to keep that money. Income from licensing cannot all be attributed to athletics, so this matter needs further informed discussion.
I disagree with Mr. Leckonby’s view that student-athletics fees should be treated as “Generated Revenue” rather than as “Allocated Revenue.”
Such fees are levied by the governing boards, with or without student consent. They are from a board perspective additive to tuition as revenues received by the university administration and allocated to athletics.
I see Mr. Leckonby’s reference to free seats allocated to students in prescribed numbers as an important issue to be resolved apart from the categorization of student-athletics fees. More broadly, I suggest that free seats allocated to students, faculty, administrators and trustees might possibly be properly considered as equivalent to fund transfers from athletics to the university central administration, effectively reducing the value of centrally allocated funds.
In some cases, such seats are used to court or reward benefactors of other programs of the university, and in other situations such seats are perquisites of office for university administrators. It seems to me that some recognition of the value of these seats should be accommodated in our financial reporting, at least in principle. However, difficulties in determining the value of such seats awarded to others outside of athletics, recognizing the significance of unmet demand as well as price, may make such adjustments impractical on a national scale.
The most disturbing aspect of Mr. Leckonby’s letter in my eyes is the premise that allocated funds are “bad” and athletically generated funds are “good.” In my view, the value of athletics competition to participating students and others fully justifies the allocation of money to support athletics. Moreover, funds generated by inappropriate athletics commercialization are not healthy for the total enterprise. What is deemed as “bad” and what is deemed as “good” depends on the specific campus culture.
The purpose of our campaign to adopt national standards for financial accounting in intercollegiate athletics is to improve the capabilities of local college officials to make good financial decisions based on trends in their own institutions and those of peers. There is not to be any standard that defines the right way to operate intercollegiate athletics in an American university.
© 2010 The National Collegiate Athletic Association
Terms and Conditions | Privacy Policy