National Collegiate Athletic Association

Division I

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Financial report shows uptick in spending for Division I programs

By Gary Brown
NCAA.org

After several years in which athletics revenues grew at similar rates to expenses, the NCAA’s latest research on fiscal trends indicates a wider gap in spending for many Division I programs.

The 2012 edition of the NCAA’s Revenues and Expenses Report for Division I Intercollegiate Athletics Programs shows an increase of 10.8 percent from the previous year in athletics spending from schools in the Football Bowl Subdivision. The increase was 6.8 percent for programs in the Football Championship Subdivision and 8.8 percent for Division I schools without football.

Meanwhile, generated revenues (dollars generated directly by the athletics department, such as ticket sales, media contracts, royalties and alumni contributions), rose only at a 4.6 percent rate in the FBS and fell by 1.7 percent for non-football schools. The FCS – with an increase in generated revenues of 9 percent – was the only subdivision in which generated revenues outpaced expenses.

Only 23 programs (all in the FBS) reported positive net generated revenue in 2012, the same number as in 2011. That number has ranged between 18 and 25 since 2004. The median net generated revenue for the surplus programs in 2012 was about $8.8 million compared with the $8.9 million for the 23 programs in 2011.

The lion’s share of the expenses in the FBS (34 percent) comes from hiring and retaining athletics coaches and staff. Another 15 percent goes to scholarship allocations, while about 14 percent of spending is devoted to facility maintenance and rental. Travel costs account for another 7 percent.

The previous year, FBS schools experienced a 9.7 percent increase in generated revenue and an 8.8 percent increase in expenses.

The 2012 report also shows that the increase gap, which measures the difference in growth rates of athletics spending and overall institutional spending, spiked upward in all three subdivisions. In the FBS, the median percentage increase in athletics expenses was 4.4 percent higher than the median increase in institutional expenses (it was just 0.3 percent last year). The gap was 3 percent for the Football Championship Subdivision and 3.1 percent among Division I institutions without football.

Dan Fulks, the accounting program director at Transylvania University who authored the 2012 report and has helped the NCAA research staff compile financial data for many years, said recent reports were affected by a national recession.

“With regard to this year’s findings,” Fulks said, “there has been considerable anticipation concerning the effect the rebound in the U.S. economy might have on intercollegiate athletics. Given the popularity of college sports, it comes as no surprise that the recession does not seem to have been particularly detrimental.”

Kathleen McNeely, the NCAA’s chief financial officer, said this year’s findings aren’t necessarily unexpected, but the trends merit watching.

“There’s been a consistent trend of increases in athletics spending mirroring those of the institution over the past several years,” McNeely said. “This year’s report shows a break from that trend. Whether it is an anomaly or the beginning of a new trend certainly bears monitoring.”

The real costs of athletics

Among the benefits of the annual revenues and expenses report is the ability to determine what universities consider as the value of their athletics programs. Data from the 2012 report show the median subsidy for athletics for all Division I programs was about $12.2 million. The median subsidy in 2011 was about $10 million.

Ticket sales and alumni/donor contributions continue to be the two primary categories for generated revenue (about 27 percent each of generated revenues for FBS programs). NCAA and conference distributions are accounting for an increasing proportion of generated revenues (22 percent) as well. Fulks said that trend might be expected to continue as conference television contracts become more lucrative.

He also noted as conferences sign new media deals, the number of self-sufficient programs is likely to grow beyond the couple of dozen that has been typical in recent years. That’s because many programs that aren’t self-sufficient currently are only a few million in the red, which could be covered by an influx of media-contract dollars.

Other findings

Among other findings in the 2012 report:

• Division I institutions provided more than $2 billion in direct financial aid to their student-athletes in 2012. Report author Dan Fulks said that over the life of the NCAA’s 13-year, $11 billion contract with CBS and Turner, Division I schools will provide well over $30 billion in scholarship dollars.
• In the FBS, median generated revenues have increased by 77.5 percent since the 2004 fiscal year. Median total expenses have increased by more than 94.1 percent in the same period, however.
• Between 50 and 60 percent of football and men’s basketball programs in FBS schools have reported net generated revenues (surpluses) for each of the nine years reported.
• In the FCS, median negative net generated revenue, representing expenses in excess of generated revenues (or the amount of institutional subsidy), moved from about $5.9 million in 2004 to about $9.6 million in 2011, and to about $10.2 million in 2012. Thus, the median losses for the subdivision’s schools continue to grow, increasing by 6.7 percent since 2011.
• For Division I schools without football, median generated revenues dropped by 1.7 percent from 2011 after seeing a 12.6 percent increase from 2010 to 2011. Median total expenses increased by 8.8 percent from 2011, compared with the 3.2 percent increase from 2010 to 2011. Thus, the growth rate of expenses in this subdivision has increased, while generated revenues have decreased this past year.
• Total athletics expenditures as a percentage of the total institutional budget for FBS schools have climbed to 5.5 percent from 4.6 percent in 2004. That indicates that athletics expenses have increased at a slightly higher rate than those of the overall institution. FCS schools showed a slight increase from 5 percent in 2004 to 6 percent in 2012, while Division I schools without football have fluctuated between 4.5 and 5.9 percent. In this report, athletics generated revenues were not netted against expenditures. Had they been, the percentages would fall significantly (to less than 3 percent for FBS schools, for example).