NCAA News Archive - 2005

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Division I self-sufficiency expected -- but most often not realized


Aug 29, 2005 1:24:21 PM



USA Today's Steve Wieberg acknowledges that most critics are referring to football and basketball when they say college sports is a business. He also knows the root of the pressures that have helped create the need for the business behavior. "Maybe if Division I schools were not required to be self-sufficient, it would ease some of those pressures," he said, while quickly adding, "But that may never happen just because of the financial realities of higher education in general."

Indeed, in the 1960s, 1970s and 1980s, Division I institutions began expecting their athletics programs to be self-sufficient, and they began hiring administrators with business backgrounds rather than higher-education backgrounds to fuel the machine. And once football television contracts were deregulated in 1984, marketplace tendencies produced spiraling rights fees, and conference commissioners and athletics directors were expected to negotiate a ripe financial harvest.

Wieberg even admitted that it may not be fair to criticize the NCAA for its business behavior. "The NCAA after all doesn't control the marketplace," he said.

But with self-sufficiency an expectation -- the phrase actually appears as part of the Division I philosophy statement -- and with more Division I-A institutions relying on the profits generated by athletics that flow back into the institution, the proverbial cow may be out of the barn.

"The truck is out the door, the elephant is sitting in the living room, whatever," said Ohio State Athletics Director Gene Smith when asked if removing the self-sufficiency clause would reduce the business pressures on football and basketball. "We're too far down the road as a practice; a number of schools have set up their structures to provide support to athletics at a high level. Also, higher education is struggling financially, so athletics has become like all other auxiliaries to the institution, like parking services or recreation centers -- they have to operate on their own and generate revenue and return dollars to the institution. The institution looks at those as assets and ways to generate institutional dollars to support the overall institution."

In other words, Smith said, higher education itself has become comfortable relying on athletics to generate revenues for the university. It isn't a matter of athletics being the problem; rather, it's the institutional expectation that may need to be tempered.

University of Oklahoma Athletics Director Joe Castiglione couldn't agree more. "I find it more and more difficult to continue to fund the enterprise we're being asked to build," he said. "If the campus is going to require programs to compete at a high level and not provide the appropriate support to make it happen -- in other words, they tell you to go out and make it happen on your own, but ethically and with our approval -- why do athletics programs get criticized for doing what they've been asked to do?

"There has been any number of special-interest groups or organizations that have been commissioned to study various aspects of our 'business.' They've been very good at identifying a number of the challenges we face. But what we need is somebody to come forward with some specific solutions."

The NCAA's newly established Presidential Task Force on the Future of Division I Intercollegiate Athletics may do just that. The CEO-led think tank that NCAA President Myles Brand appointed this spring is charged with examining how best to integrate athletics within the higher education mission, and that introspection includes a long look at the financial state of the union.

At first glance, the dollar data aren't promising. Studies show that expenditures in Division I-A athletics are increasing at rates two or three times over those of higher education in general. While athletics constitutes only about 3 to 5 percent of even the larger universities' operating budgets, most experts agree that the disparity in spending increases cannot be sustained.

University of Arizona President Peter Likins knows that well. Likins chairs the task force and its subcommittee assigned to study fiscal matters. Like Ohio State's Smith, Likins would just as soon see the self-sufficiency clause in the Division I philosophy statement vanish, but also like the Buckeyes' athletics director, Likins knows that in itself won't solve the problem.

"The solution, rather, is that the rate of growth of expenditures must diminish," Likins said, "but that will be difficult to convince people to do, especially in our competitive arena."

Short of restrictive legislation, which Likins said probably would be litigated anyway, the highest card the task force can play is a spreadsheet. Likins wants the most accurate financial data to be put on the table for all athletics stakeholders to see, from presidents and athletics directors to boards of trustees and provosts. "Those are the people who need to be shown that the rate of growth in athletics is not sustainable."

Only then, Likins said, will behavior change.

Ironically, Likins pointed out, if college sports really is a business, as the claim goes, natural market forces might settle the issue. In business, when the rate of expenditures is not sustainable, the threat of bankruptcy usually changes behavior. With athletics being a small part of the university budget, however, it's unlikely that exorbitant spending in that arena would empty the university's bankbook.

Instead, Likins said, the check point in this case is university personnel, most likely presidents, recognizing when spending-induced behavior begins to distort the values of the university. That type of ethical bankruptcy is what will drive change, he said.

"In a certain sense, the athletics enterprise and a corporation are inverse entities," Likins said. "The purpose of the corporation is to maximize financial benefits while operating within social constraints. The purpose of intercollegiate athletics (or higher education) is to maximize social benefits while operating within financial constraints.

"I'm not denying that there is a trend that is increasingly commercial in how we manage some of our sports, but that doesn't mean all of college sports is a business. It means we're having a hard time maximizing social benefits within the current financial constraints."

But financial pressure should induce change, Likins said. With only two dozen Division I-A schools operating self-sufficient athletics programs, the rest of Division I is left to make those "value-based" decisions on how to subsidize programs in the red. And data show that the gap between revenues and expenses is widening for those schools. Thus, the amount of institutional subsidy also is increasing. At some point, the strain on a university's discretionary funds may prompt a change in the behavior causing the stress.

"The check point in athletics and higher education is behavior that the enterprise ultimately finds unacceptable," Likins said.

To date, Likins said, intercollegiate athletics' behavior has not breached that point. When the task force was established, he said athletics was not in a crisis mode, but rather an acknowledgement mode with regard to fiscal responsibility.

At the most recent Division I Board of Directors meeting August 4, Likins told the group that his task force's first charge is to persuade people that there is an issue, and that disclosing financial data will open eyes and direct future behavior. Ultimately, though, a decision to change behavior will have to be a collective -- and voluntary -- decision. "Academic rules are ours to make, while financial rules are not," he told the Board. "We'll have to accomplish our objective through persuasion rather than by regulation. The concerns aren't just about money, but what money is causing us to do."

-- Gary T. Brown


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