In challenging economic times, athletics programs at NCAA member schools are wrestling not only with better business practices, travel costs, staffing efficiencies and sport-sponsorship concerns (see recent examples here) but also with whether to change NCAA division affiliation to either reduce costs or increase revenue.

In light of the current economic climate, The NCAA News asked Division II Presidents Council Chair Stephen Jordan (president at Metropolitan State) and Management Council Chair Tim Selgo (athletics director at Grand Valley State) to discuss the fiscal impact of Division II membership, including whether the notion of athletics as a financial drain on the campus is myth or reality.

In Part 1 of this three-part series, Jordan and Selgo talk about the real costs – and the real benefits – of college sports at the Division II level.

NCAA News: Most people perceive that (1) athletics programs are expensive and (2) an athletics-produced revenue source (that is, ticket sales, media rights or licensing agreements) should contribute to solvency or at least help diminish university subsidy. That leads many people to believe that the only way to “afford” athletics is to sponsor them at the Division I level. True?

Stephen Jordan: Not true. First of all, most people who think athletics programs are too expensive have a Division I model in their head that feeds the perception. Budgets for Division II programs in general are several million dollars less than in Division I. There are three reasons for that. One, there obviously is less cost on the scholarship side because we operate with a partial-scholarship model (which has its own benefits that I will get into later). Two, the cost of the coaching staff is less because we don’t have the same number of paid coaches, nor are they paid at the same high salaries. And three, we realize reduced travel costs (which is becoming a larger and larger share of the intercollegiate athletics budget) because of our focus on regional play.

Then on the revenue side, rather than looking to ticket and marketing as the primary source justifying the athletics program, we choose to look at the difference in the total number of students who we believe are attracted to our schools because of the existence of an athletics program and the net tuition increase in revenue we receive as a result. That’s a much different philosophy than in Division I.

Tim Selgo: It is true that it costs to sponsor a competitive, broad-based athletics program at the Division I level. It is not true; however, that you must sponsor athletics at the Division I level to give your student-athletes a competitive and rewarding experience.

Grand Valley State chooses Division II for philosophical reasons in addition to financial ones. We believe in a broad-based athletics program in which every student-athlete in every sport has an opportunity to succeed. That philosophy is not always easy to fulfill at the Division I level, where funding is such that some schools have to focus on the so-called “revenue-generating” sports and perhaps neglect the others. Many Division I Football Championship Subdivision schools in fact have had to cut sports because they cannot keep pace with the funding of their Football Bowl Subdivision brothers and sisters.

And the notion that revenue from the bigger sports fills the gap is in my opinion one of the biggest myths in college athletics. There are only about a dozen Division I schools, if that many, that actually “net a profit” as we normally think about the term “profit,” meaning that the revenues generated from athletics are greater than the expenses. Rather, almost every institution supports its intercollegiate athletics programs through institutional funding. Even in Division I, most schools subsidize well over 50 percent of their athletics budgets with a student fee, tuition or some other way of charging students.

Grand Valley State generates about 15 percent of its own budget through ticket sales, sponsorships and fund-raising. While that might be better than many Division I schools, the athletics department at almost every school is funded like every other department – that is, the university supplies the funding. Studies have shown that schools that reclassify to Division I might increase their revenues some, but the increase in expenses is far more likely to dwarf the income side of the ledger.

NCAA News: If Division II is a cost-effective solution for schools that want to sponsor athletics at a high level, how would you explain that to (1) a Division I colleague who is wondering how to square his or her athletics budget or (2) a Division III colleague who is considering Division II but perceives that the partial-scholarship model is too costly?

Stephen Jordan: At some point, an institution must reconcile its perception of what it is with the reality of what it can afford. I have talked with presidents at some schools that have reclassified who were very aggressive in how much money they were going to be able to raise for athletics from their boosters, and the difference between what they thought they could do and what the reality ended up being was pretty significant. Many schools may aspire to be at that level, but there are only a few that really achieve it.

Everyone talks about how athletics results in more gifts to academics. I’ve seen very few institutions actually demonstrate that. I don’t know that I’ve ever talked to an employer who said they hired a person because his or her college had a great athletics program. I certainly believe in what athletics contributes to an individual, but I don’t believe that employers look at the candidate pool and base a decision on what kind of athletics program the potential employee had. So we need to bring the perception and the reality of who we are together at some point.

As for Division III, presidents and chancellors need to look at the benefit of athletics as potentially increasing the school’s bottom line because of net tuition revenue. If people take the time to assess whether they are capable of increasing their total enrollment and overall bottom line by a partial-scholarship model, they might be surprised by the results. I would encourage people to check out the simulation model Division II developed to give institutions an accurate idea of how the partial-scholarship model contributes not only to an institution’s financial bottom line but also its total enrollment.

Tim Selgo: To colleagues considering reclassifying to Division I, I would say this: If Grand Valley State were to reclassify to Division I, we would have to build a new football stadium. In many ways, our current stadium is inadequate for Division II – certainly for the attendance we have had in recent years. However, it would cost roughly $50 million to construct a Division I-type stadium.

Now, our school has been trying to build a new library for a few years and it has a price tag of close to $70 million. It has been a struggle to secure the funding for this. Imagine how tough it would be if it were competing for the money to build a new stadium as well. This is the type of stress and conflict that most schools in Division I face in trying to “keep up with the Joneses.” There is no question that an institution is faced with a conflict in priorities – and somebody is bound to suffer because of it.

In the last 15 years, Grand Valley State has built almost a half billion dollars worth of academic or student life buildings. That is how an institution should invest its dollars if it wants to become a better institution, not by spending millions of dollars to move to Division I.

• Coming in Part 2 tomorrow: Jordan, Selgo and Championships Committee Chair Dave Riggins address “ticker envy” and prudent fiscal management.

• Coming Thursday in Part 3: How one school’s attempt to live the Division I philosophy led it to choose Division II instead.