Using Student Fees to Pay for Losing Teams

While most people think that university athletic departments make money, it turns out that most of them lose money, and many lose large sums that result in using student tuition dollars to subsidize insolvent athletic departments. According to the recently released Knight Commission Report on NCAA sports, “the vast majority of athletics programs reap far less money from external sources than they need to function. Virtually all universities subsidize athletics departments through general fund allocations, student fees, and state appropriations, and the NCAA estimates in a given year that only 20 to 30 athletics programs actually generate enough external revenue to cover operating expenses. Institutional subsidies to athletics can exceed $11 million, according to data provided by the NCAA.”

Not only are these athletic departments losing money, but their expenses continue to spiral out of control: “In 2009, the National Collegiate Athletic Association published a report that found median operating spending for athletics increased 43 percent between 2004 and 2008, but median revenue generated by athletics programs grew only 33 percent over the same time period (Fulks, 2008). In another telltale spending reality a few years earlier, the NCAA reported in 2005 that athletic expenses rose as much as four times faster than overall institutional spending between 2001 and 2003 (Orszag & Orszag, 2005).” What is shocking about this study is that universities are raising tuition at record rates, and part of the reason is to bail out these athletic programs that are too big to fail.

According to the Knight Commission, the expenses breakdown in the following way:
Salaries and benefits, especially coaches’ salaries (32 percent of total expenses);
Tuition-driven grants-in-aid—or sports scholarships (16 percent);
Facilities maintenance and rental (14 percent);
Team travel, recruiting and equipment and supplies (12 percent combined);
Fund-raising costs, guaranteed payments to opponents, game-day expenses, medical costs, conducting sports camps and other miscellaneous costs (12 percent).


The irony of baling out sports programs, while tuition increases and educational quality decreases was recently brought to a head at Cal Berkeley when it was discovered that the university had been for years using millions of dollars to subsidize the athletic department. The San Francisco Chronicle has reported the following: “This year, UC Berkeley's Department of Intercollegiate Athletics - whose football team is in the Bowl Subdivision - is projected to run a deficit of nearly $6 million, rising to $6.4 million next year. To make ends meet, Chancellor Robert Birgeneau expects to lend the athletes more than $12 million by the end of next year.” Not only is Cal lending the athletic department millions of dollars as it raises student fees, cuts classes, layoffs teachers, and reduces in-state enrollment, but it in 2007, UCB forgave the program over $31 million in debt.

In response to this crisis, the UCB senate voted to stop subsidizing athletics, and it is time for all campuses to do the same. Moreover, we need each school to come clean and tell us how much they are spending and who is paying for the bill. People like to blame the state for all of UC’s problems, but this is one that is completely self-generated.