Division I athletic departments are spending too much money, growing their budgets at a rate two to three times that of the rest of higher education, and borrowing against future earnings to pay for facility expansions and upgrades, all of which puts their institutions at risk. That is the finding in an NCAA report, "The Second Century Imperatives," released in October 2006 by a 50-member task force.
In a letter introducing the report, NCAA President Myles Brand and Peter Likens, the now-retired President of the University of Arizona who chaired the task force, raise the concern that the burgeoning growth of Division I spending may eventually overwhelm institutions' academic missions and further erode integration between student-athletes and their non-athlete peers. "The current business model for athletics is strained and the financial stability of athletics for the future is at risk," it says.
Because the NCAA cannot make across-the-board rules to check spending, the report emphasizes that answers will not come through national-level legislation or reforms, but rather through "presidential leadership that begins at the campus level." The report also calls for better collaboration and data sharing between athletic directors and university presidents to help rein in spending.
At the University of Massachusetts, Athletic Director John McCutcheon views the report with caution and a little skepticism. "I think that generalizing about Division I spending is a little dangerous," he says. "There are annual budgets in Division I of $100 million, and there are annual budgets below $10 million. Athletics spending is an institutional decision. If an institution makes a decision to position athletics at a certain level, that is its prerogative."
"There are institutions that put a lot of money into their athletic programs because they have a strong commitment to sports and want great programs available on their campuses," agrees DeLoss Dodds, Athletic Director at the University of Texas. "Who can argue with that? That is their choice."
The report voices particular concern over heavy spending on facilities, pointing out that nearly 20 percent of current spending is tied to construction projects. It calls the borrowing associated with infrastructure improvement "little more than a get-rich-quick branding initiative" that has the potential to backfire.
Dodds sees a different reality, however. "Many institutions built their athletics facilities in the 1920s and 1930s, and they're run down and in need of fixing," he says. "We've recently spent money to update our 30-year-old football, basketball, and baseball facilities, and that might lead to the perception that we've increased our spending in a permanent way. But the reality is, now we're in good shape for the next 25 years and won't need to spend that kind of money again. I believe this is what's happening at many institutions, and it's a temporary bubble."
Jamie Pollard, Athletic Director at Iowa State University, agrees that athletics spending is up to individual institutions, but also acknowledges that schools face a great deal of pressure when making financial decisions about athletics. For one thing, the visibility of athletics may drive constituents to demand more than the university can realistically afford. And since these donors and fans are often footing at least part of the bill, they feel entitled to have a voice.
"Most institutions fund large parts of their athletic programs through donations and ticket sales," Pollard says. "When you ask your constituents to fund the enterprise, you bring them into the decision-making process. And what they typically want is bigger facilities and more successful teams. To accomplish that, you have to pay top dollar to coaches and do capital projects.
"For institutions whose constituents are willing to fund that kind of success, I see absolutely no problem with it," Pollard continues. "But it becomes a problem when institutions without the constituent base to play in that arena feel pressured to try to compete at that level anyway. Not every school has a hospital or a veterinary school, and people accept that. But constituents expect every school to have a top-level athletics program, even if it means the institution has to subsidize it at a very high level.
"There is enormous pressure for presidents to stay in this arena, even when the logical choice for an institution may be to pull back. A president who stands up and says, 'This is ludicrous. We can't compete at this level' may very well find him- or herself out of a job."
At Iowa State, Pollard's solution is to communicate directly with alumni and donors. "Our constituents want much greater results than we've had so far," he says. "But we're a smaller player and we haven't had the ticket sales and donations to support the type of success they want to see. So we are in the process of laying out a strategic plan to show our constituents exactly what it will cost to have the kind of program they say they want. And we're telling them, 'If you really want these results, you are going to have to pay what constituents at other schools are paying to get them.'
"Some people have called it a risky approach, but I feel it's better to tell people in black and white what it will take," Pollard continues. "If they want it, they can do it. If they don't, they don't. But I believe it would be worse to be the leader of a program where you promise your constituents a certain result and don't know how you're going to fund it."
Dodds, Pollard, and McCutcheon agree with the report's conclusion that university presidents need to be intimately involved with the day-to-day operations of their athletic departments, but all three believe this is already the norm. "The perception that athletic departments are operating in a vacuum is false," McCutcheon says. "Conversations between athletic directors and presidents are already going on."
More than communication, Pollard believes what's really lacking is data. "We need financial data that can be accurately compared school to school, and we need a reporting structure for collecting it," he says. "The task force seems to be asking schools to change, but based on what? If there was a report that came out on a regular basis showing what schools are doing financially, that would provide impetus for change."
To learn more about the task force's work and download a copy of the report, visit: www.ncaa.org and enter "The Second Century Imperatives" into the search window.