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The recession has certainly tattooed its mark on the world of collegiate athletics. However, many argue that the ink of runaway spending by institutions prior to these harsh financial times equally affected the NCAA's collective economic slide.

The Knight Commission meeting came on the heels of the release of an NCAA-commissioned report detailing recent spending in major college athletics, which continued to rise despite the current economic conditions. The report showed that major college athletic programs increased their operating budgets by 11 percent annually, bumping up expenditures by well more than a third between 2004 and 2007. Meanwhile, only 19 NCAA institutions reported generating more money than they spent on operations in 2006 and only six of the athletic programs that generated a profit have done so consistently for the past five years. Across all Football Bowl Subdivision (formerly Division I-A) institutions, the average net operating deficit was $8.9 million in 2006, a figure that rose 25 percent in just two years.

"The recession is accelerating the need to make hard choices about college athletics, but the fundamental problems will not abate when the economy improves," said R. Gerald Turner, co-chairman of the Knight Commission and President of Southern Methodist University. "The struggling economy presents a prime climate for all stakeholders in college sports to take action. Through innovative solutions, we can take measures to rein in ever-increasing athletics spending and preserve all that is good about college sports."

John Colombo, a University of Illinois law professor, addressed the commission on the complicated issue of the tax-exempt status of intercollegiate athletics. He also presented policy recommendations for those seeking Congressional involvement.

Colombo described pulling the exemption as, "virtually impossible under current law." However, he went on to say that many big-time football and basketball programs, "have become big businesses. But the problem is, at the university level, you're talking about a (sports) program within a larger entity. The larger entity probably still ought to be tax-exempt. The university itself is still an educational organization.

"Our opening here is to say to universities: 'If you want to keep your tax exemption, then you need to start doing some things a little differently with these big-time college athletic programs,' and give them a chance to do that," he continued. "It's a matter of getting the political machinery to go down this road, and I think maybe the time is right to get the political machinery to think about this as part of the underlying tax-exemption law."

Inside Higher Ed reported that:

Although Colombo told the commission that the IRS was likelier to levy additional unrelated business income taxes on the revenues of college athletics programs than to revoke their tax exempt status, he posited that "one could expect that any taxable profit would quickly disappear" as institutions accounted for this change. As a result, he argued, merely threatening to increase taxation would not be a "sufficient stick to induce reform."

Critics are not wrong, Columbo argued, to believe that major college sports such as football and men's basketball are "perfect examples of why commercial revenues of charities should be subject to taxation." As such, Congress would be justified in "attaching special limitations on the continuation of tax-favored status." Though he said athletics leaders should conceive of their own benchmarks, he suggested a few stipulations for Congress to mandate of these institutions.

For example, Colombo noted that an institution might be required to spend a certain amount of money generated from revenue-generating sports to help fund minor, or non-revenue-generating, sports. After all, he argued, most institutions already tout this strategy in defense of their larger teams' profits. He also added that Congress might set certain expenditure limits, such as capping salaries for coaches - a move the NCAA has argued it needs an antitrust exemption to implement.

Turner is skeptical about what federal involvement would and would not do for college athletics and warns of the unknown. "Unintended consequences of seeking federal assistance can sometimes be overpowering," he says. "I don't see a lot of positive net result that could come out of that. A lot of time is spent talking on that rather than working on what's possible within the current guidelines."

Instead, Turner would like to see spending issues addressed at the conference level. "Now, we're even seeing that within the BCS automatic bowl-qualifying conferences, there is a growing gap between the top athletic programs and others within the conference," he says. "I think these discrepancies will soon necessitate questions and solutions within these conferences."

Can the presidents of schools that are making money be expected to honestly act in the best interest of reform if it conflicts with their own school's best interest? "If you take their university's interest in a broader context than just what might be good for them in this moment today, then the answer will be 'yes,'" Turner says. "If it's no broader than what helps them today, then the answer may very well be 'no.'

"That's why I think it's so important for these questions to be asked at the conference level," Turner adds. "It may be too much to ask a school to sacrifice for what's best for 119 schools in Division I, but it may be more realistic to ask them to do what's best for the other 12 or so schools in their conference."

As such, Turner says upcoming conference meetings this spring could bear a number of tangible solutions. "I would look for things that are specifically related to cost control relative to scheduling, number of contests, and personnel," he says. "If you look at the number of personnel that have been added to athletic programs over the last five to seven years, it's large, and I think you'll see conversations about making reductions in those areas--especially for some of the bigger sports in terms of public following, like football, basketball, and even baseball, where there has been this proliferation of trainers, managers, and on-campus personnel that help with recruiting and staging events."

True to Turner's words, a couple of conferences have begun charting this course. At their spring meeting last week, Atlantic Coast Conference athletic directors voted to cap football travel squads for league games at 72 student-athletes. The measure goes into effect this fall, and should save schools thousands of dollars each year.

Meanwhile, Conference-USA football coaches are encouraging their athletic directors to observe the decisions handed down at other spring meetings and embrace similar cuts, such as limiting the number of players on travel squads and eliminating the printing of media guides. However, those same coaches don't want the cuts to be too drastic and are concerned about keeping up with the Joneses.

"We're willing to make sacrifices, but we don't want to go out there with less than the other conferences we're trying to go out there and beat," Tulane Coach Bob Toledo told the Orlando Sentinel. "We are supposed to go out and beat BCS schools to represent our conference, but we can do it with even less than we had before. If those schools make cuts, we'll make the same cuts. But if we make more cuts than everyone else, they're going to use it against us in recruiting."

In addition to worries about excess spending, there are concerns that revenue sources for college athletics may have reached a collective ceiling. "As we look forward, it's going to be very difficult for us to come up with new revenue streams to offset our escalating expenses," explains Tim Curley, who is in his 16th year as Athletic Director at Pennsylvania State University. "We are in a mode right now where we are 24/7, 365 with sports, and I think at some point, we need to see if there might be some way to give some relief to that."

Curley believes the dollar amounts spent on multimedia rights contracts have peaked, meaning athletic departments can no longer count on climbing TV revenue to offset increased expenditures. He says the next three to five years are going to be trying times.

"The economic realities facing athletics will have a major impact on sponsorship and participation in the years ahead and, without changes, the number of sports will be reduced, mostly at the men's Olympic-sports level, many of which could return to club status," Curley said. At least 13 programs have announced they are cutting 29 sports already this year, according to the Chronicle of Higher Education.

Despite all the financial doom and gloom surrounding college athletics, Turner says the NCAA and its members have worked through similar adversity. He points to the academic reform movement as a model for the feasibility of change.

"There was a time when not everybody was happy about the academic reform efforts, but for the good of the whole enterprise, they were brought forward," he says. "Now, I think we all feel pretty good about the academic reform efforts, which have led to the creation of and improvements in the academic progress rate scores. We just need some kind of equivalent level of organization, assistance, and cooperation in dealing with financial issues and come forward with a set of ideas and recommendations and programs in the financial area that foster the same broad-based support we've had with academics."

The Commission will meet again Oct. 26. in Miami.

R.J. Anderson is Online Editor for AthleticManagement.com.