College teams fail Econ 101
graphic November 13, 2001: 3:27 p.m. ET

Despite more sports dollars, losses rise for many schools' 'money' teams.
A twice-weekly column by Staff Writer Chris Isidore
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    NEW YORK (CNN/Money) - This is the best time of the year for fans of college sports, as major football programs fight for bowl bids, basketball season tips off and financial losses mount for many of those teams across the country.

    Yes, there are many major football and men's basketball programs which are profitable, and in the case of those schools, things have never been better, with revenue from tickets, television and merchandise increasing.

    But the cost of competing with those top teams in Division 1A football or a major basketball conference is increasing as well. For about a third of these schools, these "money sports" are money losers, and the losses are increasing.

    "The gap between haves and have-nots is getting wider and wider," said Daniel Fulks, a professor and director of the accounting program at Transylvania University in Lexington, Ky., and the author of a report on revenue and expenses of intercollegiate athletics for the NCAA. "There's a lot of pressure on [the] expense side to build more facilities and pay more for coaches, and on the revenue side you hit the ceiling."

    Fulks is in the process of updating his biannual report, but for the 1999 season, the most recent for which complete data is available, there were 37 out of 104 Division 1A schools losing money on football, with an average loss of $1 million per school. That's up from 27 money losers in 1985, when the average loss was $400,000.

    Smaller Division 1A football programs such as Middle Tennessee State, shown here in a game against LSU, have trouble competing both on and off the field with the big-money football programs.
    Among the schools making money in 1999, the average profit was $6.4 million, almost triple the average profit of $2.2 million at 60 schools in 1985. These trends are likely to continue in the report now underway, Fulks said.

    Men's basketball is less costly for the money losers, but losses are climbing there as well, with an average $290,000 loss for the money-losing programs in 1999 almost double the $150,000 average loss in 1985. Meanwhile the average profit has more than tripled to $2.3 million from $740,000 in 1985.

    While a trip to the NCAA men's basketball tournament in March is likely to put even a financially struggling program into the black, many of the schools getting football bowl bids in a few weeks would be better off saying "no" if they were looking strictly at the bottom line.

    Fulks said only the top bowl bids pay the schools enough to make money, and even some of those schools will lose money because of staggering travel expenses. And many schools play in conferences where the bowl money is split with other teams in the conference.

    "Two bowl season ago, 12 schools had deficits of more than $100,000 from bowl trips," he said. "Most schools will lose money on the bowl, partly because they choose to take everyone along - the band, the boosters, everyone. When Tennessee went to the Fiesta Bowl for the national championship (in 1999) they spent $800,000 on travel. I would venture to say Vanderbilt University made more money off Tennessee's bowl bid than Tennessee. They stayed home and opened the mail."

    The University of Tennessee, shown here celebrating in a recent game, won a national championship in 1999 but not on the bottom line when the school spent $800,000 on travel to the Fiesta Bowl.
    Tennessee's $800,000 bill was for chartering three planes, and did not include food or lodging on the trip for the state-funded school.

    Still there are more and more schools trying to move into Division 1A football, in the apparent belief it will give the school the profile or support among alumni to help it.

    "Unfortunately, I think in the minds of some there is the feeling that being in Division 1A for football is a broader representation of an institution than just football," said Charles T. Wethington, former president of the University of Kentucky and chairman of an NCAA committee looking at football. "Clearly there is a push by alumni and friends of the sports programs to be in Division 1A."

    These new 1A schools, such as Middle Tennessee State University, don't have much more chance at success off the field competing with the top schools than they do on the field.

    "They move up to 1A, they have to get themselves pummeled on the road by other big schools with big stadiums," said Fulks. "You've got to go to Baton Rouge to play LSU and get a check. They're not going to come to Mufreesboro."

    Wethington said his committee is looking at toughening the requirements of teams being in Division 1A, but he doesn't expect to see more schools move out of 1A, just fewer schools moving into it.

    Fulks does defend some of the money-losing programs, saying that much of the loss is due to the cost of scholarships and other aid for the athletes, not just coaches' salaries or facilities.

    "We don't expect anyone else in a university to make money, not the music department or drama department or history department," he said. "If you accept athletic teams as part of university, I don't know if it's fair to hold them to the standards of having to make money."

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    Fulks also points out that major programs in football and men's basketball are about the only sports that have a chance of making money for the schools. Division 1AA, which is the next level down, has many of the same expenses without the same opportunity for revenue, he said.

    But the average loss for money-losing Division 1AA football programs is only $630,000, or about a third less than a 1A school loss. Those lower losses can help free up resources that can be spent on other sports or other school programs.

    Part of the fun of sports is living the dream of championships - of underdog victories and glory. But other students, and in the case of public colleges, taxpayers, are paying a price for those illusions of grandeur. And those illusions are only going to get more and more expensive, while the larger programs continue to crush the dreams. graphic

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    CBS to ink new $6B contract for NCAA basketball - Nov. 18, 1999

    CBS choose between winning survivors - Mar. 14, 2001


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