This $10 Billion Dollar Sports Operation Needs To Change

Big money! What company is it? It’s not. It’s a not-for-profit enterprise–major college sports.

USAToday, which tracks the numbers, reports that in 2016-17 230 public universities generated over $10 billion dollars in sports revenues and spent nearly all of what they took in.

Neither the NCAA nor the conferences have many regulations in place about how much money universities can spend on athletics. That situation fuels an arms race in big-time college sports, which includes escalating salaries for prime coaches.

Photo: Kevin C. Cox/Getty Images, For The Win, USAToday.com

ESPN reports that a college coach is the highest paid public employee in most states. In South Carolina, it’s Dabo Swinney, coach of the national champion Clemson football Tigers. Swinney just signed a 10-year, $93 million dollar contract.

He’ll make that money as a public university employee in a state that ranks 44^th in the country in personal income. In contrast to Swinney’s haul, South Carolina’s highest-ranking public official, Governor Henry McMaster, earns $106,000 annually.

But what the public doesn’t know is that a good share of the money being spent on major college athletics doesn’t come from sports-related activity, like ticket sales, TV rights, merchandise sales/licensing, and athletic donors. Nearly $3 billion (about 30% of the total spent in 2016-17) came from subsidies to athletics. Subsidies include student fees and transfers to athletics from schools’ general funds.

USAToday reported that only about 15 of the 230 schools were subsidy-free in 2016-17. At many schools, subsidies of 50% or more of revenues enable schools to balance the athletic books.

The defense propagated for years–that football and basketball pay the bills for non-revenue sports–is a myth at the vast majority of America’s public universities. In reality, football and basketball often need subsidies to pay their own bills.

Here’s an example. Florida Atlantic University made national headlines a few years ago when it hired a big-name football coach, Lane Kiffin, the former head coach at Southern Cal and Tennessee. It was a big day for the Owls.

But in money terms, here’s a story that wasn’t told: $24 million of FAU’s $34 million athletic budget comes from subsidies. That means 70 cents of every FAU athletic dollar come from non-athletic sources.

It would be one thing if FAU was a one-off in the State of Florida, but it’s not. Using USAToday data, I found that athletic subsidies at Florida public universities totaled a whopping $131 million dollars in 2016-17. That money comes from state taxpayers and students (and their parents).

When I broke down the data, I saw a ‘tale of two cities,” so to speak. The subsidy percentage of total revenues was small–around 3% combined–at U Florida and Florida State. But it was (on average) 57% of revenues at the other major sports-playing state universities in the state, including FAU. Worse yet, I found the same pattern in other states, including California, Virginia, Michigan, and Ohio.

With the high costs of college today, I think it’s foolish to spend that amount of money on athletics. And I say that as a big college fan.

Because the NCAA and conferences are not taking action to address what I believe to be a major problem, it’s time for state legislatures to get involved. I’d like to see a subsidy cap imposed on college athletics at major sports-playing state schools, say, at 25-30% of total revenues. I think that’s a reasonable solution to the problem.

Yes, many of us love college sports. But what price are we willing to pay?  Today, the answer is way too much.