Picking up on a thread from a couple of days ago (see Item #3 of the linked post), I wanted to say something further about money in big-time college athletics. An article in the latest issue of Sports Business Review reports on the revenues and expenditures of ACC schools. According to the piece, despite the fact that ACC expansion was fueled by football. its basketball programs are still the big money makers, at least the four North Carolina schools that comprise the ACC's "Big Four." (UNC, Duke, Wake Forest and NC State). While Duke and Wake Forest lost money on football in 2005-06, the programs made $4 million and $5 million respectively, on the hardwood.
UNC did extremely well in both sports, making $7.3 million in football, and netting a whopping $12.5 million in basketball.
None of this is really surprising in itself - Wake Forest's stunning football success in 2006 notwithstanding, basketball is king in these parts. And, coming off a national championship and playing in a 21,500 seat arena, one would expect UNC to be raking in cash.
But, it's best to read all such reports with skepticism. Why? Because, as SBR itself notes, accounting methods differ from school to school, which means that one doesn't always know whether one is comparing apples to apples. And, that raises a larger point: do athletic departments and universities have a vested interest in putting a positive gloss on their major programs' finances?
In the case of UNC, one fact always gives me trouble: the Dean Dome, which opened in 1986, has never turned a profit. Now, one can assume that, on nights when the men's basketball team is playing there, the building does very well: 21,000 fans, at $35-40 a ticket. Repeat that fifteen times and you're looking at something like 10-12 million in revenues over the course of a season. And, that appears to account for the bulk of the $17million in gross revenue that the program raked in in the last reporting cycle. But, the Dean Dome was sold to donors, faculty, state legislators and other interested parties as a magnet for other revenue producers throughout the year, such as concerts and the like. But, the building appears to have been a flop in that regard, and rarely if ever any longer has non-basketball events there. Since the facility was built for basketball, does the expense of operating it year-round accrue to the basketball program? I don't know, and I can't find information on that question. My hunch is that it does not: it's common for unaccounted for expenses to be covered by state funds, and perhaps that's happening here. In other words, while the basketball program is clearly being credited with the revenue generation associated with basketball games, it's not clear that the program, or the athletic department more generally is being held accountable for the building's finances as a whole.
According to SBR, Duke's basketball program incurs double the expenses that UNC's does, about four million dollars more in the reporting year in question. And, some of that difference can be accounted for by the fact a Duke education is more expensive than a UNC education and, therefore, a scholarship to Duke is pricier than a UNC scholarship. But, with 15 scholarship athletes on each university's men's basketball team, that difference can only account for a fraction of the four million dollar difference in expenses. Coach K's university paid salary is higher than Roy's, so that's another chunk, but that still doesn't get us near four million dollars.
The reporting tool of the Department of Education's post-secondary education arm doesn't breakdown expenses in such detail, so we're left to speculate. But, to repeat, I have a strong hunch that the true total expenditures of UNC's basketball programs are being absorbed somewhere else in the University or in state funds.
I am not trying to pick on my employer, of course. I just happen to know a little bit more about UNC than I do about other schools. And, I don't assume that UNC is somehow more underhanded in its accounting of these matters than other major Division I programs. But, the larger issue is this: we hear media discuss the relative merits of the revenue-generating men's sports all the time, usually in very positive terms. The conclusions of the WRBS post about Rutgers to which I referred the other day are premised on those positive assumptions about the revenue sports: namely, that they really make money for their schools and that everyone benefits because they spread that wealth around to other athletic programs, including women's teams, and to academic units. But, we know that most programs, especially football programs, don't make money. And, we also have reason to be skeptical that, when it comes to the big grossing sports in general, that the expense side of the ledger may be understated, and often considerably so.
Just over four years ago, Michael Sokolove wrote a lengthy article for the New York Times Sunday Magazine titled "Football is a Sucker's Game." It's a tour de force - a brilliant analysis of the allure and potential pitfalls of investing in a major college football program. Sokolove profiles the efforts of the University of South Florida to establish a top flight program that would, in turn, enhance the prestige of the entire university. It's a path, Sokolove argues, that few have charted successfully:
"Schools get on a treadmill, and there's no getting off," says James Shulman, an author of "The Game of Life." "They have to stay on; they have too much invested." The former Princeton basketball coach Pete Carill once said of the big-time programs: If you want to get into the rat race, you've got to be a rat."
Another way to look at big-time college sports is as a sucker's game, one with many more losers than winners. Notre Dame, a great football team before it was a great university, is the prototype for all schools hoping to hitch a ride on the back of a popular sports team. Duke certainly has become more celebrated and academically selective in the years its basketball team has been a perennial Final Four participant. But Notre Dame and Duke are exceptions. For every Notre Dame and Duke, there are many more like Rutgers and U.A.B., schools that spend millions in a hopeless mission to reach the top.
Sokolove's conclusions are more pertinent to whether Rutgers' gamble on big time football will pay off than whether schools like UNC can run a successful basketball program. The jury's still very much out on whether, over the long run, Rutgers football will have the kind of sustained success, on the field and financially, that will yield revenue sufficient to be a net positive for the university as a whole. UNC, by contrast, is a Rolls Royce program. But, if there is at least room to question whether a program as ostensibly profitable as UNC's is fully accounting for all its expenses, it raises larger questions about whether we're getting an accurate sense of the balance sheet in high gross revenue college sports in general. Regarding football, Sokolove notes that there appears to be a good bit of accounting slight of hand:
U.S.F. calculates that the football team brings in, roughly, $4 million in revenue and spends about the same amount. But as in most athletic departments, the accounting makes no attempt to measure the true resources used.
One day, I stood in a humid basement room and watched the laundry -- muddy Bulls jerseys and pants, T-shirts, sweat socks, wrist- and headbands, jockstraps -- from 105 football players being cleaned. Several colossal washers and dryers were fed by three athletic-department employees. They perform this task early August through late November, six days a week, 10 hours a day. None of this -- the salaries, the utility costs, the $8,000 a year just in laundry detergent -- is charged against football. Nor is there any attempt to break out football's share of such costs as sports medicine, academic tutoring, strength and conditioning, insurance, field upkeep or the rest of its share of the more than $5 million in general expenses of the athletic department not assigned to a specific sport. In the papers I was shown, I also could find no evidence that a $2 million fee to join Conference USA (which is not a B.C.S. conference) as a football-playing member in 2003 was accounted for in football's expense ledger. The money was borrowed from the university's general endowment, and the athletic department is paying the interest. So when Jim Leavitt says that his football team is revenue-producing, that should not be understood as profit-generating. I would not pretend to know what football really costs at U.S.F., but it's clearly a lot more than $4 million, maybe even twice that.
I don't expect this situation to change - it's a lot of work for sports media to delve into arcane accounting matters and, after all, sports media folks are sports fans who put an inherent value on things like college football and men's college basketball. But, at the least, it's worth keeping in mind Sokolove's distinction: "revenue-producing...should not be understood as profit-generating."