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<p>As generalizations, these statements are more or less true. But just to be clear on the specifics, USA Today identified 23 university athletic departments that generated more operating revenue (independent of subsidies) than operating expenses. In other words, even apart from any subsidies, their athletic departments were operating in the black. Not surprisingly, these include many of the perennial football powers (Ohio State, Michigan, Penn State, Nebraska, Florida, Florida State, Alabama, LSU, Texas, Texas A&M, Oklahoma, Oregon, Washington) or basketball powers (Indiana, Kentucky) or both (Michigan State). </p>
<p>The thrust of the USA Today story was that even some of these “profitable” (= surplus-generating) athletic programs were receiving additional subsidies from the university’s general fund or other sources, even though they didn’t need it because their operating revenues (apart from subsidies) exceeded their operating expenditures. Well, this is an interesting fact, but it doesn’t mean these athletic programs are a drain on the university budget. In some cases the “subsidies” are quite small, and represent differences in how certain costs should be accounted for. For example, USA Today said Michigan’s athletic department received a “subsidy” of $259K, representing the cost of an academic tutoring center on the athletic campus, to help student-athletes keep up with their academic work. The university deemed this an academic expense and charged it to the general fund budget, while USA Today thought it was properly an athletic department cost, and counted it as a subsidy. That’s an accounting quibble; I don’t really care how it’s classified, but the point is it’s a pretty trivial expense item in a university with a $5 billion annual budget and an athletic program that generates a $25 million athletic department operating surplus independently of any “subsidies.”</p>
<p>Some other, larger “subsidies” have equally reasonable explanations. Florida law mandates that public universities charge a sales tax on ticket sales, but then instructs them to divert the sales tax revenue to support women’s intercollegiate sports. OK, you can call that a subsidy if you think that’s a better accounting practice, but it’s not money that’s coming out of the university’s general fund, nor is it money that would otherwise be available to the university’s general fund. </p>
<p>I’m not certain about any of the others, but these two examples suggest USA Today went out of its way to find expenditures that it could classify as “subsidies,” and most of the “subsidies” it found were rather small-- 7 of the 23 programs had no subsidies, 2 more were less than $1 million, most were under $5 million, and all were in some sense not necessary, insofar as the athletic department was already operating in the black without the subsidies. You can perhaps criticize the value choices reflected in the decisions to provide those subsidies, but you can’t say the athletic department is dependent on, or a drain on, university resources.</p>
<p>Here’s the bottom line for me: the cheapest approach to intercollegiate athletics is to have none at all. The next cheapest approach is to have a successful, big-time program that pays for itself. In fact, you could say the net cost of these 23 schools’ athletic programs is zero, i.e., the same as having no intercollegiate athletics at all, but the universities (or the state, as in Florida’s case) elect to chip in a little something as a sweetener, even though the athletic department doesn’t need it. Where it gets expensive is if you have a large intercollegiate sports program ( = high expenditures) but low athletic revenue. The extreme case of the latter is Ivies and those Division III schools that maintain extensive intercollegiate athletic programs despite having fairly trivial athletic department revenue. In that case, it’s pretty much all subsidy, all the time. But I don’t criticize those schools for doing it if it’s something they value.</p>
<p><a href=“http://www.usatoday.com/story/sports/college/2013/05/07/ncaa-finances-subsidies/2142443/[/url]”>http://www.usatoday.com/story/sports/college/2013/05/07/ncaa-finances-subsidies/2142443/</a></p>