For the most part, the latest report on NCAA revenue and expense is neither good news nor bad.
The report, released Wednesday, notes that 22 Division I Football Bowl Subdivision programs are now considered financially self-sufficient. While some might see that as good news, others might see it as an ephemeral condition that will flow (and ebb) with conference media contracts. Besides, there’s nothing wrong with the idea that schools might underwrite their athletics programs to an appropriate degree.
If there is happy news in the report, it’s found in data that showed a reduction in the rate of spending in the 2009-10 fiscal year. The long-term numbers are still scary: Since 2004, when the report’s current methodology was adopted, expenses have increased 61.4 percent while revenue has climbed 54.6 percent. To use the vernacular of the economics crowd, that is not considered sustainable.
However, over the last two years, total generated revenues (ticket sales, media contracts, etc.) have grown by 15.9 percent while expenses have increased “only” 12.9 percent. Perhaps it’s the leading edge of a trend, but it doesn’t take highly developed analytical skills to wonder how long annual revenue growth of about 8 percent can last. And though expenses have slowed, they are still clearly far beyond the rate of inflation. But it is progress, and that’s good.
One other element: The report notes that the average “cost” of operating a Division I athletics program continues to be about $9 million. It’s an important number – one that probably hasn’t gotten the attention it deserves. It represents the average amount of institutional support provided to Division I programs, and it is generally consistent among the Division I subdivisions. For those who want to know how much cash a typical school needs to pony up to compete in Division I, $9 million annually is the answer.