The Temple News takes an in-depth look at what the athletic department has in its wallet.
Intercollegiate athletics do wonders for a university. Among many things, it unites the student body while offering it something to cheer about, it provides student-athletes the privilege of playing a sport in order to pay for their education, and it represents the university in a positive light on a national stage. But for most universities, there’s one thing intercollegiate athletics doesn’t do: make money.
“People believe that every university plays sports because they make money at it. Well, 14 schools out of the 1,100 last year actually had positive cash flow out of intercollegiate athletics,” NCAA President Mark Emmert said in a March 10 interview with ESPN. “It’s anything but a money-making proposition for universities and colleges.”
Temple is one of the 1,100 colleges where the athletics department does not turn a profit and has to be subsidized by university funds.
How much is spent on Athletics?
There are two different points of view concerning athletics’ overall expenses. There’s the way the university looks at athletics’ expenses, and there’s the way the United States Department of Education views it.
“When you look at our expense budget, there [are] three major categories.There’s compensation, which includes salaries and benefits, [and] there’s non-compensation, which is basically operations. Operations are equipment, travel, recruiting, supplies – all those types of things you do to run your program. The third piece is financial aid, which is primarily scholarships for student-athletes.” said Eric Roedl, the senior associate athletic director and chief financial officer for the athletic department.
The university includes only the first two categories of expenses: compensation and non-compensation, in its total for athletic expenses. According to the 2010-11 proposed budget on the university’s website, intercollegiate athletics total expenditures are listed at $15,404,580 for the 2010 fiscal year.
The U.S. Department of Education’s Equity in Athletics Data Analysis report for Temple includes all three categories and lists the athletic department’s total expenses at $28,783,706. Along with scholarships, financial aid, facility expenses, expenses associated with academic advising and academic support for student athletes are what comprise the third category, Roedl said.
Who pays for athletics?
According to the 2010-11 proposed budget, the athletic department made $6,340,000 in revenues during the 2010 fiscal year and to financially keep the program intact, the university subsidizes the program with $9,061,580. That money is used to support whatever costs generated revenue doesn’t cover.
“When you look at the budget, and we generate revenue, we have budgeted expenses and the subsidy fills the gap,” Roedl said. “I would say that the subsidy is a form of support that goes toward helping us fund our program, and in the simplest light, that’s what it is.”
The athletic department’s subsidy comes out of a portion of the university’s revenues from the Educational and General Budget called the “other sources” revenue, which totals at $28,723,000. Examples of “other sources” revenue include trademarks, licensing and investment income.
“The athletic department is funded through two sources: One is athletic generated revenue, and the other is the university brings in money in three forms,” Roedl said. “There’s commonwealth appropriation, tuition dollars and what you could call ‘other revenue streams. [It’s] more of a mixed bag of revenue that’s a smaller amount, but the athletic department is funded through athletics’ generated revenue and our university subsidy comes through those other forms of revenue generated by the university,”
“The subsidy is not commonwealth appropriation or tuition money. It’s coming from that other source of revenue generated by the university,” he added.
The size of the subsidy and the overall athletic budget is reviewed and approved by the Board of Trustees, and it’s also where the university sets the expectations for the athletic department.
“Our hope for the athletic department is that they can raise more of their overall budget with ticket sales or other revenues they can raise that would relieve the need for a subsidy,” said Anthony Wagner, the executive vice president, chief financial officer and treasurer of the university. “They’re always projecting ways to increase their ticket sales, but at the end of the day, it’s just projections. The cost of doing business for them keeps going up.”
“They have employees that receive salary increases, there’s inflation and benefits, so their costs are going up each year,” Wagner added. “At Temple, we’ve been sort of hovering around the level of a $9 million subsidy is what it’s taken to run our athletics program.”
The Board of Trustees decides how large the subsidy will be based on the number of sports Temple offers and the overall cost to keep the program intact. The Board has not made any decisions to reduce the subsidy, Wagner said.
The use of student fees
In addition to the subsidy, the athletic department also receives funding from the General Activity Fee, which was $45 per semester last year. For this academic year, it was consolidated into the $295 University Services Fee.
“The athletic department has, for many years, received a portion of student fee funding,” Roedl said. “The funding basically goes to provide complementary admissions to the Temple student body for intercollegiate football, basketball and any ticketed events.”
“At other schools, students may pay over $1,000 per year. At Temple, fees overall are pretty modest and the portion that goes to athletics is pretty minimal,” Roedl added.
Roedl declined to say how much money athletics received in GAF funds. For some of Temple’s football peers in the Mid-American Conference, some athletic departments are more dependent on student fees.
In a study by journalism students at Kent State University, using student fee data compiled from all 13 schools in the MAC, Temple had the third lowest total student fees. Last season’s MAC football champion, Miami (Ohio), charges $789 in student fees per student with $454 of those fees going to the athletic department. Fifty-seven percent of student fees at Miami (Ohio) go to athletics, the highest percentage in the MAC from schools willing to respond. A look at the Miami’s athletic budget for the 2011 fiscal year shows $14,647,373 in student fees was used to keep the $21,818,413 RedHawk program financially afloat.
Six schools in the MAC use student fees to fund more than 50 percent of their overall athletic budget. According to each respective school’s budgets, the two biggest users of student fees after Miami are Ohio University and Akron. Ohio uses $14,846,089 in student fees to support a $18,246,666 athletic budget, meaning 81 percent of the Bobcats’ budget is paid for with student money. Akron uses $18,000,000 in student fees for a $22,994,889 athletic budget.
Rising costs
Most athletic departments run into trouble financially in the form of the compensation and the financial aid categories of athletics expenses.
A study from the NCAA analyzing trends in athletic expenses and revenues listed the median total expenses for all Division I Football Bowl Subdivision schools at $28,991,000 in 2004, and in 2009, that figure had grown to $45,887,000. The main culprits for the increase are the increases in tuition and salaries.
In the 2010 fiscal year, the athletic department spent $4,993,203 in full-time salaries plus $2,052,591 in benefits. According to Temple’s EADA report, $9,038,396 was spent in Athletically Related Student Aid.
“It’s something that presidents and the NCAA talks about. It’s the biggest challenge that everybody has, and that’s from the NCAA,” Athletic Director Bill Bradshaw said. “That comes from the CEO who says ‘the biggest challenge is that expenses are spiraling out of control at a disproportionate level than revenues.’”
“The expenses of compensation and benefits are numbers that are given to us by the Board of Trustees, the same with tuition, room and board and books and fees. Those expenditures are increasing geometrically, and revenues across the country are increasing for the most part additionally, or they’re flatter,” he added.
Roedl described the trends in coaching salaries as “market driven” where the market for salaries for football and men’s basketball have become “pretty aggressive.”
“Those three categories with compensation, non-compensation and scholarships in any given year, compensation is going to grow, the typical increase assessed by the board is the cost of living adjustment is probably three percent and on the financial aid side, that always increases depending on what happens with tuition each year,” Roedl said. “As tuition goes up each year, that drives up our scholarship expenses.”
The only expenses that have remained stable are the non-compensation costs, which are the costs dealing with running the athletic department, such as recruiting expenses, travel, equipment, supplies and game-operating expenses.
“All those things have been relatively stable over the last 10 years which really is a testament to what the people on our staff have done to remain competitive to keep those costs down for the university but remain competitive and still put forth a first class program,” Roedl said.
Brian Dzenis can be reached at brian.dzenis@temple.edu.
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