Life with the haves

If you’re a top-tier football program, you’ve probably been doing alright lately.  Better than most of us, actually.

The economic downturn that started about six years ago flattened wages and crushed jobs. But sports programs at the nation’s top public colleges have thrived: Revenues continue to reach record levels while payrolls have risen on average about 40 percent.

Total revenue from the nation’s top-tier college sports programs — the NCAA’s Football Bowl Subdivision — has increased by about a third, fueled by ticket sales, donations and lucrative television contracts that together resulted in about $8 billion.

You’ve also done a pretty good job massaging the numbers.

Operating revenue listed by athletic departments includes what’s often referred to as a subsidy — money the university (including student fees) or a state government provides to an athletic department to help it cover its expenses. But even if those dollars are removed, which is possible for public schools that disclose that information, the percentage increase in “earned revenue” is still about the same.

In 2012-13, 20 public schools showed a surplus of earned revenue, a number that hasn’t changed much over the past few years. The NCAA puts the figure at 23, which likely includes a few private schools whose data the NCAA has access to but doesn’t release publicly. For six schools — Ohio State, Alabama, Oklahoma, Texas, Florida and Oregon — the surplus was in excess of $15 million.

Ohio State showed a surplus of almost $24 million, but that does not factor in $16.6 million in debt service that the department is paying on bonds issued to fund renovations at Ohio Stadium and to build a new aquatics center, along with some smaller building projects, said associate athletics director for finance Pete Hagan. Hagan said not including debt service was an oversight that should have been included in the expense figures submitted to the NCAA. He said that his department plans to address the oversight.

Hagan said the NCAA, U.S. Department of Education and university require unique financial reports, and the bottom lines are never the same, making it difficult to see how much money is really left over.

Sports economists say the actual number of schools with a surplus is probably far higher, as they point to several ways athletic departments can pad expenses to hide extra revenue.

Goff said schools have long been trying to keep their actual bottom line “under wraps.” “If there’s going to be a surplus, you find some expense to put that into often before the surplus even appears,” he said.

And that’s where it gets fun.  Really fun.

• In 2012-13, Auburn spent $2.8 million on recruiting, more than any other school.
• Tennessee spent the most on severance pay in 2012-13 at $8 million. In 2012, when the college fired football coach Derek Dooley, he was paid a severance of $5 million and his assistants up to $4 million overall. A payout of $1.3 million went to former athletic director Mike Hamilton, who resigned in 2011, adding to the department’s $19 million total over the past six years. (One that should ease up this year because those deals have all been accounted for, Stanton said.) Second to Tennessee over that time was Kansas, at $14.4 million, which agreed to a $3 million severance with former coach Mark Mangino in 2009.
• At public FBS schools overall, spending on coaching salaries increased on average by 45 percent.
• Travel costs increased about 8 percent from 2012 to 2013 for public schools.
• For 2012-13, four public schools spent more than $1 million on their spirit squads — Georgia, Florida, Texas and Michigan.  (For perspective, note that Texas, at $1.9 million, spent the most money on medical care for student-athletes last year.)

Why do they do it?  Well, basically, because they can.

Goff and other economists say it’s not nefarious, but it’s a practice common to nonprofit organizations and government entities: Spend as close as you can to what you bring in every year, because there’s no incentive to show a profit.

Chad McEvoy, a professor and graduate program director with the Department of Sport Management at Syracuse University, said, “it’s definitely interesting accounting.”

“We’ve definitely seen growth in salaries and personnel, but I think a lot of that is by choice,” he said. “I think these athletic programs have added staff both on the sports side and the administrative side because they have the money to spend and needed to spend it on something.”

He points to a volleyball coach making $300,000 a year for a program that draws only a few hundred fans who pay $5 or $10 a ticket. “The market rate or the math doesn’t add up,” he said.

Even travel costs, which are legitimately going up due to rising fuel prices and the need to play schools farther away due to conference realignments, can be pushed up by traveling more luxuriously and staying in higher-end hotels, McEvoy said.

Ohio State’s Hagan, who has worked in athletic department finance since the early ’80s, said he doesn’t believe there’s a general incentive to spend more so as not to show a surplus — or too much of a surplus. But he said athletic departments are in a highly competitive environment, an “arms race” as he described it, in which they’re driven to be bigger and better to attract top recruits and faculty: “We could spend every cent that we make and then some trying to just keep up with renovating our stadiums and improving our facilities and practice fields.”

And this is why you have to laugh when you hear the Emmerts and Delanys cluck about student-athlete compensation and competitive fairness.  When Georgia spends as much on its spirit squads as Troy has for its entire travel budget, that ain’t no level playing field.  And the big boys aren’t interested in making it one.