First in a Series of Financial Analyses of NCAA Division I Institutions

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The well-documented financial pressures on NCAA member institutions increased steadily during the last two decades. Indeed, by FY 1999 only 76 percent of Division I institutions balanced their budgets in real dollars and 31 percent of the institutions surveyed indicated that they were experiencing significant to very serious financial stress (Bowden & Yow, 1999). In addition, the results of a sample survey in April, 2000 indicates that these percentages will persist or worsen during FY 2000 and beyond. This is a sobering financial scenario for many athletic administrators.

However, a number of intercollegiate athletics departments have demonstrated remarkable cost-effectiveness and in most cases have balanced their budgets consistently throughout the decade via cost efficiencies and increasing revenues.

The 1999 Sears Cup Top 25 athletic programs (Table I), along with the number of sports they offer were analyzed in reference to their reported operating budgets.

Table I: The Sears Cup Top 25 Listing

The results of the cost-effectiveness analysis indicated that the expenditure per sport in these programs placed them in the following order shown in Table II.

TABLE II: EXPENDITURES PER SPORT AMONG THE TOP 25 INSTITUTIONS

Shown as 24 since two of the institutions didn't respond to the survey and there was a tie for 25th among theSears Cup Top 25 for a total of 26 institutions

Thus when the cost-effectiveness factor becomes the ranking criterion among the Top 25 institutions, there is a significant shift in the rankings. When considering this outcome, Duke, North Carolina, Notre Dame, Maryland and others maintained their Top 25 Sears Cup ranking while achieving a cost per sport expenditure far lower than the others. Another fact that emerges is the influence of economies of scale where Stanford, for example, with 33 sports benefits from some fixed costs offsets against a larger number of sports offered, along with a generally sound program of financial and operations management.

A corollary finding is that among the Top 25, there are nine (9) that offer 24 or more sports and only 17 in the top 40. These nine broad-based programs among the Top 25 were also analyzed with regard to their average Sears Cup points earned per sport. The order by average points earned per sport for this smaller sub-group of athletics programs follows (with other relevant data provided).

TABLE III: BROAD-BASED SUCCESS

SEARS CUP POINTS PER SPORT AMONG THE NINE TOP 25 INSTITUTIONS WITH 24 OR MORE SPORTS.

Clearly, financial challenges continue to be the prevailing concern of directors of intercollegiate athletics in the United States and Canada. Indeed, the results of a survey in 1998 produced sobering data which are discussed in depth in the recently released book entitled Stress In College Athletics: Causes, Consequences, Coping by Yow, Humphrey and Bowden (New York: Haworth Press). The book surveyed stresses on collegiate student athletes, coaches and athletic directors. It was discovered that there are four major stress-producing factors prevalent in the professional experience of ADs. The leading cause of stress was the financial and budgetary issue for which most athletic directors perceived no long-term solutions and in most cases no short-term solutions. More than 75% of ADs surveyed indicated that their financial challenges/budgetary concerns were their dominant stress producing issue.

Despite the difficult environment, most athletic administrators continue to direct athletic programs cost-effectivenely. This cost effectiveness study illustrates this.

EDITOR'S NOTE: Also see the May, 2000 book release entitled, Strategic Planning for Collegiate Athletics by Yow, Migliore, Bowden, et al, New York: Haworth Press.)