Most athletic programs need subsidies to cover expenses
By Roy Ockert Jr.
Dec. 8, 2015
Major college athletics has become big business, though playing the games at the highest levels of the NCAA is certainly not profitable for most institutions.
Despite huge cash infusions over the past decade, only 24 programs out of the 346 Division I athletic departments managed to generate more revenue than they spent in 2014, according to the NCAA Membership Financial Reporting System. The University of Arkansas at Fayetteville was one of them.
For fiscal 2014 (July 1, 2013-June 30, 2014) the UA Athletic Department reported total revenues of $96.6 million and expenses of $94.5 million — leaving a net gain of just over $2 million.
While that performance ranks in the middle of the pack in the Southeastern Conference, it’s by far the best of the five NCAA Division I schools in Arkansas, all of which rely heavily on institutional subsidies to make their athletic books balance.
Arkansas officials generally say their athletic programs require no subsidies, but the UA report shows $1.9 million in “Direct Institutional Support,” which the NCAA defines as subsidies including state funds, tuition, tuition waivers and transfers, as well as federal Work Study support for student workers employed by athletics. The report only breaks down the charges by teams, with $722,920 attributed to football.
Even considering that, the UA subsidies represent only 2 percent of total revenues, fifth lowest in the SEC. Only Louisiana State University lists no subsidies by the NCAA definition.
Here’s the percentage of subsidies in 2014 for the state’s other Division I programs: Arkansas State University, 52.8; UA-Little Rock, 64.6; University of Central Arkansas, 74.6; and UA-Pine Bluff, 77.6.
Student athletic fees are used by most institutions to make up a big part of the difference between athletic revenues and expenses. The UA does not charge a student athletic fee, but all other 4-year institutions in Arkansas do. A report for the Arkansas Higher Education Coordinating Board shows that ASU’s is the highest for 2015-16 — $19 per credit hour.
But UALR, which doesn’t field a football team, is right behind at $18.75; UCA and UAPB are charging $17.
For a student carrying an average load of 15 hours over two semesters, a $19-per-hour fee translates to $570. Generally, that entitles the student to attend all home athletic events without further charge.
ASU projected its total revenue from student athletic fees this year to be just over $5 million, an increase of about $400,000 over fiscal 2014. By comparison, athletic-generated revenues (ticket sales, game guarantees, support club contributions, royalties, licensing, advertising and sponsorships) were expected to total $6.4 million.
UA ticket sales alone totaled more than $34 million in fiscal 2014.
ASU’s 2014 report showed a major jump of about $2.5 million in earned revenues over 2013. But total subsidies also increased by a little over $1 million to compensate for total spending that increased by about $2.7 million.
Nevertheless, ASU ranks near the top in the Sun Belt Conference in covering expenses with athletic revenues. Louisiana-Lafayette had the lowest percentage of subsidies, 26.5, with ASU a distant second at 52.8.
Lafayette’s total of athletic operating revenues, though, was only fifth highest in the conference and ASU’s sixth with $21.3 and $20.1 million, respectively.
Two of the league’s newest members, Texas State and Georgia State, led the way with $32.2 million and $27 million, respectively.
In fact, Georgia State, which moved up to Division I in 2013 to join the Sun Belt, was used in a November article by the Chronicle of Higher Education to illustrate the difficult path that so-called mid-majors have in trying to compete at the Division I level. More than 76 percent of Georgia State’s athletic revenues came from subsidies. Student fees accounted for $17.6 million.
Those two schools have the largest enrollments in the Sun Belt, with undergraduate enrollments actually larger than Arkansas’, so their student athletic fees raise more revenue. Georgia State’s fee translates to about the same as those at ASU and UALR, but its student enrollment of about 24,000 brings in a lot more money. The two Arkansas schools have the lowest undergraduate numbers in the conference.
Football and men’s basketball are the cash cows for most successful university athletics programs, as shown in the UA report. Exclude the revenue and expenses of those two teams, all the others had a deficit of $17 million in fiscal 2014. Football alone had a profit of about $29 million in a year that the Razorbacks had an overall record of 7-6 and appeared in AdvoCare Texas Bowl at Houston. Men’s basketball had a profit of just under $5 million.
While the UA has no student athletic fee, students must pay to attend football and men’s basketball games. A student “Razorback Athletic Pass,” which covers home games, costs $85 this year. Only 12,000 passes can be sold, and seats are guaranteed to only the first 9,500 students who show up for a football game or the first 3,000 who show up for a men’s basketball game. The Little Rock football game is included, but only 2,000 of the pass-holders can get vouchers for tickets.
At the other Division I schools in Arkansas football and men’s basketball brought in most of the revenue, but not enough to cover expenses.
Roy Ockert is editor emeritus of The Jonesboro Sun. He may be reached by e-mail at royo@suddenlink.net.