What goes on

A funny thing happened today when I was searching for data for my upcoming post on the FY 2011 budget and its impact on Rutgers: I stumbled across something that seems far more interesting, which is impressive considering how vital the budget story looks.

I usually only get my college football news from a handful of sources (none of which actually include the site College Football News). There's the various team-specific reporters and websites, my custom RSS feeds, mgoblog, and Dr. Saturday. I would read Bruce Feldman if he wasn't behind a paywall. That's about it, I don't really read much else, owing to time constraints more than anything.

That being said, imagine my surprise when I stumbled across USA Today's college athletics financial database from January. FINALLY, a worthwhile follow up to the Indianapolis Star's detailed reports from all the way back in 2005 (although, that report had a better sport-specific expense breakdown). It has financial information for athletic departments from the years between 2004-2005 and 2007-2008 ('08-'09 reports were submitted to the NCAA in mid-January). Just did a quick search of my afore-mentioned gatekeepers, and nope, can't find anything (although it's entirely possible that they're there and I just missed them). I can't remember coming across any mention of this from when it first came out two months ago, because I would have definitely jumped all over it at the time.

Here's why this is super, super important. Most of the time, when the media discusses financial data about college athletics, they usually refer to the public federal OPE data. This data is useful for giving a team specific breakdown of revenue and expenses, but ultimately flawed because it doesn't give an adequate breakdown of revenue sources. For instance, the OPE data and Rick Malwitz both agree that Rutgers Men's Basketball makes a profit. Malwitz says that the women operate at a loss, while the OPE data says they're dead even. It also says that total athletic department expenditures are about equal to revenue. What gives then?

What's happening here is that Malwitz is either citing sourced information or his paper filed a FOIA request with the athletic department, which is how the Ledger published all of that financial data two years ago. The OPE data does not require institutions to file detailed breakdowns of revenue sources. The NCAA, however, does require that information for their records. They don't make any of it public, but make everything available to the Knight Commission on athletics. Those public records are then subject to FOIA requests, which is how the USA Today and other publications typically find this stuff.

There are two very important (among others) factors that make the OPE reports on revenue so misleading. "Direct institutional support" revenue means a direct subsidy from the university's general fund pool to the athletic department. Meaning, that athletics are in direct competition with academics for funding. The second are mandatory student fees, which don't have a negative impact on the classroom, but are still a burden on students already paying sky high tuition. Students do receive free football tickets in exchange for their fees, so I do not necessarily consider that as a pure subsidy. I divided the 2007 figure by the 24,876 full and time students enrolled at RU-NB in 2007-2008, and came up with a $280 yearly subsidy per student. (note: I originally counted both full AND part-time, but this chart seems to indicate that was a mistake).

As Inside Higher Ed notes on the USA Today study:

The vast majority of sports programs -- even those that purport to support themselves -- receive significant financial backing from their institutions to operate. Of the 99 institutions in the table below, all but four -- Louisiana State, Ohio State, and Purdue Universities, and the University of Nebraska at Lincoln -- reported receiving at least some revenues in the 2007-8 fiscal year from one of four categories of "allocated" revenues: student fees, direct state or government support, direct institutional support (general fund money), or indirect institutional support (facilities, energy costs, etc.).

It is important to note that private institutions like BC and Syracuse do not have to comply with FOIA requests, and are not included in the study. Pennsylvania law also allows PSU, Pitt, and Temple to not comply, and Navy did not either.

Anyway, after that giant preamble, here's the actual information. Rutgers athletics received nearly $7 million in mandatory student fees in 2007, and over $15 million in direct institutional report. The combined total of these two figures is in fact the largest of any surveyed institution included in the report. Rutgers offers a lot of sports, but as of two years ago, the athletic department was by no means in good fiscal shape. In fact, I think there's a very good argument that a lot of that figure can be attributed towards the need for short term investment with an eye on longer term goals, but it is a figure that looks very bad on the surface. A decade ago

Among peer schools, UConn charged more in student fees, but their athletic department received only $3.7 million from the general fund. This disparity is partially explained by the fact that Rutgers has over 10,000 more undergraduates, and funds seven more varsity sports. They're also a useful comparison in the sense that UConn was in the midst of massive facilities upgrades following their move to division I-A, while RU has had to spend a lot in order to make up for years of athletic neglect. Rutgers makes more off concessions and parking, but gets absolutely clobbered when it comes to $2.2 million in broadcast fees, and a disparity of over seven million for "Royalties, licensing, advertisements and sponsorships".

Maryland on the other hand receives slightly more in conference revenue (not by any means a staggering amount; I'm not looking at a B10 or SEC school), and their figures for student fees and school support are roughly similar to UConn's.

All of this is readily apparent (a recommended read if you don't remember this interview from June of '09) to athletic director Tim Pernetti, which was a significant reason why his predecessor Bob Mulcahy pushed for stadium expansion. It was a short term expenditure designed to further grow the athletic program and reduce future deficits. The project was fraught with risk, but has worked out well to this point.

While the 2007-2008 data is quite informative, and 2008-2009 even more so, I would advise caution before jumping to any further conclusions. The revenue picture has almost certainly changed since then, with football selling more tickets for a higher price,

During the first season played in the expanded Rutgers Stadium – which grew over the summer to include 52,454 seats as part of a controversial $102 million expansion project – ticket revenue is projected to be $10.7 million, a fivefold increase since 2005.

Combined with $2.5 million in fees required to purchase club seats, located on the eastern side of the stadium between the two decks, spectators paid $13.2 million to see Rutgers at seven home games.

Ticket revenue alone will be more than enough to pay the $6.9 million in annual payments to finance the stadium expansion.

new sponsorship deals and partnerships (like a payout bump from moving a home game to Giants Stadium) from the past two years, increased donations, and more conference revenue from a somewhat better bowl lineup (The Big East shares its bowl revenue - Champs is a 250k upgrade on the old Gator deal, Meineke is going up, and the Pinstripe Bowl at $2 million will improve on whatever it replaces). Sure would be nice if the economy ever improves and Rutgers can sell the naming rights to its stadium.

As great as the USA Today data is, and they should be commended as much as possible for compiling everything, it leaves me in want of the ability to further detail the subsidy by sport. Football is king, but there simply isn't enough evidence to conflate its budget with the entire athletic department's. Bob Mulcahy told Rick Malwitz that football generated a $5 million profit in 2007, although that figure isn't that informative without the further context described above. The revenue disparity between men's and women's basketball however is striking. The irony here is that many critics of athletic department probably would not approve of decisions like cutting non-revenue supports or academic support.

This is running far longer than I anticipated, so that's all for now until the forthcoming budget post.

Update: a NewsBank search offers more historical context. Multiple sources reported in 1998 that Rutgers had subsidized its athletic programs with $31.5 million over the past decade, and had never made a profit as a Big East member.. According to "Rutgers goal: A winning season - Football losses put a drain on athletics" (NSL 9/1/2000),

The Scarlet Knights' win-loss record is directly tied to the financial health of the state university's athletic department. Football alone is hemorrhaging more than $2 million a year and contributing to the athletic department's overall $7 million deficit, a situation university officials say must end.

There is hope, said Richard Sheehan, a professor at Notre Dame and a leading expert in the economics of college sports.

"If Rutgers can convince its homegrown talent (to stay) and the state continues to makes a long-term commitment to the program, the team has a chance to be competitive and make some money," Sheehan said. "But they need a horizon longer than five years. What they need is a 20- to 30-year horizon."

In the short term, Sheehan said, Rutgers will likely have an easier time becoming successful on the field than a financial success off it.

The football bump went hand in hand with a boost for Olympic sports. "THE PRICE OF GLORY" (The Record, 1/21/96) is another comprehensive account.

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