Gap between haves, have-nots grows
Just 25 of the 119 Football Bowl Subdivision athletic departments finished with positive bottom lines at the end of the 2006-07 and 2007-08 academic years.
The figures for 2008-09 could be worse when they are tabulated by Dan Fulks, an accounting professor at Transylvania University in Lexington, Ky., who has been an NCAA consultant for 20 years.
Katie Hill, Clemson's senior associate athletic director and the department's chief financial officer, knows this scenario all too well. She said the school's corporate sponsorships are down 15 percent from last year, and she expects a $2 million shortfall in annual giving. Football season-ticket sales are down 10 percent, but are expected to recover somewhat by the time games begin in September.
"I think our circumstances are entirely the result of the recession," Hill said via e-mail. "Of course, there are many variables that contribute to the amount of fan economic support a program has. In this instance, I think we have the best circumstances possible except for the recession -- a new, young and enthusiastic football coach with new facilities; and a popular men's basketball coach."
Clemson had record revenues during the fiscal year ending June 30, but with the current economy, Hill said Clemson knew it might be in this predicament. The school has an emergency reserve fund that reportedly has about $10 million.
But Clemson hasn't taken some of the measures to cut costs that many schools have taken during the past year. It has no plans to eliminate media guides or specific sports, and other than a five-day unpaid furlough in 2008, the staff has been untouched.
Clemson has become the exception, not the rule.
Other schools, and conferences, are implementing budget cuts that include everything from discontinuing some sports to traveling by bus for away games to laying off the summer intern. Some schools and conferences will not print media guides this year, instead directing media to their Web sites or handing out flash drives. Conferences such as the Western Athletic and Conference USA have cut the size of tournament fields across multiple sports.
Travel-squad sizes are being cut in the ACC, Pac-10 and Conference USA. Miami, Virginia Tech, Central Florida and Cal will take buses to some football games. Air Force, which has used larger planes to facilitate bigger players, will use a smaller plane to cut costs and will limit bigger linemen to one seat to save room. Tulane says it will fly only to road games that are at least 400 miles away.
The Big Sky Conference, Ohio Valley Conference, Southern Conference and Sun Belt Conference are all dropping in-person media days and will host videoconferencing instead.
"It really started last year during football media day when we saw where the numbers were and we saw that we had six markets represented and six that didn't have anyone there," said Russ Anderson, assistant commissioner for football and baseball operations for Conference USA. "With the economic stuff that was really just starting last summer, we realized that we needed to look into other ways that we could do this and get more people involved."
Both Conference USA and the Sun Belt Conference have said that other conferences have contacted them about implementing videoconferencing for media days.
The Pac-10 has proposed NCAA legislation to eliminate media guides altogether.
But how much will all of these cuts really save?
According to Fulks' breakdown of collegiate athletic operating expenses, not much. On average, travel makes up just 8 percent of a budget, and media days and media guides fall under miscellaneous expenses, which represent 7 percent.
"Where people seem to focus is on team travel, but that's just about 8 percent of the total budget," Fulks said. "You can cut your travel all you want to, and a lot of schools are doing that. But it's still not going to make much difference in the total budget. I think a lot of it is for PR purposes."
Fulks said there are only three major items that would really affect the budget: salaries (33 percent), grants and aid (17 percent), and facility maintenance (10 percent). But, because tuition is set by the school, most athletic departments can't alter grants-in-aid, and many are unwilling to cut coaching salaries or even agree to a uniform NCAA cap on coaching salaries. Schools with smaller athletic budgets generally spend a higher percentage of their money on salaries than the schools with large budgets.
According to Coaches Hot Seat, a Web site that tracks football coaching contracts and salaries, the five highest-paid coaches -- USC's Pete Carroll, Notre Dame's Charlie Weis, Alabama's Nick Saban, Oklahoma's Bob Stoops and LSU's Les Miles -- all come from financially sound institutions. In the case of Oklahoma, the athletic department is giving the university money to fund general scholarships.
But head coaches from the bottom half, who all make $200,000 or less, come from schools in the Sun Belt or Mid-American Conference, places that have reported tough economic times.
"The schools that are making money are making more money, and the schools that are losing money are losing money, so the gap between the haves and have-nots keeps growing," Fulks said. "A lot of these sports could operate on a lot smaller budget than what they're doing, and to some extent there's an arms race going on, but I think the arms race is in two areas, salaries and facilities."
The total number of schools reporting positive revenue was 25 for both the 2006-07 and 2007-08 fiscal years, but those numbers were up from just 18 schools in fiscal 2005-06. Being in the black, Fulks said, is due in large part to the ability to sell tickets, which typically account for 26 percent of an athletic department's general revenue. Teams with large stadiums and eight home games, such as Notre Dame, Tennessee and several teams in the Big Ten, come out big winners.
That's why major schools are willing to shell out as much as $1 million for a guarantee game with a team from the Sun Belt or Mid-American Conference. While those guarantees can often help smaller schools stay afloat, they bring the host school more than twice that when ticket sales and concessions are factored in.
Regardless of the poor economy, athletics aren't going anywhere. The revenue generated from football and basketball -- including extra television revenue for schools that make the NCAA tournament -- is enough for most schools to survive and provide a product that's both profitable and entertaining.
"I believe that college sports are recession-proof," Fulks said. "...It's part of the entertainment business, and people will always pay to be entertained."
Graham Watson is a college sports writer for ESPN.com. She can be reached at firstname.lastname@example.org.
Business Of College Sports
College sports are not immune to the current economic woes. Teams are being cut and athletic departments are struggling to bridge budget gaps.