Tuesday, July 17, 2007

You mean there's a budget constaint? 

From a new report issued by Moody's, entitled "Intercollegiate Athletics Programs: A Winning or Losing Game?" According to a Chronicle of Higher Ed report (subscriber's link),

The report ... says the biggest and most successful athletics programs can have a positive effect on the creditworthiness of their institutions. But a majority of intercollegiate athletics programs require substantial institutional subsidies to balance their operational budgets, and do not have significant revenue from ticket sales and donations. Those programs could hurt their institutions' credit rating, the report says.

"A well-run athletics program or a particular team's sustained success might contribute to long-lasting, stronger student demand, national name recognition, and philanthropic support, thereby creating positive credit momentum," the report says.

But success in athletics requires heavy spending on facilities and coaches' salaries, costs that can create negative publicity, the report says. And such big spending typically does not lead to other benefits, such as attracting faculty members or research grants.

Isn't that shocking? Of course not. There are more losers than winners in college sports; Big 12 commissioner Kevin Weiberg points out that the winners cannot compensate the losers (h/t: Phil Miller.)
It is also important to understand that even with equal revenue sharing in television, the increase for the teams receiving the least amount under the present structure would likely be less than $1 million. While not insubstantial, that amount of money is only about two percent of a $40 million budget. A case can also be made that a team appearing in a televised game should receive some financial upside since many times television requires changing start times and other inconveniences for the participating teams. There are also a number of areas in the Big 12 where money is shared equally, like revenues from the football championship game. So the current package of revenue sharing represents a negotiated balance. It is an area that the conference needs to continue to focus on and to discuss.
"Continue to focus on and to discuss" is the commissioner's nice way of saying "no way, pal." And I wouldn't expect this to improve with the possibility of the "plus one" playoff in college football.

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