Athletics Departments Face Financial Issues
July 10, 2008

Many college sports fans share a common misconception that all athletics departments make millions of dollars in profits each year. In reality, only a handful of institutions are self-sufficient or generate revenues over expenses - most athletics departments are actually in the red on an annual basis and rely on subsidies from the university to balance their athletics budgets. Duke is the latest athletics department to speak publically about its financial struggles.

Yes, that's right, Duke University, home of one of college basketball's most successful and well-known programs. New Duke Director of Athletics Kevin White recently said that the athletics department is "financially challenged." In fact, the school has doubled its annual subsidy to the athletics program to $15 million a year to help fund the department's operations.

Duke isn't the only high-profile school in this situation. In 2006 only 19 Division I FBS (Football Schools)schools had greater revenues than expenses in their athletics departments. Additionally, only 16 of these schools had net positive cash flows over the three-year aggregate from 2005-07.

Financial matters in large part prompted the formation of an NCAA presidential task force two years ago to discuss a disturbing trend in which the rate of growth in Division I athletics spending was tripling the rate for university spending overall. While athletics budgets on average represent only about 5 percent of a university's budget, presidents agreed that current trends could not be sustained over time. Big-time athletics is not in a fiscal crisis, they said, but the growth in spending is adding pressure on institutions already strapped for cash.

On this week's Monday's with Myles NCAA President Myles Brand said "the cost of doing business...in intercollegiate athletics is going up." Not only is the high price of gas affecting the finances of athletics departments, but as Dr. Brand suggests, the rising cost of other factors like market conditions, salaries and facilities play a major role in this struggle.

The situation at Duke should be a wake-up call to those who think college sports is awash in money. Athletics departments are going to need to find creative ways to increase revenues or reduce expenses, and I hope that the answer doesn't manifest itself in the cutting of athletics teams.

Who decided to pay Mike Krzyzewski $1,200,000 in wages? it was the AD that agreed to the contract. Now he claims their broke with out a subsidy. Not takeing away from the free market system... but lets be real on what somebody is worth. This guy is a "basketball" Coach.

Parkwayred. That is an awesome post!!!!

24/7

Richard,

I wasn't sure where this article came from and if you were inserting your own comments in Red. But I put the title of the article in Google and I found it came from the NCAA Double-A-Zone which was stated to be the official blog of the NCAA. I think you were putting points that you were wanting to emphasize in Red.

I went to Duke's latest EADA report for the 10/16/06 to 10/15/07 period. It showed that Duke's sports revenue for the period was $47.507,169 just a little more than the $47,391,264 that it was showing for total sports expenses. That is not really not much of a net profit on that amount of revenue. I don't know if this $47 million of revenue includes the school subsidy of $7.5 million which is doubling to $15 million as reported by the NCAA blog article that you site in this topic. In contrast KU in its latest EADA report was showing total sports revenue at $65,194,721 vs. expenses of $58,046,962.

The thing that concerns me in this Duke report is that if $7,500,000 of that reported $47 million in revenue is really from subsidy then that means they are really operating at that much of loss and it appears that the loss would be growing to $15 million. I also saw from their participants report that there were 3,267 male students and 2,947 female students and there are 369 male athletes vs. only 248 female so that seems to be in some Title IX compliance potential trouble. I am concerned that this means that the Duke wrestling program could be vulnerable.

parkwayred, I understand your feelings. It gets to me too when I think of these basketball and football coaches making salaries that we know that could fund two to three college wrestling programs. In looking at Duke's EADA report in further detail I did notice that its basketball revenues were over $13 million and only had $8 million of expenses. When you look at it from that point of view, Duke University would no doubt look at their coach's salary as a bargain. And in reality, the profits from the Duke basketball team have in part been used to help subsidize the Duke wrestling team.

This is part of the reason why I have been becoming a supporter of the idea of a National College Wrestling Endowment fund. I think wrestling has to start developing the financial clout to become more self sufficient in order to survive and grow in colleges across America. I believe we need to do that by a two fold approach to funding by endowing our local college programs like Fort Hays State, Newman and now Baker along with our junior colleges and by endowing a national college endowment fund that the NWCA is at this time considering to become trustees of.

Following up on Duke's situation, I got on their Duke wrestling website. I found out that going into the 2007-2008 season last year they were entering their 80th season.

I also found out that they have an active program in place trying to build financial support within the Duke wrestling community. I see this an essential part of the two fold approach to endowing programs that I described in my previous post on this topic. This is the local/alumni endowment effort. Duke's goal for the 2007-2008 season was to recruit 200 donors at a $500 average contribution for a $100,000 funding goal for the 2007-2008 season. I am not sure if they did it. I think increased endowment gifting is going to be essential for all wrestling programs. I am sure it has always been a component but I think the pace needs to pick up. If you want to read more about Duke's program look at the Friends of Duke wrestling section of their website.

http://www.dukewrestling.com/friends/

Looking at the roster for Duke I will say that Max Tabachnik must have been raised a Blue Devil...heck, maybe his dad is the mascot.

Seriously though, this is a school that has an amazing room for fencing (the olympic sport), but has a beat up room with holes in the ceiling that drip onto the mats in the far corner of the basement of the student union (I saw the room first hand 2 years ago). It was depressing seeing a DI team (or any team for that matter) subject to that kind of conditions, especially when they are expected to be competitive. I think you show great pride based on what you have, and they don't have much in terms of a wrestling facility. A little fixing up and a coat of paint may go a long way for a team like Duke as difficult as that may seem to be. Scholarships wouldn't hurt either.

NCCC Wrestling, that picture of Max is hilarious. I had not looked at that roster pictures before your comment. I am surprised they let him get away with that or maybe you are right that his dad might have been the Blue Devil.

On your serious second paragraph, I agree from your description that yes certainly maintenance of the wrestling room and even a better facility for the wrestling room along with scholarships could only help Duke become more competitive in their conference and at the NCAA's. But in light of the article that Richard posted here concerning college athletic departments not really being the profit makers that many of us think they are with Duke in particular being used as the example, do you really think Duke can award to give a lot of wrestling scholarships at this time?

Did you read what Sean Meakim, Friends of Duke Wrestling President, stated as the financial goals of the $100,000 capital drive?

FINANCIAL SUPPORT: Understanding that financial support is critical to achieving our stated goals; the team will require an increase in capital in order to finance a second full-time assistant coach, increased recruiting efforts, travel expenditures and additional off-season competitions. By raising this capital, we are not only showing the Athletic Department that Duke Wrestling is an important institution to a large body of alumni and university donors, but more importantly that our team can be a nationally competitive program if only given the proper tools to compete (and without scholarships). For the 2007-2008 fiscal year, we have established two goals:
1. Donor Participation: 200 total donors
2. Total Donations: $100,000

While this is ambitious, we have not lost sight of those in the Duke Wrestling community who have given so generously in the past. The Friends of Duke Wrestling, the coaching staff, and, most importantly, the current wrestlers appreciate such tremendous generosity, especially as we recognize the team is ever more dependent on this support to achieve its pursuit of excellence.

Sincerely,

Sean Meakim, '01
President, Friends of Duke Wrestling

Those are all pretty basic operational goals which to me supports the idea of the article that Richard posted that many universities are having difficulty meeting their athletic budgets.

Also as far as scholarships goes for Duke it doesn't even appear to be a goal of Duke wrestling. At the bottom of Mr. Meakim's President Message you can download the newsletter and in the newsletter there is a Coach's Corner message from Duke Head Coach Clar Anderson entitled "Big Dreams". Coach Anderson says that they can achieve their goals without scholarships.

Did you notice how Sean Meakim stated that one of the purposes of the need for this funding drive was to show the Duke Athletic Department that wrestling is an important institution to a large body of alumni and donors? I think that is so important for all colleges with wrestling programs to show that the wrestling community is willing to step up and take more direct responsibility for the ongoing support of the wrestling program at their schools. I think it is the biggest issue that college wrestling faces today. It is about taking financial control of our destiny. Wrestling has to do it or we will continue to see more programs drop. This article Richard posted and what almost happened at Arizona State this year has to be an eye opener and call for the wrestling community to attack this problem of college wrestling programs in a different way. The wrestling community absolutely must increase its endowing of these programs if we expect college wrestling to survive in this country.