In Tom Wolfe's I Am Charlotte Simmons, one of the characters (the university president, I think) explains that first-tier college athletic progrms are not money makers; they are actually subsidized and universities pour money into them for the sake of "the aura".
They product differentiate as best they can. Many of them can more esaily join the ranks of athletic powerhouses than spend decades accruing a reputation for academic distinction. In the process, student athletes are exploited (yes, the term is actually appropriate here) and university presidents and others justify their NCAA cartel with bromides about the virtues of amateur sport.
Today's WSJ includes coment on the Knight Foundation report that comes to essentially the same conclusions.
"A Numbers Game"
"The world of college sports got an interim report card this week when representatives of the Knight Foundation Commission on Intercollegiate Sports and the National Collegiate Athletic Association met in Washington. There was good news and bad, so you might say that Joe College and his school are still on probation. Above all, it appears that everybody could use a crash course in the perils of taxing and spending.
"When the independent Knight Commission was established in 1989, its stated goal was to press for reforms in 'a climate in which commercialization of college sports often overshadow[s] the underlying goals of higher education.' Although scandals make headlines -- when coaches are caught conspiring to fake grades so their star athletes remain eligible to play, or when players do drugs -- the greater crime is that many kids recruited to play college sports never get an education. As Knight Commission associate director Amy Perko notes, while a tiny handful of student players may strike it rich in the pros, many 'suddenly find themselves in a world that required skills their universities did not require them to learn.'
"In one sign of progress by the commission and the NCAA, schools soon will have to meet minimum standards, involving retaining academically qualified student-athletes, or be subject to penalties. A test-run begun last February suggested that 26% of football teams would be in the zone for penalties if the new Academic Progress Rate standards were already in effect. At least now everyone has a goal to aim for.
"Yet the most surprising figures to come out of this week's meeting were not about graduating. They were about what some call an "arms race." It seems that spending on college athletics has been growing four times faster than overall university spending. According to data compiled in several studies for the NCAA, the spenders may not be getting much bang for their bucks, either.
"In 2001-2003, both revenues and expenditures of Division 1-A athletics programs rose by an average of about 17%. If you exclude the extra money universities cough up in "institutional support" for sports, only about 40% of all Division I programs report that they run athletics in the black. More ominous yet, that statistic doesn't reflect capital spending, e.g. for building stadiums. If that's factored into the equation, as few as 12 of the division's 325 member programs may be self-sufficient.
"Meanwhile, spending on scholarships and coaching salaries continues to soar. This despite studies indicating that, on balance, pumping money into athletics does not increase winning rates, or bring in more donations from alumni.
"For the time being, a train wreck is being delayed in part by institutions contributing more out of their general budgets to sustain athletics programs. Then there's the tax otherwise known as the "student athletic fee." For example, one public university in Florida raised more than $11 million this way in 2003-2004 and students at another state school now pay more than $11 per credit hour to finance athletics, whether they have any interest in sports or not.
"So far nobody has proved that funneling cash into athletics programs hurts a university's ability to fulfill its primary, academic, mission. Even so, the leadership of the NCAA and the Knight Commission clearly realize that in yet another arena of collegiate sports -- financial integrity -- priorities are getting out of whack. Wouldn't it be ironic if, in that regard, college athletics turned out to be a losing proposition?"