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In the Pacific 12, profit-and-loss is eclipsing wins and losses

Most Pac-12 athletic departments need money diverted from university coffers to make ends meet, sparking criticism in a time of shrinking budgets and cutbacks. A new $3-billion TV deal and increased revenue sharing should help.

October 15, 2011|By David Wharton and Baxter Holmes
  • Commissioner Larry Scott engineered Pac-12 expansion and a historic $3-billion television contract.
Commissioner Larry Scott engineered Pac-12 expansion and a historic $3-billion… (Reed Saxon / Associated…)

The clock is ticking, less than a year until the Pacific 12 Conference starts collecting on its historic $3-billion television contract. The largest broadcast deal ever negotiated by a college league, it will pour hundreds of millions into the member schools annually.

And it cannot come a moment too soon.

A sluggish economy has left athletic departments across the Pac-12 scrambling to cover costs, and some barely afloat, according to records acquired by The Times.

Cash-strapped programs at California, Arizona State and Oregon State needed "allocated revenues" to balance their budgets last year. That meant taking $10 million or more from university coffers, student fees and state funds.

Sports at all 10 of the conference's public schools — USC and Stanford did not have to share records — received allocated revenues in some amount. Even relatively robust programs at UCLA, Oregon and Washington got more than $2 million each.

Critics see a problem with diverting any money from classrooms in an era of budget cuts and tuition increases. "It would be great if we had an athletics program that didn't have to cost so much," said Michael O'Hare, a professor of public policy at Cal. "Maybe there would be money left over for actual students."

The Pac-12 reflects a national trend, with only 22 of the 120 largest NCAA athletic departments showing a profit in the 2010 fiscal year. These numbers explode the myth that big-time college sports generate big profits.

Even with more TV dollars on the way, a fundamental question arises.

"At the heart of the issue, does the athletic department have a legitimate place on campus like everyone else?" asked Rodney Fort, a sports economist at the University of Michigan. "That is the debate that everyone should have."

Who's counting

Each year, a U.S. Department of Education website posts financial data submitted by college teams nationwide. The oft-quoted numbers can be confusing.

They lump allocated revenues with money that athletic departments earn through television contracts, ticket sales and donations. For the 2009-10 school year, these numbers seem to suggest that every school currently in the Pac-12 broke even or turned a profit.

But NCAA members compile another, more detailed report available by request, one that reveals most athletic departments in the Football Bowl Subdivision, the highest level of competition, do not make enough to cover costs.

"That report gives us a fairly complete picture," said Dan Fulks, an accounting professor at Transylvania University in Kentucky who helps the NCAA analyze the numbers. "Our goal is to determine the true cost of athletics."

Four types of allocated revenues are crucial:

•Student fees, including assessments or registration fees paid along with tuition.

•Direct government support shows state and federal dollars earmarked for athletics. The Oregon teams receive proceeds from their state's lottery.

•Direct institutional support includes money from general and discretionary funds as well as tuition waivers that cover athletic scholarships.

•Indirect support includes the cost of athletic facilities and services — light bulbs, groundskeeping, etc. — supplied by the university at no charge.

At UCLA, students pay a registration fee that goes into a pool and is appropriated by committee. In 2010, $2.7 million went to help the athletic department meet its $61.9-million budget. Beyond that, the university contributed only $60,000 in direct support.

A different scenario played out at Cal, where a $12-million deficit prompted officials to eliminate or demote five sports last fall. All five were ultimately preserved with help from donations.

Still, athletic spending remains a sore point on campus. As Brian Barsky, a computer science professor, said: "The UC system had a $650-million budget cut this year. Ultimately, it is a matter of priorities."

Other schools that relied heavily on allocated revenues in 2010 included Oregon State ($11 million), Arizona State ($10.3 million) and Pac-12 newcomers Utah ($8.6 million) and Colorado ($7.3 million).

Washington State's athletic department needed $9.3 million to cover costs, including general funds to pay for compliance staff and employee benefits. With a small population base in rural southeastern Washington, Athletic Director Bill Moos said the Cougars cannot generate nearly as much revenue as USC, UCLA and other large-market programs.

"That's a big deal," Moos said. "There has not been a level playing field through the years."

Pay to play

On most Pac-12 campuses, athletic spending falls in line with a national average that sees universities devoting 3% to 4% of their total budget to sports. It might not seem like much, but the dollars add up.

Last year, conference athletic budgets — which are publicly available — ranged from $32.7 million at Utah to $75.7 million at USC and $81.7 million at Stanford.

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