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The One Where Dan Wolken Gets Me To Talk FCS Financials

At any given time I have about a dozen writing subjects buzzing around in my head like a monkey on uppers.  Today I woke up and said, what do I write about today?  Realignment?  The CAA?  Stony Brook?  Appalachian State's move to the Sun Belt?  Lehigh's expected QB battle in camp this August?

Instead, inspiration came from an unexpected source: USA Today reporter Dan Wolken's Twitter feed.

Twitter allows a 140 character limit on tweets, meaning statistics posted there can be interpreted any way one chooses.  And his Twitter report from the NCAA convocation in Florida made me (incorrectly) defensive - but allows me to give some insight behind the numbers of Division I Athletics.



One of my great pet peeves is when numbers are presented without context.  Nobody would give any validity to, say revenue numbers from IBM if they didn't include the costs.  If IBM made $30 billion but spent $40 billion to make that $30 billion, that, um, is relevant.

Twitter, though, is a fountain of out-of-context information.  How can you put context in 140 characters?  It's possible, but not easy.  Angrily, I nabbed the Chronicle of Higher Education's list of NCAA financials from last season, looking to tear that (admittedly, non-) argument to shreds.

In a nutshell, it's not enough to look at how much revenue an athletic department generates.  If you are really, really truly to justify your athletic existence in business terms, you have to go the whole way with it - revenues and expenses.  Economics 101.  Don't give me crap about revenues without telling me what it cost.

Fortunately, the financials are not all that hard to find.

When Dan says the median athletic department generates $40.5 million, he means specifically the amount of revenue from the athletic department itself, i.e. ticket sales, booster donations, sponsorship, etc., in other words, the kinds of revenues the layman might expect an athletic department might create.

He does not mean athletic subsidies, coming from (in some cases) state governments and (in almost all cases) additional student fees, packaged as a part of tuition - and, in some cases, most if not all of the "profits" of the schools' athletic departments in question.

The COHE report provides context:

The largest revenue source for FBS schools is ticket sales, which generated nearly 25 percent of FBS revenues in 2010. With larger stadiums and NCAA attendance requirements, these programs depend heavily on their extensive regional fan base for support.  Again, there are significant differences among FBS institutions, with the smaller FBS programs operating more like the FCS subdivision than the larger, higher spending programs. Among lower spending schools in the FBS (quartiles 3 and 4), ticket sales represented less than 20 percent of total revenue and institutional subsidies comprised about 40 percent to 60 percent of their budget. 

Get used to hearing the words "third and fourth quartile" from the mouths of NCAA commissioners and executives, who are very much looking to define the Division I football landscape further, as schools in the Big 10 conference look less and less like "fourth quartile" schools such as all the members of the Sun Belt and MAC.

Take, for example, a fascinating and candid Q&A from Doug Fullerton of the Big Sky, an FCS conference:

Q: The Big Sky has long been one of the top Football Championship Conferences. Other marquee programs such as Georgia Southern and Appalachian State are leaving FCS to join the FBS. Do defections like those, and rumors of other programs looking to jump give you concern about the future of FCS?

A: We are indeed concerned. Every indicator tells us that the institutions that make the move to the fourth quadrant of FBS - that is where they will all most certainly move to - are going to win less often and spend more money for that privilege. Yet, they insist that the neighborhood change will somehow make them a better institution. They will fund their programs in very predictable ways. Those institutions are not able to move to a conference that is able to support the move financially, nor are they able to tap into an untapped media resource. They will either play more “money games,’’ or they will ask for more allocated income from their students or their president. The money game road has proven, for every school that has tried it, to be a sure method to destroy even the most solid programs. So that leaves them with securing more allocated funding from their universities. It almost always comes down to those options. Given the widening gap separating the five top conferences financially from the rest of FBS, whatever they are chasing is going to only become even more unattainable and more expensive in the future.

As Fullerton hints, those subsidies are huge, too, when it comes to "balancing the books" of Division I athletic departments.  For the years 2005-2010, the median FBS athletic department spent over $56 million - the gap being covered by these subsidies.

And this is using expense numbers that aren't even current - they date from three years ago.  As the COHE report states, too, this $56 million might be a bit low considering Dan Wolken's new information, too:

Recent trends suggest that the most significant economic slowdown in recent years has done little to reverse the growth in athletic spending, particularly in those divisions heavily dependent on institutional support. The growth in athletic spending is not expected to abate anytime soon, as media contracts fuel more money into the system and the “have nots” continue to chase the “haves.” Not only does athletic spending per athlete far exceed academic spending per student, it is also growing about twice as fast.
Is that to say FCS football is out of the woods in terms of expenses?  Hardly.  Any of the trends of growing athletic spending certainly affect football in all of Division I, not just Notre Dame and USC.

But, again, looking at the numbers is instructive.

Taking Dan Wolken's $3.75 million generated revenue numbers, FCS' average athletics department expenses totaled just a bit over $10 million in the five year period between 2005-2010.

Is it a "loss"?  Of course - with the same cast of characters, institutional support and state support, making up the difference.

But about this a second.  FCS programs nearly six times less expenses across the board in their athletic departments than their FBS counterparts.

As a result, this is saving a boatload of money for the students and the state.

When a school goes FBS, they're essentially asking the state and the students for a handout to cover a $16 million annual handout for athletics, whereas when the school is FCS, it's $6 million.

Over a 10 year span, the difference between the two paths is $100 million dollars in expenses.  $100 million!  And this includes having a Division I football team!

How come the powers running the FCS never frame the argument in this way?

Not to pick on Mr. Wolken, but this is what bugs me about the presentation of facts in terms of revenues.  Without context, the numbers "FBS median revenues are $40.5 million, FCS median revenues are $3.75 million" are completely misleading if you're judging an athletic department on how much it makes - because you have to spend money, and an awful lot of it, to be an FBS program.

Put it this way: if you, yourself, had to pay out-of-pocket $600/year annually for FCS football, or $1600/year annually for MAC bowl football, which would you choose?

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