A big business can still lose money
On booster clubs, economic development grants, and the collective-action problem that has most of America's colleges losing substantial money on their athletic departments
The GAO has issued a report on the cost of collegiate athletics that contains this stunning pair of highlights: “Across DI colleges, 94 percent of athletics programs, including 49 of the 69 Power colleges, spent more than they generated in revenue in the 2023-24 academic year [...] All DII athletics programs spent more than the revenue they generated in the 2023-24 academic year.” Considering the revenues raised through broadcasting rights, on-site advertising and sponsorship, concessions, tickets, merchandise, and booster club fundraising, it’s pretty incredible that such a very big business can be so very unprofitable.
■ There’s good reason for college athletics to exist as a common practice, of course: It provides a common base for entertainment, offers publicity to colleges, gives alumni a reason to feel bound to the alma mater, and (theoretically, at least) encourages the formation of a well-rounded person.
■ But these things are also not exclusive to athletics; collegiate notoriety and common cause can be found in the arts, social events, publications, community service, and academics. As with all such things, balance is essential.
■ It’s hard not to see certain expenses as outliers, as when the report notes, “The 14 highest spending Power colleges each spent more than $38 million on coaching.” That’s a lot of money to spend on management for a pursuit with wildly uncertain returns on investment and a very high rate of unprofitability.
■ Much like the case with economic-development spending, it’s hard for any individual institution to opt out of the practice of high spending on athletics, no matter how irrational the behavior might be. It’s a real collective-action problem: Nobody has the incentive to rationalize those budgets if it would mean taking the risk of irritating alumni and others by under-performing on the field of play. But it would still make sense for cooler heads to weigh in before the subject becomes yet another matter for overheated political rhetoric.