Tuesday, October 27, 2009

Is Cal's Football Program Really Losing Money?

By Robert Gammon
Tue, Oct 27, 2009 at 2:21 PM

Some UC Berkeley faculty are upset that the university spends millions each year to subsidize its athletic department at a time of academic cutbacks and rising student fees, according to the Chron. Some point to Cal football coach Jeff Tedford's $2.3 million annual salary as an example of an over-the-top expenditure. But their anger may be misdirected, because it's not at all clear whether Cal's football program requires an operating subsidy from the university, takes money away from professor salaries, or forces students to pay higher fees.

The Chron story paraphrases William "Brit" Kirwan, chancellor of the University System of Maryland, and co-chairman of the Knight Commission, which released a report yesterday on college sports finances, as saying that only 24 of the 120 top college football teams operate in the black, with deficits averaging $10 million per school. But according to Amy Perko, executive director of the Knight Commission, that's not entirely accurate.

Perko said in an interview today with the Express that 54 percent of the top 119 college football programs reported being profitable from 2004 to 2006 - the most recent data available from the NCAA. That is, they brought in more revenues in the form of ticket and merchandise sales than they spent on operating expenses, such as coach's salaries. She also said that when you add in the unprofitable, lesser-known sports, that lose a lot of money, then only 25 of the top 119 colleges operated in the black.

The confusion may have been created by how the Knight Commission report categorizes the biggest schools. It puts them in something called, "the Football Bowl Subdivision," even though the category refers to all sports programs at the universities, not just football. It's also not clear from the report whether the rising salaries of football and basketball coaches are the main causes of sports programs being less profitable or whether schools are losing money by subsidizing lesser-known sports that generate virtually no income.

The Knight Commission report, however, does note that many women's sports, required under Title IX, are unprofitable. "Virtually no women's teams attract enough fans to make money, and few have the kind of marketing deals from corporate sponsors that enable men's teams to generate net operating revenue," the report states.

Perko also said that the Knight Commission report didn't analyze the profitability of individual schools, or individual sports programs, so there is no way to know whether Cal football is a money loser. Also, there is no way to know from the report whether Tedford's salary is worth it, although there are indications that it might be. The report notes that the biggest schools make more money from bowl game appearances. And under Tedford, Cal has had its most successful football team in years.

In other words, if the UC Berkeley faculty wants to get angry about the university's athletic department, then it needs to do a bit of homework to find out precisely which of the school's sports programs are actually requiring a subsidy each year.

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