Contrary to Popular Belief, College Sports Teams Lose Money

Yesterday I put up a post showing the rising discrepancy between spending on athletics and academics at traditional sports powerhouses in the Football Bowl Subdivision. Matt Yglesias picked it up, rightly decrying, “our habit of combining the function of a college with the functions of a professional sports franchise.” Unfortunately, many of the commenters continue to assert, wrongly, that college sports teams make money for their schools, despite the NCAA’s own admission that they don’t.

Let’s take as an example the 2008-9 Florida Gators. Led by Heisman Trophy finalist Tim Tebow, the Gator football team won their division in the SEC, beat the undefeated and #1-ranked Alabama in the conference title game, and then, with 26.8 million people tuning in on Fox, won the BCS title game over Oklahoma. The men’s basketball team, two seasons removed from back-to-back national titles, made the NIT, while the women’s team made the NCAA tournament only to lose to eventual champion UConn.

Yet, despite all this on-field success, and after including $2.5 million in student fees, $40.7 million in alumni contributions, $1.8 million in direct state support, and millions more in television fees, tournament revenues, royalties, licensing, parking, and concessions, the University of Florida lost $5.4 million on their athletics programs in 2008-9. This was arguably the most successful college sports program in the country!

Just to drive the point home and show that Florida is not just some sports-obsessed school located in a sports-obsessed state, consider the University of California. Known for its outstanding academics, the University of California had a $1.6 million deficit in 2008-9 even after $12 million in direct student and institutional subsidies.

The numbers above are direct costs only, and it’s worth mentioning that there are indirect benefits to having a sports team, things like free advertising, school spirit, increased interest, and so forth. But there are also indirect costs as well, like player arrests, academic scandals, and over-emphasis of semi-professional athletics over academics.