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NCAA president predicts shrinking athletics revenue

Bloomberg News
December 29, 2010
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Revenue growth in college sports’ top tier will be held to 3 percent next year as states slash subsidies nationwide, predicts Mark Emmert, president of the National Collegiate Athletic Association.

The median growth rate was 5.8 percent for the fiscal year ending 2009 and 17 percent a year earlier, according to a report by the Indianapolis-based agency that oversees most college athletic programs.

Schools with the strongest growth will be those in conferences that recently negotiated television contracts, like the Southeastern Conference’s 15-year, $3.1 billion agreement with Walt Disney Co.’s ESPN and CBS Corp., Emmert said. Such schools play in the Football Bowl Subdivision, or FBS.

“FBS schools are being clipped badly to terribly by state revenue cuts,” Emmert, 58, said in a telephone interview on Dec. 20. “Even if the economy improves in 2011, the tax revenue isn’t going to go zooming up, so most every public university is going through some level of budget cuts from modest to extreme. That’s the huge challenge.”

The U.S. economy, the world’s largest, will expand 2.6 percent next year, according to the median projection in a Bloomberg News survey of 65 economists from Dec. 2 to Dec. 8.

About 20 percent of athletic department budgets in the highest division were subsidized by their universities between the fiscal years 2004 and 2009, according to the governing body.

Donations are better than expected given the state of the economy, but “are lagging where they need to be,” said Emmert, who took over as the NCAA’s fifth president on Oct. 5. He succeeded Myles Brand, who died in September 2009 after almost seven years in the job.

Alumni contributions were down about 8 percent for the fiscal year ending 2009, according to the NCAA report.

Ticket sales account for about 30 percent of generated revenue followed by donations (25 percent) and NCAA and conference contributions (20 percent), the report said.

Emmert said the economy and state cutbacks will put pressure on athletic departments trying to be self-sustaining.

The NCAA report issued in August showed that only 14 of the 120 FBS schools posted an operating profit in the fiscal year ending in 2009, down from 25 schools the two previous years. Emmert said he expects the number to remain at 14 or fewer for the fiscal year ending 2011.

State cutbacks have caused some schools to drop programs. In September, the University of California Berkeley cut baseball, men’s rugby, men’s and women’s gymnastics and women’s lacrosse to save $4 million annually.

The belt-tightening hasn’t been limited to individual schools.

The NCAA cut $10 million from its budget for staffing, travel and operations this year, after negotiating a 14-year, $10.8 billion contract with CBS Corp. and Time Warner Inc.’s Turner Broadcasting to televise the men’s college basketball tournament.

The association will also consider legislation to limit the number of non-coaching positions in football and men’s and women’s basketball as a cost-cutting measure at its annual convention in San Antonio from Jan. 12 through 15.

Emmert said he is concerned about the financial well-being of athletic departments, but not because his goal is to see them generate big profits or eliminate university subsidies.

“The money we generate buys services that support those students,” he said. “If we can keep the athletic programs financially healthy, they can create more opportunities for students to participate in athletics.”
 

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