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Colleges pay to play

It’s expensive to compete with the big boys.

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IT'S COSTING THEM: The Bears - move up to Division IAA.
  • IT'S COSTING THEM: The Bears - move up to Division IAA.

The University of Central Arkansas stepped up from Division II athletics to Division 1AA in 2006. This was one of many questionable calls made during the administration of President Lu Hardin, who has since resigned under pressure. UCA is looking for a new president now, and one of the first and largest problems he or she will have to confront is the painful cost of upward mobility in sports. It's not inconceivable that UCA, now under closer watch by state government and the public, would have to step back down, a rare occurrence in intercollegiate athletics.

Had UCA officials sought assistance in making their decision about sports, they would have found it easily accessible. Only a couple of years earlier, the NCAA, the governing body of collegiate athletics, had released a comprehensive study showing that moving up in sports classification was a losing proposition financially. NCAA researchers effectively refuted the argument made by every institution that wants to move up — that is, the greater revenue from playing bigger and better-known opponents will more than offset the increased cost of competing at the higher level (more athletic scholarships, more travel, bigger stadiums, etc.).

The NCAA studied the impact of reclassification on 19 colleges and universities from 1993 to 2003. Eleven of the institutions moved from Division IAA, the second highest division, to Division IA, the highest. Eight moved from Division II to Division IAA. The findings were essentially the same for both groups.

The dates of the study were such that it just missed both UCA and Arkansas State University at Jonesboro, which moved from IAA to IA in 1992, but there's no reason to believe the findings would have been different at either of those institutions. Both have struggled greatly with the demands of competing in a higher sports classification. (In this report, we've used the names for the various divisions that were in effect when the NCAA study was done. Since then, there's been some adjustment to the terminology in regard to football.)

It's true that revenue from athletics generally increased with higher classification, the report said. “Unfortunately, operating expenses grew at an even greater rate …” For example, all of the eight institutions that moved from Division II to Division IAA had lost money on their athletic programs before reclassification. After reclassification, they lost a lot more. School A (the study did not identify institutions by name) lost $3.6 million the year before it reclassified, and $6.9 million after reclassification. School B went from a $2.1 million loss to a $4.9 million loss. School C went from $2.8 million to $6.3 million. And so on. In each case, the operating loss of the athletic department was covered by transferring funds that had been intended other university purposes, raising the activities fees charged all students, and resorting to other non-athletics revenue sources.

The report concluded:

“Overall, our study suggests that there are neither obvious financial nor considerable nonfinancial measurable benefits from reclassification and that the primary motivation to reclassify is intangible (e.g., perceived increased prestige). Additionally, the findings in this study underscore the issues faced by school administrators who are considering reclassification. One significant and consistent finding is that reclassification is a financial drain to the athletics department. The fact that schools choose to reclassify despite this suggests that non-monetary perquisites, perceived increases in status, and a ‘keeping up with the Joneses' effect' may serve as a motive for reclassification.”

And when a school moves upward to the Southland Conference (UCA) or the Sun Belt Conference (ASU), it's hard to argue that there's much increase in prestige, either.

Information from UCA shows the athletic department with a $6.4 million operating loss last year, compared with a $4.5 million loss in fiscal 2006, the last year of competition in Division II. ASU athletics lost $7.4 million last year. The university said it had no records for 1992, the last year of Division IAA competition. 

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