College athletics in America operates unlike any other sports organization in the world. Athletic departments are embedded within educational non-profit institutions and function with a different set of incentives and accounting practices than professional sports leagues that aim to maximize profits. Yet, college sports have also become increasingly commercialized enterprises over the past 40 years, with football and men's basketball programs at the most prominent universities generating billions in revenues annually. This dichotomy has led to a complex and often opaque budgetary system for college athletic programs.
In 2019, prior to the Covid-19 pandemic, the National Collegiate Athletic Association (NCAA)'s Division I athletics programs generated $15.8 billion in total revenues. Media rights contracts for football and men's basketball accounted for the largest portion at 36%. These deals, negotiated by athletic conferences, can be worth hundreds of millions or even billions of dollars over multi-year periods. The SEC signed a $3 billion deal with ESPN in 2022. Ticket sales were second at 17%, followed by contributions from donors and sponsors at 15%. Royalties, licensing, advertising, and sports camp revenues accounted for another 10.5%. Government and institutional support from student fees and direct subsidies made up 15%, while just 6% came from endowments and investment income.
Revenue by Category
The vast majority of these revenues are driven by football and men's basketball. In 2019, those two sports generated around $13.5 billion combined, over 85% of total Division I revenues. At big time sports schools, football can account for 70-75% of athletic department revenues on its own. Media deals, ticket sales, sponsorships, donations, and licensing are all dominated by those two sports. Other Olympic sports like soccer, tennis, volleyball generate little revenue in comparison.
On the expense side, athletic scholarships and direct facilities/equipment maintenance accounted for about 18% each of the $15.8 billion in total Division I expenses. Coach salaries made up 12%; strength facilities, media relations, fundraising, spirit groups, ticketing and marketing were another 17% combined. Debt and lease payments on athletic facilities took 6.5%. Medical expenses and insurance were 4.5%, while 10.5% went towards administration and overhead costs. The remaining 13% covered travel, recruiting, game day, conference dues, and other operating expenses.
Again, the costs are largely driven by investments made to support football and men's basketball programs in the quest for wins, recruits, ticket sales, sponsors, and donations. Top coaches earn multi-million dollar salaries, the best making over $9 million, and often have access to private planes, country club memberships, and luxurious football-only facilities separate from other students. Recruiting costs can range from hundreds of thousands to multi-millions annually per program. Chartered flights, fancy hotels, lavish meals are used to entice elite prospects. Building new stadiums and arenas to enhance the fan experience, generate more revenue from premium seating, and appeal to recruits is also tremendously expensive, with costs running into the hundreds of millions. Most schools finance these facilities through greater debt loads. Operational costs like team travel are also exorbitant compared to other college sports.
The result of this widening gap between revenues and expenses is that very few athletic departments actually turn a profit, even amongst the wealthiest Power 5 conference schools. In 2019, only 25 out of 130 Football Bowl Subdivision (FBS) programs reported positive net generated revenue - and the median profit was relatively small at $7.9 million. The other 105 FBS schools - the bulk of the NCAA's top division - had a median net operating loss of $15.9 million. Most costs are largely fixed, while revenues fluctuate based on team performance and fan interest. A few down years can turn net revenues negative in a hurry.
The pressure to spend and win does not dissipate even if profits turn negative. Coaches are rarely fired for losing money. Athletic directors who oversee poorer performing revenue sports tend to lose their jobs instead. This create an incentive to double down on investments rather than exercise fiscal restraint. Bloated administrations and expensive facility enhancements are hard to pare back. Schools routinely increase student athletic fees and institutional support to backfill deficits rather than cut costs.
Debt Rising deficits have also led to dramatically increased debt loads for major conference athletic departments. Outstanding debt grew from $846 million in 2004 to $6.9 billion in 2019 across all NCAA divisions, a compound annual growth rate of 12%. Much of this is tied to expensive football stadiums and basketball arenas built to generate more revenue, but also carries significant interest payments.
In 2019, over $1.2 billion went towards servicing athletic department debt across Division I, representing 7.6% of total athletic expenses that year. But again, the debt burden is not evenly distributed. 20 universities carried over 60% of all Division I athletics debt, led by Texas A&M ($241 million), Texas ($223 million), and Ohio State ($195 million). Power 5 conference schools average debt loads approaching nine figures, while many non-Power 5 departments operate debt-free. Still, balancing budgets becomes even harder when 10-15 cents out of every dollar goes towards debt rather than operational expenses.
Subsidies In order to sustain such substantial losses and debt burdens year over year, almost all major athletic departments receive significant subsidies from their broader institutions, primarily in the form of direct support and mandatory student fees. In 2019, $1.9 billion in student fees and $1.4 billion in direct institutional support went towards Division I athletics. Most public universities require mandatory fees in the range of $500-1500+ per year per student to support athletics. Student fees made up 11% of total Division I athletic revenues, institutional support another 9% - yet another reflection that college sports operates unlike any professional league.
The argument from universities is that prominent athletic programs provide intangible benefits beyond just dollars and cents. Applications and enrollment may rise during winning seasons. Alumni engagement and donations could increase, including those directed towards academic programs. School spirit and student life are also enhanced by big time college sports. However, research on these indirect impacts is mixed at best. Applications bumps are generally small and temporary. Academic donations do not clearly rise with athletic success. Either way, students end up supporting athletics to a considerable degree despite the majority not participating directly in varsity sports.
Revenue Distribution In theory, the revenues generated by football and men's basketball not only support those programs directly but underwrite the other Olympic sports as well. Schools must comply with Title IX regulations around providing equal opportunities for female athletes, so some portion of football and men's basketball profits gets directed towards women's sports that draw little fan interest. But in practice, colleges have used creative accounting to show balances between expenses and revenues across all sports rather than explicit transfers from revenue to non-revenue sports. Football and basketball profits rarely directly supplement other sports losses, though those profits do allow schools to support non-revenue sports within Title IX compliance rather than eliminating them entirely.
There are also wide variances across different sports. Power 5 conference schools spend on average $8 million for men's basketball and $17 million for football per year on operations/coaching salaries/scholarships. Expenses for most women's teams run between $2-5 million; for non-revenue men's teams, it ranges from $1 million to $4 million. Again, though, just two dozen FBS athletic departments turn an annual profit thanks to football and men's basketball. Revenues from those sports allow colleges to sponsor other varsity sports that cost more to operate than they bring in themselves. But expenses still outpace revenues across the athletic department as a whole at most schools.
The pressure to spend ever increasing millions to compete drived exponential growth in revenues, expenses, debt loads, and subsidies across college sports - an ultimately unsustainable financial model. Reform proposals generally fall into two camps: unfettered free market capitalism that pays players market wages or a non-profit model with cost controls to refocus resources on education. Allowing unlimited alternate revenue streams like endorsements moves closer to financial transparency but likely exacerbates gaps between college football's haves and have nots. Imposing national salary caps on non-coaching compensation and tighter limits on recruiting spending would sustain competition between programs. In any case, creating financially sustainable athletic departments that primairly serve university values rather than chase ever growing profits remains an immense challenge with no simple solutions on the horizon.
While varied across different schools, conferences, and divisions, here is a general breakdown of how money tends to flow through a major college athletic department:
Media rights contract revenues, ticket sales, advertising/sponsorship deals, donations, and licensing royalties flow into the central athletics department budget. Football and men's basketball make up 80-85%+ of revenues for departments in large, public universities and conferences. Certain schools also receive subsidies from their broader universities derived from tuition, fees, state appropriations for public institutions, and other central funds to cover additional costs.
Each varsity sport operates as its own financial entity within the athletics budget overseen by its head coach. Sports earn revenues mainly from any ticket sales, advertising, donations directed specifically for that team, and portions of general department sponsorship deals. Sports incur expenses like coach, staff, & scholarship athlete salaries, recruiting costs, travel, equipment, game day operations, etc. The sport specific budgets roll up into one unified department budget.
Consistent profits from football and men's basketball fund more than the direct costs of those programs and allow colleges to sponsor other varsity sports at a net loss, though through somewhat vague internal cost allocation processes rather than direct subsidies. Most universities lose money overall even after accounting for all revenue and expenses across their entire athletic department. Continued deficits and debt are offset by some combination cuts to department costs and increased subsidies from central university funds.
While college athletic department budgeting follows the same general principles of other businesses - revenues in, expenses out, profit calculation - the incentives, culture, and accounting practices differ considerably from pro sports teams. Athletic directors face far more pressure to spend on winning than earning profits. And the financial relationship between universities and athletics departments remains unlike any other industry, with billions of dollars ultimately supported by non-athlete student fees and institutional budgets rather than fan interest or an ownership chasing investment returns similar to pro leagues. These tangled economics have fueled the rapid commercialization of college sports, but also created an opaque and confusing budgetary web of inflated revenues and expenses that fails to operate as a financially sustainable business nor properly serve educational institutions. Unraveling those threads persists as a monumental challenge under the current NCAA system.
Revenue by University
Source: USA Today
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