clock menu more-arrow no yes mobile

Filed under:

15 big facts about the NCAA's wealth and competitive imbalance

A sports economist from the University of San Francisco rattled off some interesting (and perhaps surprising) nuggets about the way big-time college sports works.

Schools that make less money off sports than the University of Texas have a much harder time competing, no matter what the NCAA claims.
Schools that make less money off sports than the University of Texas have a much harder time competing, no matter what the NCAA claims.
Jim Cowsert-USA TODAY Sports

Sports economist Dan Rascher took the stand for the O'Bannon plaintiffs on Friday in an effort to prove that college sports are run like a business, and that players profiting off their athletic ability would not stop people from watching. The latter is the most relevant point to the outcome of the trial.

Remember: revenue and expense numbers are variable, depending on who you ask. And as far as the trial goes, it matters if "amateurism" is the key to the NCAA business model more than it matters how much money is in college sports.

However, Rascher's analysis shows that the NCAA's member institutions are often doing better financially than they like to let on.

1. Some athletic departments are as rich as pro teams.

2. Revenue sports are very profitable.

Remember, there are ambiguous ways that athletic departments are required to report their financials, so it's going to be hard for either side to prove exact numbers. Plus, Rascher's numbers have been disputed before. Still, the point remains: revenue sports are profitable on their own.

3. Schools fudge how they allocate money.

It might be impossible to know exactly how schools allocate their money, but as Rascher pointed out at trial, it's "unfathomable" that just 7 percent of Ohio State's donations went to revenue sports.

4. Schools benefit from sports.

5. College sports holds its own with pro leagues.

6. The business is growing ...

7. ... but it's pretty inefficient in doing so.

8. Being in Division I is financially worthwhile for most.

If this were really a money-losing industry, schools wouldn't be lining up to join. That's basic economics.

9. Competitive balance is a farce.

10. Really, it is.

The NCAA claims that if players get money, the rich schools will have an advantage in recruiting. However, that advantage already exists.

11. Athletes at big schools would get more money than athletes at small schools.

It's important to note that this is not the model that would be used if O'Bannon wins. Or at least, probably not. Neither side will decide that model. The most likely model if O'Bannon wins is one in which each conference sets payment values for athletes. However, athletes in the richer conferences would still get more money than athletes in the smaller conferences.

12. Athletics trump all else.

Basically, schools will do whatever they can to not cut money from football and men's basketball, even when they're in the midst of extreme budget crises. That's evidence that football and men's basketball are profitable.

13. Football and men's basketball are the priorities.


Funding non-revenue sports might be a relevant issue for schools and the people who watch them (though that's probably a bit overblown), but the market in question here only includes football and men's basketball. Judge Claudia Wilken ruled that the NCAA cannot use the funding of non-revenue sports as an excuse to not pay players, because the organization has not said why it couldn't enforce stricter revenue-sharing rules (i.e. funding those sports over paying their football coaches absurd amounts and building palaces as facilities).

The revenue sports, as a market by themselves, are profitable, and that's all that matters.

14. You won't stop watching if athletes are paid ...

The NCAA contends people watch their teams just because of the name on the front of the jersey, and not the ones on the back. However, people don't go to games just because. They're far more likely to go if their teams are winning, which shows the athletes have value.

15. ... because you already do it.

Also, people who don't like change will inevitably argue that if players are paid, they'll stop watching games. However, the plaintiffs have previously pointed to similar sentiments about the Olympics being untrue when the IOC changed its amateur model. And in a more relevant example, Rascher pointed out that people still watched the Sugar Bowl in 2011 even though they knew star players had accepted money.