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Sunday, July 22, 2007
 
Mark Alesia Honored for Empirical Study of Intercollegiate Athletics Financing

Congratulations are in order for Indianapolis Star reporter Mark Alesia, who was honored this week by the Society of Professional Journalists with its 2006-07 Investigative Reporting Award for the empirical study (Part I, Part II) he conducted in April 2006 on the extent to which schools and the NCAA profit from star players, how university general funds and students contribute to athletic departments, and the interplay of those contributions with the NCAA's tax exempt status as a non-profit entity. From the study, he built the NCAA Financial Reports Database, which is the most detailed, publicly available database of college athletic department financial information ever assembled.

Among Alesia's findings is that fewer than 1% of NCAA athletes generate more than 90% of the NCAA's money, which confirms the incredible economic value of basketball and football stars to colleges and universities. For instance, he found that 43 public schools in the 2005 March Madness tournament paid out a combined $12 million in expenses relating to the basketball players (including scholarships and tuition and other expenses), which proved to be a very good investment, as those same players generated $267 million in revenue for those schools. Where did the $255 million difference go? "The rest was used to pay for coaches, administrators and money-losing sports -- basically, all others except football."

Alesia also found
that athletic departments at taxpayer-funded universities nationwide receive more than $1 billion in student fees and general school funds and services, and that without such outside funding, fewer than 10% of athletic departments would be able to support themselves with ticket sales, television contracts and other revenue-generating sports sources. In fact, most would lose millions of dollars.

The award committee at the Society of Professional Journalists praised other noteworthy aspects of Alesia's study:

What he uncovered is this: Taxpayers indirectly subsidize athletic departments because college sports are exempt from federal taxes, based on their tie to education. The exemption particularly benefits big schools, which receive up to 40 percent of their athletic revenue from donations, most of which are tax deductible. Critics believe college sports have largely become a business of mass entertainment and should no longer receive an education-based tax exemption, especially in an era of rising tuition and stagnant state support for higher education.

Judges praised Alesia for challenging “how college teams are funded. In so doing, it effectively attacks institutional support and student fees subsidizing college sports. Database work incomparable … brave work with compelling results.”

James Duderstadt, former president of the University of Michigan and now a member of the U.S. Secretary of Education’s Commission on the Future of Higher Education, said this coverage is “the most thorough analysis of the financing of intercollegiate athletics I’ve seen since we asked the Big Ten chief financial officers to do an independent audit of our athletics departments during the 1990s. … You folks have done a great service to higher education!”

Congrats again to Mark, whose work will undoubtedly assist those of us at the newly-formed College Sport Research Institute.





3 Comments:

Congrats Mark! You deserve it.

Blogger Rick Karcher -- 7/23/2007 9:46 AM  


Great research.

I've got a love/hat for intercollegiate athletics. The schools just refuse to exercise restraint on the upper revenue scale. At those schools dropping a million or four on a coach is just an ordinary day and paying a couple million to get rid of the current coach to get another multi-million coach doesn't cause a ripple. Alabama fired a multi-million coach who had lost to a guy (Joe Novak) making less than a quarter million a year. Boise went to the BCS with a guy making a half million and a million a year guy who didn't post a winning record in his one season at Boise, Houston Nutt, hasn't made the BCS in nine seasons at Arkansas.

Universities pay a million plus drop a men's sport and blame Title IX when they could hire a MAC, WAC, Sun Belt coach, give them a hefty raise and still save enough on salaries to save the sport and add another women's sport. At least 30 I-A schools have head coaches making less than some coordinators at rich schools.

I just feel torn about the logical steps that need to be taken. On one hand when you see an institution selling off naming rights and entering lucrative deals for merchandise and television rights the idea of tax-deductibility for donations that are used to pay someone a million bucks to just go away seems so wildly bizarre. The idea of an enterprise that generates piles of cash just to spend it on salaries and toys is tax-exempt is wrong.

Taking a low end Forbes sports valuation metric University of Texas athletics has a value ranging from $178 million to $356 million meaning that if it were for sale it would at the low end bring more than the Milwaukee Bucks and at the high end be equal to the Chicago Bulls or Texas Rangers.

But then down on the other end of the scale in Division I and the lower levels of college athletics you have an activity that loses money, yet has some value to the college experience and is run on a shoe string.

At the high end donations are extorted to get in the stadium or arena and set priority for those seats, no donation no ticket. At the lower end the donations are much more a goodwill gesture because ample seats remain available. Maybe not theatre seats on the fifty but bleacher seats on the forty are available to the person who got in line early enough.

At some point between the top and the bottom tax deductibility and exemption from income tax need to fade away.

Blogger Mark -- 7/23/2007 1:07 PM  


Michael,

Mark is indeed to be congratulated on his outstanding work related to the NCAA. Dr. Duderstadt was exactly correct in his assessment of the value of the database to academic research on college sport.

Mark's work, as you note, will be of great assistance to the College Sport Research Institute (CSRI).

Mark's work in covering the many issues surrounding big-time college sport exemplifies the rich tradition of investigative journalism in this country.

Again, congratulations to Mark.

Sincerely,

Richard M. Southall
Director - College Sport Research Institute

Anonymous Richard Southall -- 7/28/2007 9:17 PM  


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