Be Careful With USA Today's College Finances Database

This moment led to a $5.2 million "subsidy" for Texas A&M athletics. - Aaron M. Sprecher

It's not as simple as it seems.

The USA Today has done the annual update to its database of college athletics financials. It now contains information from the 2011-12 school year.

You'll read a lot of interesting information that people will pull from it, and I will probably do some of the same myself. However, it's important to be very careful with anything that anyone tries to do with it.

I have gone digging through colleges' actual financial statements at various times over the past couple of years, most recently when debt became a hot topic back in January. The only firm conclusion I have ever been able to pull out of them is that every school does its accounting differently. For instance I think pretty much every college has some kind of nominally independent athletic association to run its cash, but what schools put on those books and what they keep on their own is not consistent. Click on the debt link to see some concrete examples of some different approaches within the SEC.

Another example of why you have to be careful comes from last year. Kansas State got tons of positive press for being the "most profitable" athletic program in the country. While KSU is largely responsible with its money, that story was highly misleading. K-State launched a capital campaign during the 2010-11 athletic year, and it booked the entirety of its multi-year donation pledges on that year's statements. If you look at the Wildcats' revenue chart from the USA Today, you see a giant spike for contributions in 2011.

While that is a valid way of accounting for the money, it makes the story far different. KSU's "most profitable" title was the result of a large, one-time donation campaign that won't actually see all of the money come in for many years. It wasn't the result of a regular and repeatable pattern of bringing in $23 million more than it spends. The school may even have to make downward adjustments in the future to account for any donors who don't follow through on their pledges.

The USA Today also makes a big deal about subsidies, but if you read beyond the first couple of paragraphs, you find that "subsidies" can vary wildly from school to school. Florida public schools must follow an arcane state law about sales tax and spending on women's sports that results in a "subsidy". Texas A&M athletics' "subsidy" was an interest-free loan from the school to bridge the gap spanning from when it lost Big 12 payouts to when it received its first SEC payouts. For most schools with a subsidy, a student fee is part or all of it. Those are typically voted on by student governments, so they don't happen without the students' consent on some level.

There is plenty of room for investigating and criticizing the way money flows through college athletics, but doing so requires precision. If you try to paint with a broad brush, you'll probably end up producing a very flawed (if not totally meaningless) result that you feel embarrassed about later. Trust me, I know. Be careful out there.

UPDATE

ESPN sports business reporter Kristi Dosh tweeted out some more examples this morning of how things can differ:

The different ways that schools use to keep debt on the books, either the athletic association's or their own, will also make the level of debt service payments vary a lot as well. Universities don't have a Securities and Exchange Commission regulating how financial statements must be structured like there is with publicly traded companies on Wall Street (and even they can have large discrepancies in methodology too). Everyone is different.

X
Log In Sign Up

forgot?
Log In Sign Up

Forgot password?

We'll email you a reset link.

If you signed up using a 3rd party account like Facebook or Twitter, please login with it instead.

Forgot password?

Try another email?

Almost done,

Join Team Speed Kills

You must be a member of Team Speed Kills to participate.

We have our own Community Guidelines at Team Speed Kills. You should read them.

Join Team Speed Kills

You must be a member of Team Speed Kills to participate.

We have our own Community Guidelines at Team Speed Kills. You should read them.

Spinner

Authenticating

Great!

Choose an available username to complete sign up.

In order to provide our users with a better overall experience, we ask for more information from Facebook when using it to login so that we can learn more about our audience and provide you with the best possible experience. We do not store specific user data and the sharing of it is not required to login with Facebook.

tracking_pixel_9341_tracker