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The Fiscal Foul Line: Arizona's Budget Crisis Signals Deeper Issues in College Sports

The University of Arizona is teetering on the edge of financial ruin, facing a staggering $240 million budget deficit that now threatens the very existence of its athletic department. With the memo circulating around the Tucson campus that "everything is on the table", including cutting several varsity sports teams, it's apparent that the Wildcats are in dire straits. But while UA's situation may be uniquely bad, it reflects larger trends in college sports - a financial model that seems no longer tenable for many institutions.

When UA president Robert Robbins disclosed the shocking budget figures at a faculty senate meeting last week, gasps echoed through the halls. But for those closely following the economics of college athletics, perhaps the bigger surprise is that more schools haven't already met a similar fate. Operating revenues simply haven't kept pace with spending in the so-called "arms race" of college sports in recent decades, an era defined by flashy facility upgrades, exorbitant coaches' salaries, and increasingly plush player amenities. In nearly every metric - from average coaching pay to average spending per athlete - the numbers have rocketed up across major conferences. Last year, median total spending per athlete among Power 5 conference schools was $289,000 for football and $186,000 for men's basketball, according to NCAA figures.

With spending unchecked, athletic department budgets have become bloated beasts to feed, relying on massive subsidies from university coffers and student fees. A recent Knight Commission study found that the average Power 5 school needed $18 million in student fees and direct institutional support just to break even on athletics each year. Nearly half of athletic department budgets among Power 5 schools now comes from sources other than media rights deals, ticket sales, donations, and sponsorships - the traditional revenue streams. At many colleges, students and academic departments are essentially funding sports they derive minimal benefit from.

The existing model only functions as long as everyone keeps buying in - state legislatures approving hiked subsidies, university administrators signing off on rising fees, networks dishing out lucrative TV deals, and donors continuing to open their wallets. But when any piece stumbles, the ripple effects can be far reaching. The COVID-19 pandemic provided the first tremors, wiping out the 2020 NCAA tournaments and leaving a $375 million crater in the association's coffers. Many athletic departments slashed budgets and sports in response. Stanford University, an institution with a $37 billion endowment, cut 11 varsity sports. And if a school like Stanford, with all its resources, was forced into draconian measures, it illustrated the precarious nature of college sports finances writ large.

Arizona's situation escalated from bad to dire largely because its main income sources have fallen off or remain uncertain. Its $40 million annual payout as a member of the Pac-12 conference vanished when the league fell apart this year, and the future TV revenue from its move to the Big 12 is still an open question. The $30 million that Arizona had counted on in ticket sales also failed to materialize fully, as attendance lagged. And the school's plan to use reserves to temporarily float the athletic department, under the assumption that revenues would eventually improve, backfired significantly. Arizona and its Pac 12 peers markedly overestimated the value of their media rights, which left them exposed.

But Arizona's struggle is simply an extreme version of issues bubbling at athletic departments nationwide. The media rights gold rush that conferences banked on is looking more and more like fool's gold. For all the frenzied realignment of the last year - USC and UCLA to the Big Ten, Texas and Oklahoma to the SEC, etc. - the returns haven't materialized as hoped. Plummeting cable subscriptions and the rise of streaming have diluted TV rights valuations. And conferences expanding footprints to new territory, while lucrative on paper, hasn't translated on the field. The Big Ten adding UCLA and USC, for instance, robs its football product of valuable regional rivalries. Leagues want to capitalize on massive national fan bases, but college football resonates most strongly on a regional level.

Then there is the specter of pay-for-play, long a taboo in college sports, but now gaining legal momentum. With athletes more empowered than ever to monetize their name, image and likeness rights, the current structure already looks outdated. If direct player compensation enters the equation, it's unclear if any athletic department budgets could absorb the hit. Football and men's basketball, as the only consistent profit centers in college sports, would almost certainly have to be decoupled from other sports in a more professionalized system. Once pay-for-play arrives, it could change college athletics beyond recognition.

And what would that mean for non-revenue generating sports that don't attract the same fan and media interest? The so-called Olympic sports have long relied on the teat of football and basketball to survive. Yet in the murky financial environment colleges now face, those sports feel more endangered than ever. Arizona sponsoring 23 varsity sports compared to an average of just 17 in the Big 12 feels telling. At a certain point, colleges may have to make difficult decisions and trim the fat in their athletic programs simply to remain solvent.

In looking for a path forward, Arizona and other schools face no shortage of hard choices. The most drastic solution for UA would be fully privatizing or selling off its athletic department, as some faculty members have proposed. But that comes with its own headaches, not to mention the questionable optics. For universities founded to foster academics and character rather than championships and revenues, the soul-searching is profound. Athletic departments now resemble professional sports franchises masquerading as educational appendages. Simply pumping up subsidies and plunging deeper into debt is untenable. At some point, the very notion of tying exorbitant spectator sports to institutions of higher learning needs reexamining.

Yet traditions die hard, and college sports still occupy an almost mythic place in our culture. The idealized images of noble student-athletes fighting for alma mater endure even as the reality grows more estranged. There are no obvious fixes for aligning the athletic and academic missions of universities once again, much less their budgets. But Arizona's financial free fall should underscore that change is necessary, and the longer it's postponed, the messier it becomes. UA will surely cut sports if forced to, but the ax could swing even wider in years to come. Because for many colleges today, the bottom line math simply doesn't compute anymore. Something has to give.


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