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Comment by prostoalex | Hacker News Reader

Profit centers, eh? http://seattletimes.com/html/collegesports/2010103078_ncaa21...

Yes, profit centers. Notice how all but one of the coaches on that map coach Football or Basketball.

Athletic departments as a whole aren't profitable because the ridiculous amounts of profits earned by basketball and football can't subsidize the losses incurred by supporting the other sports.

Does this profit calculation include or exclude the cost (or bond interest payments) of building up a football stadium with supporting facilities?

Obviously that's going to be an analysis that has to be done for every stadium. Certainly in many cases it works out -- the average age of an NCAA stadium or arena is much higher than a professional venue. These are not the billion-dollar megaplexes you're probably imagining.

But really, I think the issue here is that you're arguing at cross purposes. There's a strong argument to be made that the whole idea of the state running a profit-making sports team through its universities is flawed and borderline immoral. And I tend to agree.

But that says nothing about the economics of the situation, or the "fairness" of paying the coaching staff a market wage, or even the fact that these absurd salaries are, in fact, driven by a very liquid and efficient market.

Yeah, agree with what you're saying. The "fairness" comes into play as high-salaried coaches become high-pensioned retirees [1], but other than that NCAA salaries are not wildly divergent from professional sports salaries, so seem to be in line with market

http://budget.universityofcalifornia.edu/files/2011/11/2012-...

Good point. A lot of people assume that college sports programs always generate income for the school, but many of them lose money (though probably not the ones employing these particular coaches). I attended a school that was in the process of adding a football program, and the first effect of that was an extra fee for students (in addition to an existing athletics fee). I think the only way that college sports can be acceptable is if they never take money from other programs or increase the cost of education for students not participating in those sports.

From your link:

Of the 119 FBS football teams, 68 (57.1 percent) finished the year in the black.

Of the 119 FBS schools playing men's basketball, 67 teams made a profit. One of those same 119 schools made money in women's basketball in 2008.

FBS football teams recorded a median net profit of $1.95 million. Men's basketball at the same schools produced a median profit of $518,000. No other sport at the FBS schools, measured by median values, showed a program in the black.

so yeah, profit centers.

The facility cost is shifted to university's balance sheet. Most calculations assume that the cost of building and maintaining a stadium and supporting infrastructure is zero.

I'm going to sound like an economist that refuses to pick up a $20 bill (if it's real, somebody else would've picked it up), but there's, for example, profit opportunity in on-campus food catering. So a bunch of private contractors sign up with university to operate their own facility, hire their own staff, and give the university a cut of the earnings or licensing fee.

Why has no for-profit corporation stepped up to build up a stadium, hire coaches and players, license the university name and then enjoy the profits?

An athletic program in isolation may not be profitable, but I think most schools view it as an important way to keep alumni involved and believe the increase in alumni donations more than offsets any loss they may take in athletics.

The facility cost is shifted to university's balance sheet. Most calculations assume that the cost of building and maintaining a stadium and supporting infrastructure is zero.

Do you have a source on that? I couldn't figure out a way to research it myself, but it seems illogical that the cost of financing the facilities would not hit he P&L of the athletics association.

Why has no for-profit corporation stepped up to build up a stadium, hire coaches and players, license the university name and then enjoy the profits?

The same reason many Universities still own on campus housing in most cases. Likely because Universities will not let them. Also, it is likely that the NCAA would oppose it.

Yes, profit centers. While most are losing money, the ones paying their coaches many millions of dollars, generally are not.

I think the obvious question regarding this issue is whether athletics provide any educational value. Is so, why would we care if they turn a profit? How would spending funds on athletics be any different than spending funds on other ancillary departments like drama or music?

It seems that most universities believe there is some value in it for students considering that many schools are happy to run athletic departments at a net loss. The Ivy League for example has a strong tradition of fostering athletic competition and those schools often have larger athletic departments than most large state universities.

Athletic departments also provide a marketing opportunity. Students are often willing to go to a particular school because they like the football team. For better or worse, sports add an additional experience to college.

Is this including increased revenue from alumni? Or rather, how much it would decrease if the sports teams were removed? I'm not sure if this is actually something that would happen, but it seems like it could be.

While it's unclear where removing the sports team would work (one would probably have to look at universities outside of US, which more often don't have large athletic programs), this research found no correlation between team performance and alumni donation volume.

http://www.news.cornell.edu/stories/2004/09/surprise-winning...

Yes, most college athletic departments do operate in the red. I think you are forgetting about the professional sports, and the professional coaches.

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