Contrary to popular belief, most Division I athletics programs are not profitable.
Myles Brand, president of the NCAA, said that during the last decade only six institutions consistently had athletic revenue surpluses at the end of the fiscal year.
"In fact, 52 percent of all Division I-A programs require subsidies greater than 5 percent every year," Brand said during his annual State of the Association Address in January. "For these institutions, keeping up with the pace means ever-increasing subsidies, as well as institutional investments for facilities that could have long-term financial impact."
Even athletics programs that do not require large subsidies often fail to generate the revenue that university administrators expect.
Depending on how financial data is reported, an athletic department can appear more financially successful than it is, said Bill Friday, former UNC-system president and founding co-chairman of the Knight Commission on Intercollegiate Athletics.
"Taxpayer money goes into maintaining stadiums, coliseums, all of these things," he said. "And when people just take gate receipts as against expenditure, that doesn't tell the story at all."
Although the NCAA has found that Division I athletics programs are not profitable, the data reported to the U.S. Department of Education under the Equity in Athletics Disclosure Act shows a different picture.
During the 2004-05 school year 110 out of 120 Division I athletics programs broke even or made a profit, according to the EADA data.
But there are discrepancies between the EADA data and the NCAA data for individual schools, as well as in the aggregate.
For example, the athletics department at N.C. State University made about $250,000 in 2005, according to the EADA reports. But N.C. State athletics ran a deficit of more than $1 million in 2005, according to NCAA reports.
UNC-Chapel Hill athletics made a profit of nearly $400,000 in 2005, according to the EADA, but made only $220,000, according to NCAA documents.
The differences are in the accounting. The EADA counts direct institutional support, unrestricted funds allocated to an athletic department by a university, as revenue, when in fact it is a subsidy.
The EADA data does not include certain administrative costs, such as the cost of renting or owning facilities and some staff - costs that have risen dramatically as the years go by.
Money in the bank
In 1929, the average salary of head football coaches was a little more than $6,000 - about $65,000 adjusted for inflation.
That amount of money probably wouldn't turn heads today, but it was enough then to spark heated public dialogue about ethics and money in college athletics.
The Carnegie Reports on the study of college athletics that listed that figure included remarks from scholars and educators at odds with, "The paid coach, the gate receipts, the special training tables, the costly sweaters and extensive journeys in Pullman cars, the recruiting from the high school, the demoralizing publicity showered on the players, the devotion of an undue proportion of the time to training."
Despite the calls to action, not much has changed in college athletics since then - except the Pullman cars, of course.
Since the 1929 Carnegie Reports a growing marketplace has pushed salaries skyward and has made room for increased branding and commercialization to enter into the NCAA's largest revenue sports.
Salaries for head coaches in the revenue sports at UNC-CH - namely men's basketball and football - are determined by Dick Baddour, director of athletics, and Chancellor James Moeser.
The pair determines a base salary after considering the individual's qualifications, the marketplace, national trends and the state of the athletics program on campus. Once a contract is drafted, it is sent to the UNC-CH Board of Trustees for review.
Any compensation from corporate sponsors is outlined and determined in contracts held independently from the institution.
While it is an undeniable fact that coaches' salaries have continued to increase throughout history, it is a difficult movement to slow down or resist, Baddour said.
"I look at it in terms of, 'What does it take for the University of North Carolina to be competitive and to attract and then maintain the high level of coaches?" he said. "We live in great country, and a great country doesn't have those kinds of restrictions. So I just have to live in that real world."
The average annual institutional salary at UNC-CH for head coaches of men's teams was $125,113. Head coaches of women's teams received an average salary of $86,210, during the 2005-06 fiscal year, according to the Office of Postsecondary Education, which is housed in the U.S. Department of Education.
That figure includes only the base salary provided by the University.
Consider that Roy Williams, head coach of the UNC-CH men's basketball team who signed a five-year contract with the Tar Heels in 2003, receives a base salary of $260,000. His deferred income plan will earn him a total of almost $3.9 million by the end of his contract. Those funds are generated through private donations.
Butch Davis, head football coach, signed a contract to receive $286,000 from the University as a base salary. Davis' contract included a supplemental payment of $1 million that he will receive in 2007. It will rise gradually to reach $1.3 million in 2013.
But Williams' and Davis' salaries pale in comparison to what Nick Saban will receive as the head football coach at the University of Alabama.
Saban, who left the NFL as the head coach of the Miami Dolphins to lead the Crimson Tide this year, will receive $4 million a year for eight years - the highest salary of any head coach in the NCAA.
"That further blurs the distinction between the college market and the pro market for coaches," said Jack Evans, UNC's faculty athletics representative to the NCAA.
The perception that college athletics have become increasingly similar to professional sports has ballooned, and calls have come from all levels in education and athletics urging for more regulations.
Coaches' salaries likely will continue to climb during the coming years, Baddour predicted. But he foresees the numbers leveling off after some time.
"I don't know that we'll see the kind of jump that we've seen in the last five and six years, but I do expect them to increase."
Recruiting Costs
Athletics recruiting is one area that has been beset by NCAA regulations. A phenomenal amount of funds are provided for students with athletic ability.
About $1 billion in full or partial athletics scholarships are awarded each year to more than 126,000 student-athletes receive in Division I and Division II athletics, according to the NCAA Web site.
Duke University spent the most on recruiting of all the ACC schools in North Carolina. In 2005-06, Duke topped $1.2 million, according to the EADA.
UNC-CH claimed the second highest spot in expenditures that year at almost $1 million.
N.C. State spent about $820,000 in 2005-06.
Despite a $100,000 increase, Wake Forest University maintained the lowest recruitment expenditures at about $572,000.
A multitude of students pay recruitment services to promote them to college programs. The sites, of which more than 75 exist online, may charge colleges for the right to view the athlete's statistics. Many offer the service free to the school.
Students aren't the only ones trying to get their names out. College coaches are implementing tools like text messaging, instant messaging and e-mail to keep in close contact with prospects.
"Text messages are huge," said Pat Kelsey, Wake Forest men's basketball assistant coach. "It's always better to talk in person, but the NCAA has a limit on that. There is not one on texting."
The NCAA limits colleges to one phone call per week once a prospective player enters their junior year of high school.
Duke, UNC-CH, N.C. State and Wake Forest haven't been cited with major recruiting violations by the NCAA since 1994.
With the increase in demand for athletes, more coaches will be utilizing NCAA rules.
It isn't just the big revenue sports that are drawing the recruiters' attention.
Duke's Athletic Policy Manual notes that recruiters from other schools are circumventing Duke's attempts to recruit golfers by pressuring them to decide in their junior year before Duke can make an acceptance decision.
The report also notes the need for increased recruiting measures:
"In short, the arms race, once restricted to football and men's basketball, has now swept up the non-revenue sports."
Contact the Investigative Team Editor at iteam@unc.edu.
