Answer: it would look the same.
While the NCAA has improved the consistency of reporting from their member institutions and the quality of financial data related to intercollegiate athletes, these findings do not provide an analysis of the true financial costs and benefits of athletics at NCAA universities. There are a number of reasons for this. First, the nature of budget-based accounting with simple line items can be misleading if details of each line item are not known. Second, athletics departments operate within non-profit universities, thus there is less of an incentive (and mechanism) to show a profit. In fact, there are no equity holders watching over revenues and expenses in order to produce profits and dividend payments. Thus, this can often lead to a use it or lose it budget management process. Third, on a university campus there are often significant related-party transactions (RPT’s) and cross-subsidies. These mask the true underlying economics of athletics departments. As shown in Exhibit 1 below, there are many possible instances when the revenues listed in an athletics budget are under-valued compared to their true impact and expenses over-valued.
The fundamental question to ask is whether concessions, merchandise, parking, licensing, and sports camp revenue that is generated because of athletics is accounted for in the athletics’ budget. In the few case studies conducted (see below), it is not. Similarly, what are the true costs to the university of a Grant-in-Aid (scholarship or GIA)? There are many other possible indirect revenues generated by an athletics department for its university, such as increased applicants and enrollment, increased donations, increased graduation, etc. The exposure that athletics brings to a university can help drive these indirect revenues. Similarly, capital costs to build sports facilities are not always included in athletics’ department budgets.
A case study conducted nearly two decades ago is one of the few analyses that has directly looked at the costs and benefits of intercollegiate athletics for a single university. Borland and Goff (1992) investigated athletics at Western Kentucky University (WKU) because the school was considering major changes to its athletics department. It consists of two different studies. One takes an economic look at the accounting and budgeting practices at the university and finds that the many and significant related-party transactions between university departments masks the true underlying economic values and costs of the athletics department. As an example, concessions revenues collected at intercollegiate athletics events may be accounted for on the “books” of the food services department instead of the source of their cause, an athletics event.
Similarly on the expense side, the cost to the university of providing food to the athletes on scholarship was about 40% of the retail price that the athletics department was charged as part of the Grant-in-Aid. The largest such related party transaction at WKU is the tuition expense charged against the athletics department’s budget. WKU was not at full capacity, so allowing one more athlete on scholarship did not truly cost the university the full tuition, but rather zero in out-of-pocket tuition costs. Only if this scholarship athlete somehow prevented a full paying student from attending would there be a true cost. These same procedures will be discussed in the methodologies section below and applied to USF. In the end, the study shows that what appeared to be a $1.5 million loss to WKU from having athletics was only a $330 thousand loss when adjusting for the related-party transactions and actually a gain of over $5 million when accounting for the enrollment impact of athletics.
Goff (2000) notes that negative exposure, like NCAA sanctions has a negative effect on the school’s brand, but of smaller magnitude than positive exposure. He claims that large losses at big-time programs are muddled by the non-profit status of universities and related accounting practices. He also notes that universities are clamoring to join D1, that athletics department revenues are above $100 million per year for some schools, and the fact that they don’t remunerate the athletes at anything near a market rate compared with their professional counterparts points towards profitability. Specifically, he shows that 70% of universities in major conferences have revenues greater than expenses. For smaller schools, there may be a loss, but it is small (compared with the gains for those making money). Utah State University reported a loss of $700,000 per year in the late 1980s, but was shown to actually have a gain of $366,000 (not accounting for merchandise sales attributable to athletics) once the related-party transactions were accounted for. Citing Sheehan (1996), Goff makes adjustments to that data and shows that only 10% of the 109 schools in the study (D1-A) lost money, with most of those being from the Mid-American Conference.
Schwarz (2011) conducted a study of the University of Nebraska, Omaha, which chose to jump from DII to DI in 2011, but while dropping football and wrestling. The university claims that its football program was losing about $1.5 million. Yet, it has excess capacity to accept any qualified students who apply. The true economic cost of the football scholarships is much lower than their reported cost. When adjusting for this and other factors, Schwarz finds that the university actually breaks even from its football program.
As Schwarz says, ultimately, more and more schools are clamoring to get into DI. Why would they do so if it was a losing venture?
 The opposite can occur in which a cost, for example cleaning a venue after a game, is charged to another department’s budget when the Athletics department caused it.