The NCAA basketball tournament tips off this week, an event that鈥檚 worth hundreds of millions of dollars to the college athletics industry.
Eventually, a big chunk of that money makes its way in varying amounts to individual schools, depending on conference affiliation and the success achieved in the postseason.
Unfortunately for colleges in Maryland, the event won鈥檛 be quite as lucrative as their athletic departments would have hoped.
Public colleges in the state participate in various levels of competition: Maryland, UMBC, Towson, Maryland-Eastern Shore and Coppin State all play at the Division I level. Frostburg State and Bowie State participate in Division II athletics, and Salisbury plays at the small Division III level.
Only Salisbury finished the 2021 fiscal year with a positive balance. Frostburg State took advantage of a special exemption passed by the Board of Regents to use regular school finances 鈥� almost a million dollars total 鈥� to avoid incurring any debt during the previous school year.
Every other school reported losses in the millions of dollars, with the exception of Towson, which was also the only school that used federal CARES act money to help eliminate most of the debt it carried into the start of the 2021 fiscal year.
In College Park, the University of Maryland entered the 2021 fiscal year — which started July 1, 2020 — with a deficit of over $52 million. Despite paring back expenses departmentwide by about 10%, it operated at a nearly $21 million deficit to finish with a deficit of over $73 million.
鈥淚t鈥檚 got the most complicated set of financial arrangements, far and away, within the university system,鈥� said Bob Page, associate vice chancellor of financial affairs for the University System of Maryland.
鈥淭his $21 million operating result should be seen as a significant positive for the fiscal year. The revenue losses came from the decision by the conference and the institution to forgo in-person attendance at sporting events, which itself caused a reduction in normal revenues to the program of $15 or $16 million.鈥�
He went on to explain that the school had a number of reasons for operating at a deficit last year, citing the ongoing payout of the exit fee associated with leaving the ACC for the Big Ten as one reason. Ellen Herbst, the vice chancellor for administration and finance, said it鈥檚 believed the school is lined up for a significant boost in broadcast TV revenue as the Big Ten gets ready to renegotiate TV rights.
鈥淲e all recognize that the amounts shown here are large,鈥� Herbst said. But the way the school is working to improve its financial picture, she said, 鈥渋s a best practice.鈥�
Herbst said they are confident it is 鈥渂eing managed well at the appropriate levels at the university.鈥�
Linda Gooden, who chairs the university system’s Board of regents, also expressed confidence in the bigger financial picture.
鈥淟ooking at these numbers in isolation can lead one to be more concerned than they should,鈥� Gooden said. 鈥淭here is a level of attention to these numbers that goes well beyond what people see in this informational review.鈥�
Ultimately, the pandemic might lead the university system to reconsider how college athletics are funded at public schools.
In Maryland, athletic departments are required to be 鈥渟elf-supporting,鈥� though to get there schools often tack on hundreds of dollars in fees to the amount every student pays to attend school. For instance, at Bowie State, each student pays about $800 a year in fees that help support athletic programs, which is nearly 10% of the total cost to attend classes there for a year. In College Park, about $200 of the nearly $1,000 in fees that students pay each semester go to athletics.
Brian Barrio, the athletics director at UMBC, said the current setup causes students to wince.
鈥淭here鈥檚 a lot of gray area in the current setup,鈥� said Barrio, who noted that an on-campus arena that鈥檚 considered the home of the athletic department is also the home to classes and other on-campus events.
鈥淭his is something that鈥檚 different from some of the other state systems I鈥檝e worked in,鈥� he added. 鈥淚 fully understand why the requirement is in place and it鈥檚 been a challenge for us. It creates some optical challenges with general students, and we鈥檙e kind of going through that right now, as well as gives us less flexibility around some of the things financially that we鈥檇 like to do.鈥�
It wouldn鈥檛 be the last time the use of athletic fees to make the departments self-supporting, as is required, would be brought up.
鈥淥ur approach to this may evolve,鈥� said Page. 鈥淲e鈥檙e taking a look at how the policy is written and whether or not that鈥檚 the best approach to satisfying that regents鈥� value or expectation. In the future we may propose or bring back to this committee first, possible adjustments or changes or loosening of the arrangements in terms of the self-support expectation.鈥�
But at this point, it鈥檚 not a topic that鈥檚 been discussed yet by university presidents around the state, or even lower down the chain of command at the state鈥檚 colleges. Herbst indicated there would be lots of conversations in the future before a recommendation would be made in one direction or the other. But it鈥檚 clear there will be more discussion about the rule.
鈥淭hese deficits are one reason why we鈥檙e looking at the board policy and the requirements that programs be operated on a self-support basis with an idea that institution presidents maybe need more avenues to resolve these accumulated deficits over a period of time with moneys from other activities at the university,鈥� said Page. 鈥淭hat鈥檚 something we鈥檒l continue to think about.鈥�
