KINS Exam TWO Notes PDF

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These notes covermostly the lecture slides. Pifer also would test on book content. Tests were, multiple choice, true false, and short answer. Make sure to review the differences between NCAA Divisions, especially Division 1A and Division 1AA....

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KINS 4520 Exam Two_Alex Van Dyke 1 KINS 4520 EXAM TWO Lecture 2.1: INTRO TO COLLEGIATE SPORTS  As of 2012 there were nearly 1,400 colleges and universities that operated comprehensive varsity sports programs in the United States  Today, around 1,300 (90%) of these programs are members of the NCAA – the primary regulatory body for collegiate athletics  Other member association: NAIA, NJCAA, USCAA, and the NCCAA CHAPTER 2: Challenges Facing College Sports SIZE AND SCOPE  National Collegiate Athletic Association (NCAA) – the dominating regulating body for college athletics 1. Over 1,000, member schools 2. Primary purpose – ensure fair competition and enhance the student-athlete experience by enforcing rules governing eligibility, financial aid, recruiting, and playing and practice sessions 3. Conducts championships in 33 men’s and women’s sports 4. 3 classifications  Division I – membership requires athletic programs to sponsor a minimum of 14 varsity sports  396 member institutions  FBS (Football Bowl Subdivision) Division IA – requires members to make a far greater contribution to football o Athletic departments with large-scale investments in football o Must meet a minimum attendance requirement of 15,000 in actual or paid home attendance per game every other year o Must provide a maximum 85 full scholarships for football o Can only offer full athletic scholarships to individual players o Over 80% FBS schools operated at a loss in 2010 o 30% of the total revenues generated by FBS athletic came from institutional sources  FCS (Football Championship Subdivision) Division IAA o Athletic departments with ales intensive financial commitment to football o Exempt from minimum attendance requirement o Football programs are allowed to provide a maximum of 63 scholarships o Allowed to offer partial grants-in-aid  Most divide their scholarships among 85 players to fill out a complete roster o Institutional support accounts for 66% of total revenues generated by Division IAA programs  Division II – intermediate level of competition with less stringent requirements  331 active members  Typically, regional institutions with smaller enrollments  Must sponsor a minimum of 10 varsity sports  May offer athletic scholarships – maximum limits are much lower than division I o Few athletes receive full grants-in-aid – may receive partial athletic scholarships and/or some level of financial support from the institution o Allowed to give a maximum of 63 full scholarships  Division III – all sports are offered as essentially extra-curricular activities for students  508 member institutions  The 443 schools competing in DIII de-emphasize the commercial aspects of college athletics  Not allowed to provide athletic scholarships  May not establish private endowment funds for the express purpose of supporting athletics 5. Men account for 75% of all varsity competitors The NCAA share a belief in and a commitment to:  The collegiate model of athletics in which students participate as an avocation (i.e., hobby or minor occupation), balancing their academic, social, and athletics experiences  The highest levels of integrity and sportsmanship  The pursuit of excellence in both academics and athletics  The supporting role that intercollegiate athletics plays in the higher education mission and in enhancing the sense of community and strengthening the identity of member institutions ELIGIBILITY  The NCAA provides a vehicle through which its members create and enforce rules governing:

KINS 4520 Exam Two_Alex Van Dyke 2 1. Player eligibility 2. Recruiting 3. Financial aid/scholarships 4. Playing and practice seasons/schedules 5. Championship events  The NCAA administers 23 sports and championship for those sports  To participate in college athletics during their freshman year, the NCAA states that students must meet three requirements: 1. Must have graduated high school 2. Must have a qualifying GPA and ACT or SAT score 3. Must be completing the minimum number of required academic courses  Students are generally allowed to compete athletically in the NCAA for four years  Redshirts allow them to sit out one year without losing eligibility while attending school  Most demanding at the DI level – the minimum requirements set forth by the NCAA 1. A 2.3 “core”, high school GPA – ENGL, MATH, SCI, SOCI, LANG, and RELI  Must complete 16 of these core courses 2. SAT and ACT requirements are “sliding,” meaning they are more strict for lower GPAs and less strict for higher GPAs  3.55 GPA and above = combined SAT or 37 ACT sum score; 2.3 GP = 900 SAT or 75 ACT  If an incoming freshman does not meet the academic standards set forth by the NCAA, then he or she can take an “academic redshirt” in order to get in compliance with those standards at the college level  Alternatively, he or she could choose to attended a junior college for the first 1-2 years  Medical redshirts (unofficially known as hardship waivers) can be granted in special circumstances to injured/ill athletes who appear in fewer than 30% of team competitions (none of which can take place beyond the midway point of the season) RECRUITING  Recruiting is defined by the NCAA as; 1. “Any solicitation of prospective student-athlete or their parents by an institutional staff member or by a representative of the institution’s athletics interests for the purpose of securing a prospective student-athlete’s enrollment and ultimate participation in the institution’s intercollegiate athletics program.”  Recruiting rules seek to control intrusions into the lives of college-bound student-athletes  Contact and Contact Periods: 1. Contact occurs anytime a coach says more than “hello” during face-to-face interactions with an incoming studentathlete or his or her parents in an off-campus setting 2. During contact period, a coach may have face-to-face written and verbal contact with a college-bound student-athlete and their parents, visit their high schools, and watch them compete 3. Evaluation period: no face-to-face contact in off-campus settings, but they can attend and watch high school games  Quiet and Dead Periods: 1. Quiet periods allow for on-campus, face-to-face; letters and phone calls are allowed, but coaches cannot visit high schools or attend games in person 2. Dead periods no face-to-face contact is permitted in any form or setting; phone calls and letters are still allowed  Official and Unofficial Visits: 1. Official visit: any visit to a college campus by a college-bound student-athlete and his or her parents in which the college pays for transportation to and from the campus, lodging, three meals per day, and reasonable entertainment expenses (three tickets to a home sporting event); only five official visits and one to each school can be taken by prospective student-athletes 2. Unofficial visit: only includes reasonable entertainment expenses National Letter of Intent (NLI):  A National Letter of Intent is signed by a college-bound student-athlete when the student-athlete agrees to attend a Division I or II college or university for one academic year. 1. Participating institutions agree to provide financial aid for one academic year to the student-athlete as long as the student-athlete is admitted to the school and is eligible for financial aid under NCAA rules  Signing a National Letter of Intent ends the recruiting process since participating schools are prohibited from recruiting studentathletes who have already signed NLIs with other participating schools  A student-athlete who has signed a National Letter of Intent may request a release from his or her contract with the school 1. If a student-athlete signs an NLI with one school but attends a different school, he or she will lose one full year of eligibility and must complete a full academic year at their new school before being eligible to compete SCHOLARSHIPS

KINS 4520 Exam Two_Alex Van Dyke 3 Athletic scholarships are awards of financial aid given to a student-athlete to attend a college or university based predominately on his or her ability to play a specific sport DIVISION I Division I is the highest level of intercollegiate athletics sanctioned by the NCAA  D-I schools traditionally have larger budgets, more elaborate facilities and more athletic scholarships than schools in the NCAA’s other divisions 1. All D-I schools must field at least 7 men’s and 7 women’s sports, or 6 men’s and 8 women’s sports, with at least two team sports for each gender 2. The average enrollment at D-I schools is 12,900 3. Nearly 60% of the NCAA’s revenues are given to Division I programs DIVISION I FOOTBALL  Is further subdivided into the FBS (Football Bowl Subdivision) and FCS (Football Championship Subdivision) 1. FBS: allows a maximum of 85 scholarships per year 2. FCS: limited to 63 scholarships per year  FBS teams must also average 15,000 fans per home game  The FBS champion is now determined by the College Football Playof, which is the only championship NOT determined by an NCAA-sanctioned event  No fewer than 90% of FBS teams’ 85 scholarships can be awarded in a given season  These scholarships are full scholarships that must be given in their entirety to individual player (no partial scholarships)  In the FCS, teams can ofer partial grants-in-aid by dividing their 63 scholarships amongst all of the players required to fill out their roster  To maintain FCS status, no fewer than 76.5 players must receive some form of scholarship support DIVISION III  The largest of the NCAA division (by number of member schools) and consists of those colleges and universities that choose NOT to offer athletic scholarships to their student-athletes  Financial aid cannot be awarded based on any athletically-related criterion, and the total amount of general financial aid given to student-athletes must proportionally mirror the amount given to the rest of the school’s general student body  The average enrollment is 2,717 students  81% of D-III schools are private schools  These schools must sponsor at least five sports (and two team sports) for each gender  D-III schools may NOT use endowments or financial aid funds whose primary purposes are to benefit athletics programs  Only 3% of the NCAA’s total revenues are given to NCAA Division III programs A COMPARISON  Student-athletes at Division I and Division II schools are believed to have different priorities  In Division I, the athlete is expected to focus prime athletic preparedness while performing adequately enough to meet the NCAA’s academic eligibility minimums 1. D-I athletes receive assistance from personal tutoring programs and academic advisors who work with faculty members to ease the academic burdens placed on them 2. D-III athletes are expected to pursue their degrees under the same general conditions as other students  D-III athletes are understood to place a much greater emphasis on their academic experiences and degreed  University administrators at D-III schools often reject special treatment for student-athletes DIVISION II  Division II is the NCAA’s intermediate level of competition 1. The average enrollment is 3,848 2. Has member schools in Alaska, Canada, and Puerto Rico 3. D-II schools must sponsor 5 sports for men and women (or 4 for men and 6 for women), with at least two team sports for each gender 4. Athletic scholarships are offered, but generally not at the same level or frequency as D-I schools (are allowed to divide the equivalent of 36 full scholarships to football players) 

KINS 4520 Exam Two_Alex Van Dyke 4 Lecture 2.2: REVENUES AND EXPENSES IN COLLEGE SPORTS  Revenues appearing on NCAA athletics budgets are typically categorized as either allocated revenues or generated revenues  Allocated Revenues 1. Student “athletic” fees 2. Direct institutional support 3. Indirect institutional support: the payment of utilities, free rent, salary, subsidies, etc. 4. Direct governmental support: the receipt of funds from state and local government agencies that are designated for athletics  Generated Revenues 1. Ticket sales 2. Sponsorship/royalties 3. Alumni contributions: booster club, donations, and scholarship endowments 4. Guarantees 5. NCAA or conference distributions REVENUE SOURCES  Institutional subsidies account for 20% of total revenues in FBS programs, 71% in FCS and 76% in D-I programs without football teams  Three generated revenues sources account for 61% of total revenues at the FBS level: 1. Alumni/donor contributions (21%) 2. Ticket sales (20%) 3. NCAA/conference distributions (TV rights) (20%) THE FINANCIAL REALITY The cost of intercollegiate athletics has outpaced revenues over the last few decades. As of 2014, only 24 athletics programs in the FBS generated a profit  More than 80% of the largest athletic programs are losing money 1. Average profit for these 24 programs was around $6 million 2. Average deficit for the remaining programs was about $17 million 3. Median generated revenues equaled $44 million 4. Median expenses were $64 million 5. Largest reported revenues were $193,875,000 6. Largest reported expenses were $154,129,000  Three items make up close to 2/3 of the total expenses at the FBS level: 1. Salaries and benefits – 34%  Those given to coaches and senior-level administrators  These are market-driven expenses 2. Athletic scholarships – 15%  The cost of giving out athletic scholarships rises with the cost of tuition 3. Facilities maintenance and rental fees – 14%  The rising costs of salaries/benefits and tuition present a challenge to financial managers in collegiate athletics departments since the factors driving these two largest expenses fall largely outside of departmental control  The FBS/FCS sports with the highest paid coaches are (in order): football, men’s basketball, and women’s basketball  Roughly 60% of FBS men’s basketball and football teams turn a profit 1. However, these are the only two sports that consistently report generated revenues that are higher than incurred expenses UNIVERSITY FUNDING  The inability for all but a few athletic departments to operate on a financially self-sufficient basis has meant that most universities are forced to allocate revenues to subsidize a significant portion of the costs of operating athletic programs 1. Head football coaches are the highest paid public employees in many states 2. The general student body is often required to help contribute by paying directly through “athletic fees” and indirectly through tuition rates 3. Athletics expenses are rising at a 2.3% higher rate than academic spending 4. Institutional support – direct appropriations from the university’s general fund  Student fees These trends appear troubling for several reasons:  It means that institutional revenues are not being reinvested in academic areas

KINS 4520 Exam Two_Alex Van Dyke 5  Higher education has faced financial difficulties in recent years as states cut budgets and funding  Students already paying high tuition and fees are being forced to pay even more in order to help subsidize athletics departments Why do universities and students continue to fund athletics programs? “Athletics is by no means the most important part of the institution, but a strong, successful athletics program is a very important connection with alumni, donors and leaders in the state….and beyond.” – former Hawaii A.D. 1. Sports, once again, have a rare connection with people that other areas do not seem to have.  In the instance of college sports, alumni stay connected to their schools through the sports teams and their donations center around this connection  Many students choose to attend schools with prominent athletics programs for the atmosphere and excitement that they bring to campus life Competitive Advantage:  One area of significant investment has been coaches’ salaries – football and men’s basketball  Implemented cost-cutting measure in other areas 1. Reducing travel expenses 2. Shortening the length of the season for non-revenue sports 3. Eliminating the practice of lodging teams in local hotels prior to home games 4. More trips by bus than by plane COST CONTAINMENT  The Knight Commission, an organization lobbying for more institutional control of college athletics, released a survey in which 6 of 7 FBS presidents believed the compensation being given to coaches was excessive 1. In 2014, the median annual cost for an entire FBS football staff was $4.5 million  “Cutting costs, especially at the national conference level, is heavy lifting… Unless you’re prepared to deal with boosters, board members, power coaches and the public in a high-conflict environment, don’t take it on.” – Jim Delaney  One proposal has been to put a cap on college football coaches’ salaries.  However, this could potentially violate antitrust laws, meaning the NCAA would have to seek and exemption  There is a fear that even if the NCAA achieved exempt status, doing so would grant the government more power to influence and regulate the actions of colleges and universities  Controlling rapidly rising cost is one of the most serious challenges facing the majority of intercollegiate athletic programs  What makes cost containment so challenging is that two of the major expenditure growth categories are largely beyond the control of the athletic department  At most institutions, the university charges the athletic program the cost of student athletes’ scholarships or grants-in-id 1. For the past two decades, tuition costs have soared at more than twice the rate of inflation 2. Complying with federally mandated gender equity standards requires substantial investment in women’s sports REVENUES In light of these challenges, athletics departments’ abilities to generate revenues should be prioritized and emphasized moving forward  If an institution can no longer fully subsidize its athletics program, it may be forced to cut sports  However, when sports are cut they can often be brought back through donations made by alumni and other boosters  Revenues from the sale of media rights are rising as conferences create their own television channels Substantial differences in income generation between schools are largely attributable to football  On average, football accounts for around 50% ($22 million) of the revenues generated by FBS athletics programs. In FCS schools this figure is closer to 25%  Men’s basketball accounts for roughly 13% ($5.5 million) of total generated revenues  Women’s basketball, on average, only generates .5% of revenues GENDER AND SPORT  If football and, to a lesser extent men’s basketball drive the revenues in college athletics departments while the rest of the sports (and in particular women’s sports) lose money, then why do they continue to be supported? 1. One reason: programs must comply with federally mandated gender equity standards (Title IX) that require significant investments in women’s sports Title IX:  Is a comprehensive federal law that prohibits discrimination on the basis of sex in any federally funded education program or activity  It applies to athletics programs because they are considered “educational programs and activities”

KINS 4520 Exam Two_Alex Van Dyke 6 It applies to private universities as well since students and student-athletes at those schools receive funding through federal financial aid programs A series of dramatic events in the 1990s required colleges to make a serious commitment to addressing issues of gender equality in sport Three developments gave Title IX great momentum: 1. A Supreme Court ruling in the Georgia case, Franklin v Gwinnett Public Schools, for the first time permitted stiff monetary penalties for Title IX violations 2. The Office of Civil Rights identified “discrimination on the basis of sex in the athletic programs” as a priority in its overall enforcement strategy 3. The Big Ten Council of Presidents adopted a rule requiring conference schools to achieve ration of at least 40% female athletes to 60% male athletes by August 1997. 3 Criteria: The Three Prong Test  The Office of Civil Rights requires schools to meet one of three criteria 1. The substantial proportionality test – requires that women receive participation opportunities equal to the number of women in the student body at large  To be in full compliance a school m...