CHICAGO -- Intercollegiate athletics is taking in more money than ever before.
And the system is going broke.
At least 70 percent of the big-time athletic programs are expected to operate in the red this year. Remarkably, Michigan will be one of them.
No school can match the Wolverines on football Saturdays, when they put the population of a medium-sized city (106,000 people) in Michigan Stadium. The basketball team won the national championship and a big-time payday in 1989. Then there's television on which Michigan appears early, late and often.
Michigan should have its immense stadium filled to the brim with cash.
But for fiscal 1991, Michigan is projecting an operating deficit of $2.8 million. Even when outside fund-raising and $1.4 million in interest income from Michigan's reserve fund is factored in, the overall deficit still is an eye-opening $750,000.
"If it can happen at Michigan, it can happen [anywhere]," said Nebraska business manager Gary Fouraker, whose program is trying to whittle down a debt that reached as high as $1.8 million last year.
"I don't think anyone should be surprised," said Michigan interim athletic director Jack Weidenbach. "We're in the same boat as everyone else."
And the boat is taking on water. Or more specifically, red ink.
NCAA Executive Director Dick Schultz estimates at least 70 percent of the 106 big-time football programs (Division I-A) will operate in the red this year. In reality, he knows the situation is much worse.
"Very few Division I-A schools don't have a financial crisis, or at least haven't had one in recent years," Schultz said. "You can count on one hand and one finger the number of I-A athletic directors who can look you in the eye and say they have no legitimate financial problems."
It's a nightmarish paradox. The NCAA is about to start the first year of an unprecedented seven-year, $1 billion television contract for its basketball tournament. College football attendance was the second highest ever in 1990, with 36,560,247 people attending games at 673 schools. This year's bowl revenues exceeded $63 million.
Yet despite the perception college athletics is swimming in a green river of cash, boom time is going bust. According to the last NCAA financial study released in 1990, funding for all NCAA intercollegiate athletics was nearly $300 million in the hole in 1989, and that deficit ($1.8 billion in expenses to $1.51 billion in revenues), says the study's author Mitchell Raiborn, probably is low.
Football and basketball revenue account for an average of 72 percent of the take and contribute considerable profits at most schools. But those funds usually aren't enough to cover all of the bills.
The problem is twofold. Universities want to sponsor a broad-based athletic program with as many as 28 men's and women's sports, ranging from golf to lacrosse to track, with the majority of those rarely bringing in significant revenue. When the costs of scholarships, coaching and travel expenses for those sports are factored in, millions of dollars in expenses are added to the budget. For example, Illinois has budgeted almost $200,000 for men's and women's gymnastics this year.
But compounding the situation is an "arms-race" mentality that has permeated big-time football and basketball. With virtually every program trying to seek the competitive edge that will allow them to win and win again, the idea of spending more on such items as recruiting and facilities has taken on new meaning.
When the combination meets, an athletic department budget swells like a balloon being filled with water. In some programs, the balloon has burst.
Here's an idea of problem's scope:
* Factoring in debt servicing on new facilities and renovation projects, Division I-A schools (those with big-time football programs) spent an average $10,371,000 in 1989, according to the NCAA study. They took in an average of $9,765,000 in revenues, accounting for an average shortfall of $606,000 per school.
* In the Big Ten, four schools are carrying deficits -- Illinois, Wisconsin, Purdue and Minnesota. Four others -- Michigan, Iowa, Ohio State and Indiana -- showed operating deficits for 1989-'90, but have money in their reserve funds. Michigan State was the only school that showed a profit ($2.8 million) and had money in a reserve fund.
Michigan does have $17 million in reserves, but some of those funds are earmarked for a 10-year, $10 million renovation of Michigan Stadium. If the deficits continue and the interest reserve money is reduced, the Wolverines could face some serious problems.
Northwestern, the Big Ten's only private school, refused to disclose its financial figures; it also didn't divulge them for an internal conference survey. Athletic director Bruce Corrie admits his program's budget is supported by "a generous contribution from the university."
Corrie also is moving a Northwestern "home game" against Ohio State to Cleveland this year. Reason: 80,000 people in Cleveland Stadium vs. 30,000 in Dyche Stadium.