Fear The Deficit

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(from Sports Business Journal, December 3, 2012) After some questionable decisions and a decade after BCS berths in football and national championships on the basketball court, Maryland University is facing an athletics budget deficit far more impressive than any of their on-field successes. After spending $7.8 million more than they made last year, the Maryland University Athletic Department is cashed out. The university has used this deficit to validate its pending move to the greener pastures of the Big Ten Conference, but many questions remain, like how can a state university with a multitude of successes be this far under water?

It is important to note, however, that Maryland’s situation is not that unusual in the state of college athletics today. In fact, only 23 of the 120 NCAA Division I Football Bowl Subdivision teams were actually able to turn a profit before help from university or government subsidies, eight of those are from the Big Ten. Despite this, Maryland had been fronting its own expenses, which have outpaced revenues by $2 million to $3 million since 2006, by dipping into cash reserves, which were the result of early decade successes. Yet after a tumultuous 2010-2011 athletic year, one that saw the firing of popular Football coach and Maryland alum, Ralph Friedgen, the same season the school searched for a new Basketball coach, Maryland’s athletic budget took an $8.5 million hit. That increase left Maryland reeling.

The Maryland Athletic Department receives about $15 million from the university in subsidies, which come by way of student fees and state funds. However in instances like in 2010-2011 when the deficit was $1.2 million more than athletics could afford, the department is faced with borrowing money from the university that they must pay back with interest. Thankfully, though, the move to the Big Ten is seen as quick fix. As soon as the department begins Big Ten play in 2014-2020 they will stand to make over $95 million more than they could in their old conference the ACC. Yet after dumping beloved coaches and the ACC, it will be interesting to see if Maryland’s fans follow them there.