Miller: Breaking down financial situation of Stanford’s athletic department

The conversation concerning the financial situation of college athletic departments and the support of those departments via student fees and intra-university transfers has heated up in the past couple of weeks, thanks in large part to articles from The Chronicle of Higher Education and The Washington Post.

The CHE piece details how Division I athletic departments are relying more heavily on student and institutional backing to fund their operations: “In the past five years, public universities pumped more than $10.3 billion in mandatory student fees and other subsidies into their sports programs … The average athletic subsidy that these colleges and their students have paid to their athletic departments increased 16 percent during that time.” Post writers Will Hobson and Steven Rich wrote on what some would call the out-of-control spending by athletics, expenditures at least partially funded by student athletic fees.

Since these analyses looked mainly at public universities that are subject to open-records laws and FOIA requests, Stanford students may be wondering how their school’s athletic department is funded.

Firstly, varsity (NCAA-level) athletics at Stanford are not “subsidized” by students or the university. An op-ed that appeared in The Daily earlier this year wildly misstated that “the net annual cost (of athletics to the university) is thus around $67 million.” Nothing could be further from the truth.

In reality, the varsity athletics arm of Stanford’s Department of Athletics, Physical Education and Recreation (DAPER) does not rely on any student or institutional support to cover its expenses. Not only does DAPER not charge Stanford students an athletics fee (students at Cal contributed $1.44 million in fees to their athletics department in 2014), but the allocation that DAPER receives from the university ($12.69 million in 2013-14) is used to cover non-varsity athletics-related costs, including the P.E., Recreation and Wellness programs (i.e. intramural teams, gym upkeep and maintenance and wellness courses).

Furthermore, Stanford does not charge its students to attend regular-season home events, one of the only FBS-level programs not to do so. Thus, contrary to what was written in the aforementioned op-ed, Stanford is not “passing up other opportunities” “by spending so much on athletics,” because little if any institutional money is diverted away from educational programs. Our athletics department is essentially self-sufficient and thus has the prerogative to dictate its own spending policies.

In fact, Stanford’s DAPER actually paid the university over $20 million in the 2014-15 fiscal year. How is that possible, you ask? In 2014-15, DAPER awarded $20,591,001 in athletics-related student aid, which covers the tuition and fees, room and board and required textbooks for those athletes on scholarship.

In other words, the university charged DAPER that amount for the over 300 full scholarships the department awards each year, and DAPER then transferred that amount back to the university to cover the expense. Even if we assume that all or a portion of the university’s $12.69 million allocation to DAPER in 2013-14 went to cover varsity athletics-related costs (which it doesn’t), the university still received a healthy 62.6 percent return on its investment — how many academic or other campus departments can claim that?

If Stanford’s athletic teams do not receive financial support from student fees or university transfers, where does the money come from? As explained by the Buck/Cardinal Club’s (the athletic department’s main donor group) annual report and the Stanford varsity athlete handbook, DAPER receives funding from a variety of revenue sources.

The largest of these is private giving, which, when summed up, accounted for $49.63 million (42.5 percent) of the department’s $116.52 million 2013-14 revenues. Gate revenues (ticket sales) totaled $16.8 million (14.4 percent), media payouts were $17.5 million (15 percent) and NCAA/Pac-12 disbursements came to $4.77 million (4 percent).

In short, DAPER is a unique but financially healthy enterprise — despite the ever-rising costs of competing at the highest levels of intercollegiate athletics — and will likely continue to be so, provided its endowment, which is valued somewhere between $400-500 million and releases 5.5 percent per annum, remains strong. That is, unless the market hits the skids and/or other revenue streams dry up, DAPER’s varsity athletics unit should, theoretically, never have to receive direct institutional support or student fees to cover its costs, though I doubt it would refuse the extra help if ever offered.

Cameron Miller’s editor doesn’t really have anything funny to say for this contact line because all this talk of money scares him and makes him bitter that he needs to pay off student loans after college, so if you want to talk dollar dealings, contact Cameron Miller at cmiller6 ‘at’ stanford.edu.