Why there’s never enough money in college sports: ‘We’re, at times, our own worst enemy’

In 2004, on the heels of his football program’s third consecutive top-10 finish and second shared Big Ten title, Iowa athletic director Bob Bowlsby reluctantly chose to make Kirk Ferentz one of college football’s highest-paid coaches rather than lose him to a traditional power or the NFL.

“I don’t know that a football coach should be making five times what a university president makes,” Bowlsby, who later served as Big 12 commissioner for 11 years, said at the time. “But the only thing worse than being in the arms race is not being in the arms race.”

Two decades later, college football’s pay scale for coaches has exploded. But coaching salaries are just one eye-catching piece of data on the industry’s ever-growing list of expenditures as part of that ongoing arms race. According to NCAA financial numbers obtained by The Athletic through state open-records requests, college athletic departments have generated money — and spent it — at an eye-poppingly escalating rate from when Ferentz earned his first big contract. And unlike traditional businesses, there are no shareholders in college athletics who earn dividends or demand repayment for their investment. Whatever departments take in, they spend.

To understand how athletic departments get wrapped up in never-ending spending sprees, The Athletic examined the financial reports from a cross-section of college sports: 16 athletic departments spread across the nation and D-I, from the Power 4 to the Football Championship Subdivision.

The Athletic’s data collection included three schools from each of the four power conferences, plus a former power-conference program (Oregon State), two non-power schools (Boise State, South Florida) and one FCS school (Montana). The P4 schools include Ohio State, Penn State and Wisconsin from the Big Ten; Florida State, Louisville and North Carolina from the ACC; Colorado, Houston and Texas Tech from the Big 12; and LSU, Tennessee and Texas A&M from the SEC.

Those departments’ revenues have climbed an average of 212.4 percent between 2005 and ’23, but their expenses jumped 210.8 percent over the same time frame. Each new report of record revenue prompts questions of why and how schools spend every available dollar. And at the power-conference level, they are willing to take major risks to generate even more revenue.

Florida State and Clemson sued the ACC and its locked-in grant of rights agreement over fears they would fall behind their SEC competitors. Their legal battle was resolved earlier this summer, with the ACC agreeing to a new split of multimedia revenue based partly on football and men’s basketball viewership. Two years ago, the Pac-12 broke apart when it could not secure a media rights deal comparable to those of other power conferences.

Each of the four remaining power conferences has spoken with investment firms about private equity options. A Colorado football staffer attempted to secure $10 million from a Saudi Arabian firm for NIL funding without school clearance.

With revenue increases far outpacing the rate of inflation (56 percent) between 2005 and 2023, it may seem unnecessary for schools to gamble on different types of financial liability and massive program upheaval just to keep up with their neighbors. Yet, driven by the paranoia and mistrust that permeates the industry, that’s exactly what they’ve done and will continue to do. It’s never enough.

“We don’t have unity across our industry,” said Boise State athletic director Jeramiah Dickey. “We have a lot of cooks in the kitchen, from presidents to ADs to commissioners, and everyone’s job is to do what’s in the best interest of the place they are at and the people they lead and serve. And I’m not sure anyone is looking out for the greater good of an industry and thinking more creatively how we can create a more sustainable model because what we are currently doing is not sustainable.”

Among the core financial expenditures every athletic department must find a way to cover, nothing rose quite like coaching salaries. In fiscal year 2005, the 16 schools paid around $111 million to their coaches — every staff position in every sport. By 2023, the three Big Ten schools in this sample totaled $114.5 million on their own. Collectively, the 16 schools spent $411.4 million on coaching salaries in fiscal 2023, a 370.4 percent increase from 2005.

“When you think about escalation of salary, it hasn’t just been in the head coaching position,” said Baylor athletic director Mack Rhoades, who previously led departments at Missouri, Houston and Akron. “I mean, we just paid a defensive coordinator $3 million in our industry. So there’s been escalation at the assistant coaching level, primarily in football and men’s basketball.”

Like Bowlsby with Ferentz in the early 2000s and in dozens of subsequent high-profile situations the last 20 years, athletic directors face dilemmas in how much to pay coaches. Successful seasons prompt extensions and salary bumps for assistants. In recent years, salaries have soared not only for assistant coaches but for additional staff members, such as analysts. Now, with the NCAA removing restrictions on the number of assistant coaches a football program can have in 2024, “it’s hard for me to envision that (football salaries) will plateau,” Rhoades said. Other sports, including basketball, saw an increased number of assistants but still have staff limitations in place.

The coaching market is driven by the fear that a rival or a peer program might steal a head coach or a valued assistant. With so much pressure to win, a personnel shuffle could impact an entire department, especially in football, so athletic directors regularly raise coaches’ salaries and agree to massive buyouts, providing themselves little financial flexibility should the program stagnate.

“The minute one school does it, the next school and the next school and the next school (does it),” Rhoades said. “‘Well, if we’re expected to beat them and compete with them, and they just hired 10 new staff members, then we need 10 new staff members.’ And as an industry, we’ve been really good at doing that.

“What’s interesting is you sit and you have private conversations amongst athletic directors, and even amongst some coaches, and we’ll all sit there and go, ‘What are we doing?’ But then your competitor does it and you go, ‘OK, we’ve got to do it.’ So we’re, at times, our own worst enemy.”

Soaring revenues, soaring expenses

The schools averaged jumps of 321.8 percent in recruiting costs, nearly 300 percent in sports equipment, around 250 percent in both medical and gameday expenses and more than 200 percent in travel. Support staff and administration costs rose by an average of about 240 percent per athletic department, while financial aid costs averaged about a 146.5 percent increase.

“Everything has had inflation tied to it,” Texas Tech athletic director Kirby Hocutt said. “It’s like everything else in life: Your expenses continue to escalate, and you do all you can to monitor your expenses.”

Some of the cost categories, such as medical, gameday and financial aid, leave little wiggle room for athletic departments. Equipment expenses have soared as safety advancements push manufacturers toward innovation. Each football helmet, for instance, is custom-fitted with a three-dimensional scan to prevent concussions and costs about $1,000. Most programs have at least two, if not three, helmets per player. At Ohio State, stadium ushers known as the Redcoats once worked strictly as volunteers but now are paid. Starting in 2014, power-conference schools could provide scholarships up to the full cost of attendance beyond the traditional grant-in-aid. At Tennessee, for instance, that meant an extra $6,000 for in-state athletes and an additional $12,000 for out-of-state athletes each year.

The waves of realignment in the past two decades — Division I schools have changed conference affiliation 134 times since 2005 — have often led to escalating travel expenditures. The Big Ten and ACC now stretch from ocean to ocean, while the Big 12 has 16 schools scattered in four time zones. Regional bus services that could cost around $10,000 for a football team to travel to a game 200 miles away have frequently given way to $100,000 chartered planes for games two time zones away. Colorado spent $2.3 million on travel in the 2011 fiscal year, its final season before leaving the Big 12 for the Pac-12. In its final school year as a Pac-12 member in fiscal year 2023, Colorado’s travel costs escalated to $5.4 million. (The Buffaloes have since returned to the Big 12.)

Over time, new initiatives forced staffing upgrades and changes. In the late 1990s, departments poured resources into compliance offices and academic advising. Later, they directed investment toward mental health specialists, athletic trainers and strength and conditioning coaches. As logistics responsibilities expanded, athletics operations departments hired more staff. Then came analysts in football and basketball.

Ross Bjork led athletic departments at Western Kentucky, Ole Miss and Texas A&M before taking over at Ohio State in 2024. In each role, he saw how new directives simply became additional expenditures and rarely meant reimagined budgeting.

“It was the arms race on the people side,” Bjork said. “As much as we were trying to build facilities, too, to try to say we want to find either a competitive edge or a performance edge, or we have a need to support our athletes at a higher level. And you just saw this evolution where staffs just grew and grew.”

Rhoades mentioned some men’s basketball staffs have become so bloated that there aren’t enough seats on the bench during games. Some football staffs have a similar feel.

“When does it become too many people?” Rhoades asked. “Are we really going to have two coaches coaching the same group of linebackers? Two coaches coaching the wide receivers? Man, too many people, too many problems. When does it become an inflection point of diminishing return versus positive return? I think we’ve reached it.”

Meanwhile, athletic departments have shown little fiscal restraint when it comes to firing high-profile coaches. Three years after a pandemic-induced shutdown in 2020-21 spurred schools to rethink their budgets amid significant losses, many had reverted to their old ways. Guaranteed coaching contracts and buyouts proliferated, none more eye-popping than Texas A&M, which fired Jimbo Fisher with more than $70 million remaining on his contract, which the school will pay out through 2031. Less than a year after Fisher’s firing and Bjork’s departure, new A&M AD Trev Alberts laid off 18 athletic department staffers, citing “unprecedented change” in college athletics and a need to be more “efficient.” Alberts later said there was no connection between the layoffs and Fisher’s buyout.

Supporting athletes

On July 1, athletic departments were permitted for the first time to begin sharing a slice of revenue with their athletes. The new system adds another large expenditure (this year it can be up to $20.5 million) that likely will divert money from other areas, such as staffing and facility improvement.

“Everyone’s got a revenue issue right now,” said Adam Breneman, a former Penn State tight end, a media personality and co-founder of The College Sports Company. “It’s everyone. I met with a school the other day. They’re just trying to figure out, ‘How in the hell do we come up with $20.5 million extra that we didn’t have before?’”

Schools will look for areas to trim costs elsewhere in the budget, but they’d find stiff resistance if it came from the additional resources provided to current athletes. Over the last two decades, support staffing has grown beyond just coaching to include player development, mental health, nutrition and wellness.

“I think young people now have more challenges from the standpoint of distractions and things that way more access people can get to them and maybe negatively affect them or get to their emotions differently than you could back in 1996,” said former NFL player and Iowa special teams coordinator LeVar Woods.

Ten years ago, the NCAA deregulated the feeding of student athletes, which allowed its membership to provide unlimited meals. It created a worthwhile but costly initiative. Big Ten and SEC schools averaged nearly $5.3 million on athlete meals in fiscal 2023 alone. The other 12 schools averaged about $1.8 million per school that year.

“Ten, 12 years ago we couldn’t feed kids,” said Houston athletic director Eddie Nuñez, a former athletic director at New Mexico and deputy AD at LSU. “And one student-athlete (UConn men’s basketball player Shabazz Napier) making his claim nationally that he couldn’t eat anything, which we all know was very accurate, he comes out, he says it and all of a sudden the NCAA says you can do this, but it’s, ‘OK, you can have a bagel, but you can’t put cream cheese on it.’ That’s the kind of stuff that really shows that the NCAA was in a position to evolve.”

What’s next?

The fact that revenues are rising as fast as expenses has led to excess — bordering on frivolous — spending by athletic departments. Ticket revenue rose 96.7 percent; media rights revenue jumped by 342 percent thanks to jaw-dropping new TV contracts within the power conferences. Contributions skyrocketed by an average of 374 percent across the 16 schools, which tended to coincide with stadium renovations and new practice facilities. Many of those projects have involved schools taking on considerable debt.

But at the core of the spending craze are the dual incentives of competition and fear.

“You’re always comparing yourself to who has what you don’t, right?” said Dickey, a former associate athletic director at Baylor and Houston. “At that point in time, Baylor was in the same conference as Oklahoma and Texas, and obviously they had maybe a much larger brand and maybe more traditional success, and so you’re always chasing what you don’t have to elevate to compete at the highest level. The goal was to get to the CFP, the goal was to win Big 12 championships.”

Donations have helped athletic departments upgrade facilities and invest in coaches, but they can come with strings attached. Boosters want to see something tangible from their gifts, whether that’s a personnel upgrade or a new facility. Some pledges are rewarded by tacking the donor’s name onto a coaching or administrative position within the program. If their investments don’t get results, donors often struggle to accept those shortcomings.

“It’s real,” Rhoades said. “You feel it from your donors, you feel it from your regents, you feel it from your season ticket holders, all of it. And again, I think that that degree of impact varies depending upon the institution that you’re at.”

Boosters’ financial gifts can provide resources to keep coaches or help departments remain in the arms race. At Iowa, Ferentz enters his 27th season as coach, and Bowlsby’s decision 20 years ago would be considered a bargain today. Those debates take place on every campus every year. Although there are usually more factors to consider than a line item on a budget, the bottom line matters for every athletic director.

“If you change out coaches, that means you’re most likely changing out quite a few staff members,” Dickey said. “It potentially impacts your support staff. It impacts the culture. It impacts a student-athlete experience. It impacts fan experience. You’re making a decision: Is it worth me spending a million extra dollars to hold on to this guy? Because I know if I go to the open market, I’m gonna have to pay at least half a million more.”

Is there a path forward for the industry without dipping into private equity? Will universities consider restructuring athletics as a core enterprise under their financial umbrella, like Arizona State did last year to wipe out $300 million in athletic debt? Or will some departments attempt fiscal restraint on their own?

“In the Olympic sports, the non-revenue sports, we may see some slowing of escalation there,” Hocutt said. “But I think with football and basketball, I don’t believe we will see a lot of slowdown there. I think we’ll continue to see escalation because it is a competitive open market.”

(Photo: Ron Jenkins / Getty Images)