America’s colleges and universities are facing severe financial pressures, leading to staff layoffs and reduced real compensation—achieved by keeping salary increases below inflation—for many employees, even at wealthy, elite private schools. School closures have risen, and some schools are dropping traditionally important majors such as physics or history. Amid all this, the highly respected Government Accountability Office (GAO) has released a report detailing significant financial losses in intercollegiate athletics even at highly successful NCAA Division 1 programs.

This passage from the report outlines the problem:

In the 2023–24 academic year, the 352 DI colleges reported spending a total of $20.8 billion on athletics, which largely went to team and game expenses (including travel, equipment, and medical expenses), coach and support staff compensation, and athletics scholarships. The 69 ‘Power’ colleges in the most competitive DI conferences accounted for more than half of this spending.

To help cover athletics expenses, DI college athletics programs generated $13.1 billion in revenue during the 2023–24 academic year. Power colleges generated $10 billion of this total amount, primarily through the sale of media rights to broadcast games, game day revenue (including ticket sales), and donations.

Across DI colleges, 94 percent of athletics programs, including 49 of the 69 Power colleges, spent more than they generated in revenue in the 2023–24 academic year. The median college reported a gap of $20.6 million. This gap was larger than the median a decade earlier ($12.3 million). Over this period, spending increased more than generated revenue in all DI subdivisions.

This 2-3-year-old data was compiled before the NCAA began effectively paying players salaries—over $20 million per year for many large schools. The financial problem has accelerated greatly since. I suspect the average funding gap at D1 schools is now approaching $30 million annually, possibly more, and that many schools have a per-student burden that substantially exceeds $1,000 annually. The GAO itself has estimated the “median college contribution per undergraduate student” over four years at $8,500. And I doubt that even those estimates fully provide for appropriate depreciation and amortization of costly facilities like stadiums and basketball palaces. I suspect most university financial officers would be jailed or fined by the SEC if they tried to follow fully their collegiate accounting practices relating to athletics at a Fortune 500 company.

Supporters of the status quo have historically argued that intercollegiate athletic success strengthens school loyalty and leads to bigger contributions from alumni and other fans. (See the recent college sports debate on Minding the Campus). Yet the facts suggest that argument is very weak. I looked at the 10 universities with the largest endowments, and a majority were schools with little intercollegiate sports presence or prowess: schools like Harvard, Yale, M.I.T., and Johns Hopkins. Only a few had both some athletic reputation and considerable wealth—Stanford, Notre Dame, Northwestern. Students do not go to Caltech or the University of Chicago because of their sports, yet they subsequently do well in life. The correlation between academic reputation and athletic success is, at best, extremely weak. Part of the problem is what I call the Iron Law of Sports: every time someone wins a ballgame, someone else loses. The win-loss percentage for all teams is just .500 (50 percent).

Compounding the financial problems for college sports are some looming, exploding costs. As athletes start getting paid, they may decide to form labor unions, forcing high minimum salaries. As the long-term health disabilities from college-age football concussions and other injuries become more apparent, lawsuits probably will soon blossom. Women may raise gender equity issues more aggressively. If male varsity football players average $150,000 in pay, shouldn’t female volleyball players make that amount too?

What to do? For answers, some have turned to that great beacon of rationality, responsibility, and wisdom: the U.S. Congress. Personally, I would feel more comfortable buying a used car from Vladimir Putin or the Iranian ayatollah du jour than depending on Congress for intelligent solutions to pressing problems. That said, bipartisan legislation in the Senate, sponsored by conservative Republican Ted Cruz and liberal Democrat Maria Cantwell, addresses some, but by no means all, of the looming problems.

If sanity is to prevail, responsible parties must recognize that the business of creating and disseminating discoveries and ideas is rather different than that of managing ball-throwing or kicking game contests, and a bigger separation between them needs to occur. If the University of Oxford can get along without basketball, so can Harvard or even Ohio State. Colleges do have names with commercial value—the “name, image, and likeness” (NIL) qualities also possessed by star athletes. They have vast facilities that often would cost hundreds of millions to duplicate. Perhaps for-profit private athletic companies—perhaps led by sports-minded billionaires like Mark Cuban or Jerry Jones—can make NIL deals with colleges and universities that include access to their facilities. Maybe universities can turn financial liabilities into assets, while the public can still be entertained on Saturday afternoon while drinking beer and eating unhealthy but tasty food.

To be sure, there are other aspects of the topic deserving discussion if this were a book-length analysis. At many liberal arts colleges and even non-flagship state universities, for example, college sports are far less commercialized, and the issues are accordingly different. Sports are often a recruiting device in luring students, for example. The unsustainable financial condition some schools are facing may lead, out of desperation, to unilateral partial athletic disarmament; perhaps, for example, university presidents in some athletic conferences can agree to pay head coaches, say, no more than what they make, and also limit the size of coaching staffs, teams, and travel budgets. Within the Big Ten conference, does it make any sense for the University of Southern California to play volleyball with the University of Maryland located thousands of miles away?

One way or another, big changes are coming to college sports.