Thursday, January 22, 2009

Stanford budget announcement suggests trouble on the horizon


A San Jose Mercury News report that Stanford University Athletics is in the midst of considering staff reductions and the possibility of eliminating teams is perhaps the most ominous sign for college athletics that serious economic times are ahead. Stanford supports a broad based athletic program and has among the best facilities, coaches, academics and weather of any school in the NCAA. Most importantly, its financial muscle is second to none. Stanford Athletics, according to their 2006-07 annual report, had over $500,000,000 in endowments supporting their athletic program. Yes, you read that right, $500 million. As context, there are 785 colleges and universities in the 2006-07 Chronicle of Higher Education endowment report - Stanford's athletic endowment was bigger than 80% of the institutional endowments in the rankings.

The market values of Stanford's athletic and institutional endowments (valued at $17.1 billion during the same time period) have taken a huge hit, not unlike the losses suffered across higher education. If one of the strongest athletic programs in the country (Stanford has won 14 straight NACDA Directors' Cups) is discussing options of last resort - cutting staff and dropping teams - college athletics may be facing a bursting bubble similar to banks, auto manufactures and the housing market.

It is increasingly clear that corporate sponsorships, donations and ticket revenues are going to shrink and that athletic budgets are going to face challenges. Meaningful solutions are needed at the institutional, conference and national levels. Ultimatesportsinsider.com will provide suggestions in the coming days about ways to reduce costs at all three levels.

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