Student Fees: Subsidy Or Revenue?

[DFW HOYA]

Not all schools use direct student fees to support athletic programs. For those that do, a proposed change is meriting some criticism.

Can a fee be accounted for as revenue? If so, as the article suggests, what is to prevent this scenario: "A university could theoretically expand its student section, use the free admission provided to students to inflate attendance numbers, declare a sell-out, then book all that student fee money as revenue. Without stringent and complicated controls, that could occur even if students do not attend games and are even unaware that they could for free."

http://www.athleticscholarships.net/2013/06/19/ncaa-considers-change-to-accounting-for-student-fees.htm

[Lehigh Football Nation]

I was reading the base article from the USA Today on that subject:

http://www.usatoday.com/story/sports/college/2013/06/18/ncaa-athletic-subsidies-accounting-changes/2435527/

And I'm glad Infante is taking people to task on this.

On the face of it, it's basically allowing an accounting trick to make revenues look bigger.

Suppose you run a day-care center and a movie house, and you charge $1000 per kid to join. Each kid's parents or guardians get a free ticket to the movies built-into the price. In the accounting for the day-care center, you declare the revenue as "income", since the kids' parents or guardians are paying the bill. But then in the accounting for the movie theater, you declare the revenue as "income", since the tickets you forced them to buy count as tickets sold in the movie theater. And that's whether the parents even go to the movie theater.

I know the new world of college athletics really don't care if fans actually go to the games, but this weird rule seems to actually codify this fact.

[ursus arctos horribilis]

The portion of tickets students claim for a game should/could be counted as revenue at the ticket price the general public would have paid for the ticket but anything beyond that is ludicrous chicanery.

[Model Citizen]

Didn't the NCAA change its method for counting attendance a few years ago? My recollection is that they used to go by actual attendance (including "free" student attendees), but changed to paid attendance. Consequently, attendance numbers at the smaller schools went down.

Would the proposed accounting change affect official attendance?

[ursus arctos horribilis]

Didn't the NCAA change its method for counting attendance a few years ago? My recollection is that they used to go by actual attendance (including "free" student attendees), but changed to paid attendance. Consequently, attendance numbers went down.

Would the proposed accounting change affect attendance numbers?

In some cases it may have but that is another way schools play with the numbers also if they need to. Have a sponsor buy tickets instead of ads and then give the tickets away and/or throw them out and still the book the sold tickets as attendance. Without that trick the actual paid attendance at some places would be embarrassingly low or maybe I should more embarrassing.

[DFW HOYA]

Didn't the NCAA change its method for counting attendance a few years ago? My recollection is that they used to go by actual attendance (including "free" student attendees), but changed to paid attendance. Consequently, attendance numbers at the smaller schools went down.

It cuts both ways.

DePaul was cited recently in the Chicago press for inaccurate attendance by counting heavily discounted tickets for charitable groups as paid basketball attendance whether they showed up or not. What was a reported average attendance of around 7,900 a game was, in reality, under 3,000 per a game in actual customers.

[MplsBison]

From LFN's USAT link:


Under one proposed change, student fees might no longer be treated only as subsidy, but also as revenue generated by the athletics department. That could make it easier for some athletics programs, especially those at schools in the power conferences, to be considered by the NCAA as self-sufficient at a time of tight university-wide finances and increasing costs for students. The standard for self-sufficiency is whether revenue generated by an athletics department at least equals its annual expenses.

This is absolutely correct.


Look folks, this is real simple: if you want nice things, they cost money. Therefore, you put it to the students: do you agree to pay for this nice, shiny athletics department or not? If the students say yes: END. There is no counter-argument to be made. They agreed. That's money that they (the students) have agreed to fork over to the athletics department, to do with as they see fit, by agreeing to be a student at that university.


Thus, it's correct for that money to be accounted as revenue for the athletic department. And this will get stingy, lazy journalists off their backs, writing unfair pieces about schools spending "too much" money on athletics and being in the red. Those articles are just meant to stir up public anger driven by a lack of understanding anyway.

[DFW HOYA]

Look folks, this is real simple: if you want nice things, they cost money. Therefore, you put it to the students: do you agree to pay for this nice, shiny athletics department or not? If the students say yes: END. There is no counter-argument to be made. They agreed. That's money that they (the students) have agreed to fork over to the athletics department, to do with as they see fit, by agreeing to be a student at that university.


Except that student fees are generally a construct of publicly funded schools where state funds are not allowed to be directed to athletics and student "fees" serve that purpose. There is no athletic "fee" at most private universities, so whether students say yes or no, that's not part of the equation.

http://www.lehigh.edu/~infao/current/tuition/index.html

[Model Citizen]

I've seen student activity fees at private schools. However, they're typically less than $100 per semester and cover mostly campus social events. Not athletics.

[MplsBison]

Except that student fees are generally a construct of publicly funded schools where state funds are not allowed to be directed to athletics and student "fees" serve that purpose. There is no athletic "fee" at most private universities, so whether students say yes or no, that's not part of the equation.

http://www.lehigh.edu/~infao/current/tuition/index.html

So decrease the tuition by X and make a student fee of X. Not rocket science. It's the correct way to do it.

[Lehigh Football Nation]

So decrease the tuition by X and make a student fee of X. Not rocket science. It's the correct way to do it.

Follow that through a second. The German Engineering student comes to the school, and says, "I'm not going to pay for that athletics fee. All I want to do is create widgets in the lab, and in my spare time I'll play with my PS4. I have no need for college football, basketball, or women's crew."

[rokamortis]

The student fee is a subsidy. Is it a form of revenue, yes. But it is disingenuous to group it with other revenue like ticket sales, licensing, and fundraising.

[WestCoastAggie]

Should students pay this student fee subsidy? A part of me says no especially when the cost of tuition and other fees are on a constant uptick and many more students are looking to loan sharks like Sallie Mae to finance their educations.

[MplsBison]

Follow that through a second. The German Engineering student comes to the school, and says, "I'm not going to pay for that athletics fee. All I want to do is create widgets in the lab, and in my spare time I'll play with my PS4. I have no need for college football, basketball, or women's crew."

What DFW was saying is that the students *is* paying for that now. Simply, rather than needing to create a fee for that money - a private school can spend the tuition money as they please.

So it's either pay for athletics out of your big tuition payment or pay for it out of a fee. Pick your poison. Fact of the matter is, unless you get into a school like MIT (and even they still have a DIII athletics department that gets school funding!) athletics is simply the way of life in American universities. Don't come here if you can't deal with that.

[GoAgs72]

For me, attendance means number of people attending whether free or paid. I would not count season ticket holders who don't show up. Student fees for sports are getting out of hand. UC Davis has some of the highest for the UC system. The son of a friend of mine just got a full ride for golf. Golf generates no money for the University - why should all students support this when academic all-stars don't get the same consideration. At least football generates money, fan support and name recognition.

[MplsBison]

I have a hard time believing that the total amount of scholarships, fellowships, assistantships, tuition waivers, etc. that are given to graduate students in the UC system doesn't total something incredible, much more than is spent system wide on athletics.