Interscholastic Sports Financial Issues for Athletic Administrators

Articles | Online Master of Athletic Administration

Traditionally, funding for elementary and secondary education came from state resources. Property taxes, sales tax and lottery funds used to comprise the majority of the monies dedicated to covering the operating expenses of schools and school programs, including interscholastic sports, according to budget and tax authority Michael Leachman, et al, in “Most States Have Cut School Funding, and Some Continue Cutting,” on the Center on Budget and Policies Priorities’ website. But since the 2008 recession, the burden of keeping school programs up and running falls more heavily on the shoulders of individual school districts.

“[Today,] some 46 percent of K-12 spending nationally comes from state funds (the share varies by state),” explains Leachman. “Cuts at the state level force local school districts to scale back educational services, raise more local revenue to cover the gap, or both,” he says. “And because property values fell sharply after the recession hit, it’s been particularly difficult for local school districts to raise significant additional revenue through local property taxes without raising tax rates, a politically challenging task even in good times.”

Those entering the field of interscholastic sports should be aware of alternative ways to supplement their high school sports budget. Students earning a master’s in athletic administration online will learn how to institute and manage pay-to-play funding programs, pursue sponsorships and local broadcasting deals, and organize fundraising events.

Pay-To-Play Funding

Most states continue to fund athletic departments out of the general fund, but the need for alternative funding methods is growing to include income sources such as gate receipts and fundraising, according to Ohio University staff member John Evers.

In the wake of the recession, many regulations prohibit or greatly reduce the public tax funds that can be allocated to interscholastic sports programs. School districts now have to pursue outside funding to keep sports programs alive.

Unfortunately, one of the more popular methods of funding athletics has been to institute a pay-to-play rule, requiring students (and by extension, their families) to pay annual fees to participate in sports. Not all students can afford the fees.

“Today pay to participate has emerged as an accepted way for school boards to raise funds to offset the cost of sports programs and activities,” according to NIAAA’s Guide to Interscholastic Athletic Administration on humankinetics.com. “… Almost every state budget has been affected by the economic downturn since 2008, and implications are widespread. The new fiscal reality finds that all school revenues are in decline. The federal funds have pretty much disappeared, most state budget funding has been cut dramatically, and the local revenue sources are flat or reduced because of unemployment and property assessment appeals.”

Online e-commerce solutions to pay-for-play sports fees are now available at most high schools, making the process both simpler and harder to abuse. For example, SchoolPay® allows not only the collection of sports program fees, but also cafeteria payments, aftercare, and other expenses.

Partnering with or establishing 501(c)(3) non-profit corporations, such as sports booster clubs, can help reduce the amount charged to each student annually. Danny Erickson, the athletic director of Canton High School in Massachusetts, was able to reduce the pay-to-play fee for all sports from $495 down to $255 through the Canton High School Athletic Booster Club, according to Michael Popke’s, “With Budgets Tightening, Schools Struggle to Keep Sports Affordable,” on AthleticBusiness.com.

Taking Advantage of Every Funding Opportunity

While pay-to-play offers a sure way of maintaining sports programs despite budget cuts, most athletic departments attempt to eliminate or greatly reduce the fees for their students. If only families who can afford to pay for their students to participate, a school might not have enough athletes to fill a team roster.

Sponsorships and broadcasting rights can also help to fund a school’s athletic program. Local TV networks began broadcasting local high school sports, especially football, as early as the 1980s, according to journalist Mark Koba’s CNBC article, “High School Sports Have Turned Into Big Business.”

Koba offers as examples the MSG Varsity Network (Cablevision), which negotiated a $500,000 contract with New York City’s public school board to broadcast a wide range of high school sports. Also, the shoe company New Balance paid $500,000 to refurbish an existing high school stadium in Gloucester, MA.

Depending on the sport being promoted and the population of the surrounding area, broadcast and sponsorship deals can either be easy to secure or very difficult. New York City houses millions of people, so MSG Varsity was fairly confident of having a substantial viewing base. Sponsors also are more likely to agree to a sponsorship if they know their logo and advertising will reach an acceptable number of potential customers.

Most athletic organizations urge athletic administrators to learn as much as possible about sports finance so they can seek out sponsorships, contracts with broadcasting entities (including online entities such as PlayOn), or otherwise reduce the burden on students and their families.

In “The Funding Crisis in High School Athletics: Causes and Solutions,” a report by the Amateur Athletic Foundation of Los Angeles (LA84), the foundation’s board of directors suggests that athletic directors tap more corporate sources while continuing to use public funds. The board’s suggestions include:

  • Build bridges with other educational departments in order to eliminate the us-vs-them mentality between extracurricular programs competing for financial resources.
  • Learn how to package the high school sports product and sell the commercial value of it to corporate entities.
  • Learn the language of business to better understand how potential investors view investment opportunities and donation write-offs.
  • Strive to improve as lobbyists and advocates for interscholastic sports in the political arena.
  • After funds are raised, be sure to distribute them equitably across the entire educational spectrum, continuing to build bridges and reduce us-versus-them competitions for funds.
  • Take advantage of all available fundraisers, from booster clubs to auctions, bake sales, and other such opportunities.

The Amateur Athletic Foundation of Los Angeles stresses that political activity is essential. For example, a bill recently presented to the California legislature would place a tax on professional sporting events, the proceeds of which would be distributed to interscholastic athletics.

With a solid understanding of the various revenue streams and funding sources combined with an eye toward planning for the future, athletic directors can be better prepared to oversee a thriving sports department during their tenure.

“The athletic administrator should develop a five- to 10-year history of all past budgets, purchasing and yearly totals,” Evers adds. “An accurate inventory process should be developed to track the number and condition of all items under school control to help guide future purchases.”

Learn More About Ohio University’s Online Master’s in Athletic Administration

Students planning a career in interscholastic sports should be familiar with athletic director responsibilities so they can be effective in their positions. An athletic director who understands the ins and outs of interscholastic sports finance would be an attractive candidate to most any school board.

Ohio University’s master’s in athletic administration online program focuses on preparing interscholastic athletic directors to nurture student athletes and run athletic departments. The curriculum includes a course (SASM 6700 – Financial Administration of Sport Facilities and Programs) that covers financial administration of sports facilities and the overall financial responsibilities of athletic directors.

Ohio University’s MAA program is accredited by the Commission on Sport Management Accreditation (COSMA) and prepares students for National Interscholastic Athletic Administrators Association (NIAAA) certification. For more information, visit Ohio University’s MAA page.

 

Recommended Reading:

Finance Administration of Sports: Budgeting, Forecasting, and Planning

7 Essential Traits of a Successful Athletic Director

Understanding the Importance of Title IX

 

Sources:

States Cut School Funding – Center on Budget and Policy Priorities

Guide to Interscholastic Athletic Administration – Human Kinetics

Pay-for-Play Sports Fees – SchoolPay

Keeping Sports Affordable – Athletic Business

The Business of High School Sports – CNBC

Funding Crisis Solutions – LA84 Foundation