Abstract
Current accounting methods in intercollegiate athletics make it difficult for leaders to assess and understand the true cost of each sport team operations. Institutional and athletics leaders often make decisions concerning sport sponsorship/offerings, budget allocations, overall program operations, and review Title IX compliance based on information that may not truly capture the cost of each sport. Additionally, intercollegiate athletics reform groups and the federal government are calling for athletic departments to report more consistent, accurate, and transparent financial data. The purpose of this paper is to respond to the call for accounting reform in intercollegiate athletics via an innovative application of activity-based costing (ABC) to one NCAA Football Bowl Subdivision (FBS) athletics department. ABC was applied to the athletic department budget report with results showing how previously established ABC cost drivers for intercollegiate athletics (Lawrence, Gabriel, & Tuttle, 2010) and reallocation of expenses back to specific sports allow for a greater understanding of the cost of each sport.
Highlights
Current accounting methods in intercollegiate athletics make it difficult for leaders to assess and understand the true cost of each sport team operations
This paper innovates intercollegiate athletic finance; it is the first to apply activity-based costing (ABC) to the reported expenses of one NCAA Division I Football Bowl Subdivision (FBS) school to explore how implementation of ABC would impact the understanding of sportspecific expenses
Results show how previously established ABC cost drivers for intercollegiate athletics (Lawrence et al, 2010; Tuttle, 2009) and reallocation of expenses back to specific sports allow for a greater understanding of the cost of each sport
Summary
Current accounting methods in intercollegiate athletics make it difficult for leaders to assess and understand the true cost of each sport team operations. This paper innovates intercollegiate athletic finance; it is the first to apply activity-based costing (ABC) to the reported expenses of one NCAA Division I Football Bowl Subdivision (FBS) school to explore how implementation of ABC would impact the understanding of sportspecific expenses. Intense competition for premier athletic talent that encourages institutions to invest in student-athlete support such as cost of attendance, multi-year athletics aid, additional meals/snacks, mental health/general wellness support, and name, image, and likeness rule changes all illustrate NCAA evolution (McCollough & Fenno, 2020) This is all within the context of the currently unknown full economic impact of COVID-19 (Jensen, 2020). This crisis and associated elimination of sport participation opportunities underscores the value of alternative accounting methods, such as ABC, that provide accurate information about the true cost of various aspects of athletics operations
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