'We Are in a Crisis’: Why Louisville’s Leaders Are Proposing a Cap on Sports Spending By David Jesse Some simple math leads to one inescapable answer: Intercollegiate athletics is broken, getting worse by the minute, and, absent some drastic changes, will disappear, at least on some campuses.
That’s the view from the University of Louisville, where a troika of the university’s president, board chairman, and athletic director recently published a lengthy letter arguing for college-sports reform, calling for Congressional action, a hard cap on spending, and even a new governing agency. If that doesn’t happen, “sports will go away,” President Gerry Bradley told The Chronicle in a joint interview with Laurence N. Benz, chairman of the board of trustees.
The letter landed as various college-sports leaders are headed to the White House for a planned roundtable on the subject Friday. Many, including Louisville’s leaders, are skeptical real change will come from that. Bradley said he expected “maybe a general discussion, a photo opportunity, but then a smaller group of folks get together and start the work that needs to be done.” No one from Louisville was invited to attend, Benz said.
In their letter, Louisville’s leaders featured the math they wrestle with on a daily basis: The athletic department at the university — a member of the Atlantic Coast Conference, which is part of the “Power 4" group of conferences — is budgeted to rake in $154.9 million in revenue this year. On the other side of the ledger, expenses are budgeted at over $167.4 million, creating a $12.5-million deficit. That budget was approved before the House v. NCAA settlement, which adds another $20.5 million in direct-athlete compensation. The school, the trio wrote in their letter, is using a $200-per-student athletic fee, a $12-million institutional subsidy, and a $25-million line of credit. Reserves in the department have dropped from $34 million to about $3.4 million.
“Louisville’s situation is not the exception — it is the rule,” the leaders wrote. “Across the country, from the wealthiest programs in the nation to those fighting simply to stay afloat, the financial picture is remarkably and alarmingly similar.”
To combat the rising expenses, Louisville is proposing a hard cap on athletic spending to keep runaway costs at the highest levels of competition from forcing “the middle class of college athletics” to “hollow out,” they wrote. (They didn’t give a dollar amount for the cap, which would be on departmental spending, not on how much campuses can pay athletes in name, image, and likeness, or NIL, deals.)
Such a cap is a popular option among campus leaders, according to a survey released in October by the Knight Commission on Intercollegiate Athletics. Nearly 70 percent of survey respondents supported national laws that would allow limits on how much each institution can spend on specific sports or in their total budget, and a similar share endorsed “the NCAA, conferences, or institutions taking steps to implement legally defensible spending caps on things like coaching salaries and operational expenses.”
Amy Privette Perko, the commission’s chief executive officer, called Louisville’s argument “exactly correct” and commended them for speaking up. “I think they are the first Power 4 university to go on the record with these concerns, which match what we hear university presidents and athletic directors talking about in private.”
Warnings from leaders over the unsustainable finances of athletics are nothing new, and some predictions have famously not come to pass. It wasn’t that long ago that athletic directors and presidents said paying football and basketball players would decimate Olympic sports. That hasn’t happened.
Still, there’s widespread acknowledgment that someone needs to step in to fill the leadership vacuum left by the NCAA in recent years. The association has been “managing by litigation,” Benz said — forced by the courts to abandon its restrictions on athlete pay and benefits, little by little.
The NCAA and campuses have been lobbying Congress for an antitrust exemption so that the agency can more freely make rules. The Louisville leaders said the government could help set up a congressionally chartered governing body to impose a spending cap and correct other imbalances, like barring states from setting unique rules in an attempt to get their campuses a competitive advantage. (For example, some states have attempted to make NIL payments exempt from the state income tax.)
Pursuing new rules along with spending caps could help correct what Bradley called the “grave suspicion” that athletic directors feel about their competitors. It’s an open secret that NIL deals on many campuses have served as enticements for athletes to transfer there, which is against the rules. “There is just zero transparency, and so there’s zero trust,” Bradley said.
Whatever the new governance structure becomes, it needs to make broad changes, Louisville argued in its letter. It “should recenter policy on the educational purpose of college athletics” by setting limits on transfers and eligibility, among other things.
Until then, Bradley and Benz said, institutions like theirs are going to struggle.
“Right now, what we’re looking at is how do we financially stopgap over the next couple of years until a solution is found, or until a solution is put through Congress that will allow us to be able to be put on a sustainable footing,” Bradley said. “I think we are in a crisis, and I think the time for action is rapidly approaching.”
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