The University of North Carolina Board of Governors met last week to consider setting limits on college athletics spending and subsidies as budgets and deficits balloon.
According to WRAL News, the state does not currently have a cap on institutional support of athletics departments, and spending across the whole UNC system has increased by $50 million in the past three years, soon exceeding a total of $200 million.
"Athletics matter to who we are,” said Kirk Bradley, the chairman of the board’s budget committee. “The question this board will wrestle with is never whether athletics matter, it's how we sustain what matters on a sound financial footing."
AT UNC-Chapel Hill in particular, the Tar Heels sustained a $15 million athletics budget deficit last year, spending $187.9 million and generating around $172.9 million.
To combat “increasing operational demands and support the athletics financial plan” this year, WRAL News reported that UNC has turned to a 2018 advance payment from the school’s apparel sponsor, Nike. In 2018, Nike paid UNC $8 million to cover the final two years of a long-term contract — set to expire in 2028. The Tarheels invested that money in a “quasi-endowment fund,” and it has grown to $14.2 million in the past eight years. Now, the Board of Trustees has approved using $9 million of that fund for athletics spending this fiscal year.
“I want to applaud the foresight of folks that took this money up front,” Trustee Jim Blaine said. “That's what we need to be doing, that’s good stewardship.”
The remainder of UNC’s athletics department funding comes from a few main sources, including student fees, conference revenue generation and distribution, state taxes from sports betting, and private donations.
The Board of Governors oversees all 15 public university athletics departments in North Carolina — ranging from Power 4 giants like UNC to smaller schools like Elizabeth City State — so it must create a system with tiers and guardrails, because there is no “one-size-fits-all” answer.
“Rapid expense growth like this is now the norm across major college athletics but normal is not the same as sustainable,” the board notes in its presentation. “The governance question: Which funding sources absorb it – reserves, campus funds, debt – and with what board oversight?”
