How the NCAA’s Monetary Penalty Impacts Georgia Tech

Georgia Tech football players (by Flickr user hectorir)

Last week the NCAA leveled a number of penalties against Georgia Tech. The focus was impermissible benefits, but the NCAA also said Georgia Tech didn’t fully cooperate with their investigation.

The most interesting part of the announcement to me was the $100,000 fine against Georgia Tech. Earlier in the week on an appearance on College Football Playbook on Sirius/XM College Sports Nation I said we haven’t really seen the NCAA level arbitrary fines against football programs. While the NCAA has on occasion taken back March Madness money, they haven’t generally included monetary penalties in their rulings against football programs. In fact, when you search the NCAA’s database for major infractions, you’re given the option to search by penalty: television ban, postseason ban, probation, reduction in financial aid, recruiting limitations, show cause or vacation of record. Monetary penalty is not one of the options.

Maybe the NCAA heard me and decided it was time to start using their power to levy fines. Many have called for the NCAA to start hitting programs in the wallet where it really hurts. Last week I told you why they can’t take back bowl money, but they do have the power to fine programs. And they’ve done so against Georgia Tech.

The number one comment I’ve heard since this was announced is that $100,000 isn’t enough to hurt. I disagree.

Georgia Tech is not Florida or Ohio State, which I’ve shown you are self-sustaining in large part due to their football profits. Many fans think the line between the have and have nots is drawn at the divide between AQ conferences and non-AQ conferences. However, my research shows there is a line evident within the AQ conferences. Georgia Tech is not a have in the same sense that Florida or Ohio State is.

For example, Ohio State makes more than $42 million on football ticket sales. Florida makes north of $33 million when you include ticket sales, suites and luxury seating (and that’s not including contributions required to access some of that seating). Georgia Tech? Their audited financials show $9.3 million in revenue from football ticket sales. All of their sports combined bring in just $12 million in ticket revenue.

Georgia Tech isn’t bringing in booster contributions at levels anywhere near Florida or Ohio State either. Ohio State plans to pull $10.8 million from its booster club this year. Florida gets nearly $25 million from contributions for just the football program. Georgia Tech received just $1.8 million TOTAL in contributions for the 2010 fiscal year according to its audited financials.

Back to the $100,000 fine. Would it hurt a Florida or an Ohio State? No. Does it hurt Georgia Tech? Absolutely.

In fiscal year 2008, Georgia Tech posted a $3.4 million operating loss in the athletic department. In fiscal year 2009 and 2010, respectively, the athletic department saw profits of $306,508 and $284,117. That means they’re being fined roughly 1/3rd of their total operating profits. Consider if you were fined a third of your yearly salary.

Let me also point out that the small operating profits they’ve seen in recent years would be impossible without millions of dollars in support in the form of student fees and other direct institutional support. For the 2010 fiscal year, where the operating profits were $284,117, the athletic department took in $4.6 million in student fees and $1.5 in institutional support. Thus, the athletic department would be operating at a multi-million dollar loss without student fees (which they had to increase in 2009) and institutional support.

Georgia Tech isn’t Florida or Ohio State, or any of the other self-sustaining athletic department. A $100,000 fine hurts. Was it enough given what they were found to have done? I’m not passing judgment on that portion. I am telling you, however, that it’s a meaningful penalty in terms of their financial state.

I think it also sets important precedent. Although the NCAA looks at each case individually and is no way bound by its prior decisions and penalties, I still think it’s important that they’ve levied a monetary penalty against a football program. If they’re willing to do it once, maybe they’re willing to do it again. Maybe the mere possibility will become a deterrent. Although the NCAA can’t require a return of BCS money, here’s nothing to stop the NCAA from levying a fine against a program in an amount equal to what a team received from a bowl game or even from television during a season it’s now vacating. Maybe this is the beginning of a new era in the NCAA. (Maybe not. The NCAA walks a fine line when it comes to the big programs who could conceivably break free of the NCAA. But still, this is a new and interesting development.)

Posted on July 18, 2011, in ACC, Finance, Football, Investigations, Violations. Bookmark the permalink. 3 Comments.

  1. While the $100,000 may very well effect the Georgia Tech athletic department’s bottom line, I find it very hard to think this will do any real damage to GT. As you point out so frequently, many schools rely on institutional support to get by. Keep in mind as well that despite all the hoopla surrounding athletic department expenses, those expenses typically account for only 5% of an institution’s overall spending. In other words, $100,00 isn’t much compared to GT’s athletic expenses, and plays an even less significant role when you consider the university’s overall expenses.

    When it comes down to it, when you consider the close connection between an athletic department and it’s institution, the $100,000 is merely a drop in the bucket to Georgia Tech. While $100,000 is a fair amount of cash, I find it hard to believe that it will negatively impact GT in the grand scheme of things.

  1. Pingback: The Month In Review – July 2011 «

  2. Pingback: Ranking The ACC Football Programs: The Decade Ahead | Home Runs, Apple Pie, and Rock 'n Roll

Leave a Reply