Applying Activity-Based Costing to Intercollegiate Athletics

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.

Cost Management in Sports Organizations

“…In the Brčko District of BiH, a fixed rate of up to 10% of the eligible direct costs is applied. Acceptable direct costs, according to the terms of the Public Call for financing projects of public interest of associations, foundations, and other legal and natural persons in the Brčko District of BiH, include all costs "that are directly related to the realization and achievement of the goals of the project of public interest, which are directly related to the individual activity of the project and where the connection with the specific activity can be proven" 3. It is important to note that in the event that the organization is working on the realization of only one project, it will not have indirect costs because the resulting costs will probably be directly related to the specific project.…”