Mike Stock wrote:

> Bob,
>     I was under the impression that universities, like the
> government, were on a cash basis.  So no
> depreciation, just repairs and perhaps financing expense
> (bonds) for something built in the past.  All
> that might wind up charged to the Grounds Department instead
> of the Athletic Department anyway.

Mike, my grasp of government accounting is a perfect abyss.   From experience with non-government entities,
I assume it's pointless to try drawing meaningful conclusions from broad-brush summary data if there's any
flexibility in the way it can be prepared.  I've developed big financial statement numbers where nobody
could have known what went into the numbers unless they were in the room when the options were discussed
and agreed to by audit partners who needed to be pretty sharp just to understand the accounting
relationships, . . . and everything about that was kosher and in accordance with financial reporting rules,
. . . but we wouldn't have uncovered those innovative accounting concepts (here read "deeper truths") if
the preliminary numbers had already come to the bottom line the chairman wanted.  We merely searched more
intensively for things we'd overlooked and immediately stopped when we'd uncovered the combination of
things which brought us to the "right" result.


>     As someone else mentioned the revenue is likely a pretty
> good number.  I think you are correct that
> the expenses might be suspect.

Agreed.  I'd think the revenue numbers could only come to one result.  It's how you allocate expenses
between sports, between departments and between accounting periods that can wander all over the map, even
before considering whether there are errors in the applications.  Prescribed accounting methods restrict
opportunities to be wholly outrageous, arbitrary or deceptive, but they don't even guarantee that numbers
developed by two different entities should be comparable without examining the detail.  Among results that
are equally likely from drawing conclusions based on summary data are (1) creating demons where there are
none and (2) accepting results that are complete trash.

For evaluating the management performance of two different athletic departments, should bottom line numbers
be the same for a school forced to rent facilities in a central city and a school bordered by endless
cornfields, and how do legitimate cost differences impact the relative mix of contributions from the
various sports in each school?  If accelerated depreciation expense for a new football stadium isn't
included in expenses (don't know whether it should be), how does that school's bottom line for football
compare with a school that leases domed stadium space on an annual basis?  Was Michigan's write-off of its
new yellow bathtub ring absorbed in a single year or spread over several periods?   What's Michigan's
reported facilities expense for housing hockey in 80-year-old fully-depreciated Yost compared with
Minnesota's reported expense for renting space in a new central-city(?) arena?

Too many unknowns to be able to draw meaningful conclusions . . .

boB