(U-WIRE) CHAPEL HILL, N.C. – The most pressing problem in intercollegiate athletics, according to a panel of assorted sports figures who spoke Tuesday at the University of North Carolina, is the increasing size of athletic budgets at Division I-A institutions.

NCAA President Myles Brand, along with ACC Commissioner John Swofford and North Carolina administrators, cited the “arms race” among upper-echelon schools as the biggest dilemma confronting the NCAA’s future success.

“This spiraling of success demanding even more success has good people of noble intentions chasing both the carrot and their tails,” Brand said during the keynote speech celebrating the first anniversary of the Carolina Leadership Academy at the UNC Kenan-Flagler Business School.

He spoke for more than 30 minutes about the welfare of student-athletes, including academic concerns and personal development, before he and the panel fielded questions. The former president of Indiana University focused on the financial ramifications of competitive intercollegiate sports.

Skyrocketing costs have not yet harmed many programs, but once corporate advertising and revenue growth rates slow, institutions will be in serious financial trouble, Brand explained.

He commented on a 2003 NCAA-funded study by the Brookings Institute that found that increased athletic spending does not necessarily lead to increases in winning percentages or net operating revenue. These results were specifically noted within men’s basketball and football programs – typically the two most prominent programs for universities.

“The ‘spend to increase wins and win to generate new revenue’ spiral that has resulted for some schools in a no-holds-barred approach to recruiting and scandalous behavior is based, ironically, on an unsupportable assumption,” Brand said. “The popular theory is that you have to increase spending to increase wins and have to increase wins to increase revenues.”

Schools are spending more on their athletic departments to stay on par with the expenditures of peer institutions. Administrators mistakenly believe that in order to compete, they must outspend their rivals, Brand concluded.

Almost two years after the August 2003 study was released, Brand noted that the spending spiral has not changed and athletic expenditures have only continued to increase.

From a conference perspective, Swofford agreed but emphasized that fiscal matters are gaining importance among athletic departments because the NCAA has already instituted reforms that address academic concerns, including graduation rates and preferential treatment for athletes.

Dealing with financial concerns is more difficult for the NCAA because of a larger economic context, Swofford said.

“It is much more challenging and difficult to address [financial concerns] at the legislative level because of antitrust issues and marketplace issues,” Swofford said.

UNC Chancellor James Moeser said he believed the same thing, but feared that a solution will be difficult to find. He also stressed that the problem extends far beyond the realm of athletics.

“I don’t really see a way to control the spiraling costs because of the need to be competitive,” Moeser said. “I don’t want to say that it is confined to the athletic arena, because it is not. But it is very, very real in the athletic arena and it concerns me. … Short of anti-trust legislation in Congress to give the NCAA power it doesn’t currently have, I don’t know how we address that issue.”

Brand noted that the financial troubles of institutions lead to a decreased emphasis on academics and integrity and a stronger focus on profitability. This problem opens up a whole new set of concerns, according to Swofford.

“That line between professional sports and major college intercollegiate athletics is being blurred more and more from an entertainment standpoint,” Swofford said.

– Andrew Yaffe