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division 1-a fotball is supposed to fund the rest of the athletic budget. most schools receive no funds from the school and have to break even to afford the womens' scholarships under title 9. basketball helps too, with ncaa and conference tournament money making most of the teams profitable. i don't know about 1/3 of football programs being in the red, but i do know that almost half the division 1-a athletic budgets overall are in the red. football makes money, but not enough to cover the 85 additional womens' scholarships that have to be offered under title 9.
your point #1 will take care of itself. state schools especially will stop subsidizing their athletic departments and suggest a drop to division 1-aa or dropping football altogether. many of the uc and cal state programs have already gone that way -- santa barbara and northridge recently. those are huge schools with huge enrollment, but the numbers never added up. and without the 300-500,000 payouts by the big boys to subsidize them, i think you will see 10-12 schools drop to 1-aa in the next 10 years.
i disagree with solution #2, though. first, the more rules you have, the more people will cheat. if a team knows it needs 7 wins in the next 2 years to maintain its status, you will find all kinds of criminal activity to lure players to programs. the pressure in the sec is such that just about every team has been on probation in the last 10 years, some of them twice. i'd hate to think what mississippi state would do to remain in the sec. non-qualifying juco players, convicted felons, etc.
and the other unintended effect is it would force conferences to contract. the bottom teams in each league (duke, baylor, rutgers) would move to smaller conferences to avoid being relegated. that, in turn, would put pressure on the next-to-last place teams (wake forest, missouri, syracuse) to either move or cheat. and so on until you end up with a bunch of twelve 8-team conferences, rather than eight 12-team conferences. it's a lot easier to win 25% of your games in a small conference than it is in a large one.
instead, why not institute a rule that your conference bowl share depends on your placement in the conference? right now, each conference gets a "travel allowance" from its conference of between $500,000 and $1.2 million. any leftover money is funneled into a pool and split evenly. so ohio state will not actually receive any more bowl money than northwestern -- they will only receive enough to cover costs.
instead, i propose that each team gets to keep 50% of its bowl payout, regardless of expenses. the remaining 50% is divided among the conference members. so ohio state gets to keep about 6.75 million, with the remaining 6.75 million is divided evenly. penn state keeps a little over a million, and so on. northwestern will receive a dwindling share of funds. they'll start taking football seriously when they see their welfare checks cut by 50% or more.
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