I had posted earlier about an AD covering a budget shortfall by drawing from university funds. That got some blowback, so I wanted to explain what I meant in more detail.
There are at least two ways of covering such a shortfall. One is just drawing from the university. It’s a bad look, but it happens. The Ags, infamously, covered a budget in the ‘00s, by “borrowing”, interest free, $20 million from the university, to be paid back at times the AD felt like paying. (It may still be unpaid).
Another way is through “creative accounting”. I’m not talking about playing loose with financial accounting, where someone signs that the books are good and risks going to jail. I’m talking about managerial accounting, the practice of allocating costs, supposedly to support good managerial decisions.
Example- a small G5 university has a gym. It is used for PE classes, recreational sports, intra-murals, and varsity sports. Only the last item comes under the AD. When the university is allocating costs to users, what is shown as the cost of varsity sports? That’s a subjective decision (do you assign a ratio based on wear? On time used? On square footage used?). The answer reached by the manager truly seeking to manage costs can be different than the answer reached if the goal is to minimize AD expenses.
One of the legends around UT (I don’t know that it’s true; it could be) is that Bellmont Hall has classrooms because that allowed the university to use PUF funds for the 1970s stadium expansion project.
What I’m getting at- for smaller programs, if the cost of competing requires them to run a deficit that their university has to close, I respect them to say, “Gee, sorry, we just can’t recruit the good players, because the AD can’t handle the NIL on its own”. This especially applies to the private schools, that have to answer to no one on funding athletics with general funding (much backed by tuition paid with guaranteed student loans, Ha-ha-ha-ha!)