Grand River University Water Buffalos: Activity-Based Costing of University Sports

On April 30, 2018, the athletic director of Grand River University was drafting a plan for his department to be reviewed by the school’s board of trustees. Grand River University was a small university supporting several varsity sports teams that competed regionally and nationally. The men’s hockey, men’s basketball, and women’s basketball programs had struggled in recent years. In fact, the women’s hockey program had been cut several years earlier. The school wanted to reduce the athletics program’s dependence on grants. With the university facing increasing costs and stagnant revenue, the athletic director had to provide information that clearly outlined the cost to the school of each program and athlete. A group of researchers had used activity-based costing to show that the actual cost of having a team was much higher than schools had reported. The athletic director wondered what his school’s costs would look like after applying that method to his calculations.