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The University of California, Los Angeles was one of the universities that enrolled students in the athletics department. The school had to cater for the athletics department expenses. Although they got some sponsorship, they still had to cut down the budget.
Opportunity cost is the benefit that an individual or an institution loses for having taken a different decision or choice. The administration decided to eliminate ten scholarships in mens swimming team and admit ten more tuition-paying students. It is correct to say that the opportunity cost is the foregone revenue from the ten paying students (Finley 20).
The UCLA School has been promoting the athletics department and ensuring that they get scholarships for the students tuition needs. The athletics department was supposed to support the university. It was also supposed to raise some funds for the department and the school through the sporting activities.
For the last four years, the athletics budget has been increasing rapidly. The two digits increase in student tuitions has also led to the rise in the sports budget. It has made the costs of managing games to keep going up.
The athletics fans in Los Angeles would only support a team as long as it is winning in the competitions. They quickly withdrew their support when the team was losing or seen as a loser. It is, however, different in Texas and other places where fans have a passion for their team whether it wins or loses (Finley 20). The fans portray their liking or dislike through their purchase of tickets in Los Angeles. The pressure became too high for the athletics department to handle.
The reduction in the purchase of tickets with the plummeting expenses could only lead to small cash (Finley 20). The school could then start making losses. They started monitoring all the unit costs and revenues. They advised the coaches to watch their hotel bookings and transportation costs. Thus the pressure to reduce costs was high. The fans change of heart all the time would lead to the loss of passion in the game. The athletics department was supposed to raise money through the sporting activities so that it could provide scholarships for tuition.
The decision seemed to be good, but it depended on the universitys funding and the fans base support. The management had to find a better way to cut down or minimize the departments costs. They needed to get back to profitability whichever way. By choosing to remain with the Athletics team the way it was with the increased tuition fee, they would continue to make losses. If they maintained the ten scholarship men in the swimming category, the opportunity cost was the foregone revenue from the ten would be paying students (Finley 20).
There are two ways of looking at the opportunity cost. One is the alternative paying students that would replace the scholarship swimming mens team. The benefit of the tuition-paying students is that they help to reduce the losses gap and hence could improve the profit margins. The second way is the differences in return between the tuition-paying students and the ten athletics men. For instance, if the current status is leading to millions of losses in expenses, the department can change it. The admission of tuition-paying students in place of the scholarship students would bring positive cash flow. The difference between the income from the paying students and the expenses from athletics men is the opportunity cost.
Works Cited
Finley, Andrew. Staying Out Of the Fiscal Red Zone | Daily Bruin . Dailybruin.com. N.p., 2005. Web.
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