For University of Maryland sports fans, 1980 must have seemed the best of times. The university had taken the Atlantic Coast Conference championship in basketball and finished second in football. Basketball showman Lefty Driesell was at his zenith as a coach, and the Terrapins looked like a dynasty in the making.

But over in the budget office, 1980 looked a little different. When the books were closed on the university's $4 million athletic budget, the department had lost more than $60,000.

Today, a decade later, the department's financial foundation has all but collapsed under the weight of losing teams, fair-weather fans and troubles that began with the 1986 drug-overdose death of basketball star Len Bias.

This spring, the National Collegiate Athletic Association imposed stiff sanctions against the basketball program that could have financial repercussions for seasons to come. And last week, Athletic Director Lew Perkins announced he is leaving College Park to become athletic director at the University of Connecticut.

The department has accumulated a deficit of at least $3.5 million, and this spring began slashing scholarships for most of its 23 sports.

"The realities of the costs of intercollegiate athletics are coming to the fore," said William E. Kirwan, the school's president. Many universities, he said, have built big sports complexes and granted "lots and lots" of scholarships in non-revenue sports. Now they are overextended, he said, and "you're going to see scaling back everywhere."

The financial predicament facing Maryland is not unusual in college sports. A survey released in May by the College Football Association found that last year, for the first time, the athletic departments at nearly half of its member schools ran operating deficits.

But at Maryland, which has made a concerted push to maintain an expensive and high-profile sports program while simultaneously boosting its academic stature, the situation is acute. Operating deficits have been mounting since the mid-1980s, produced by various sources -- some of them common in college athletics, some unique to Maryland.

Under state policy, College Park's athletic department must be self-supporting, receiving no funds directly from the university. To sustain the programs, school officials have subscribed to the theory that profitability can be achieved by building good football and basketball teams. In the best of circumstances, those teams would attract top recruits. Winning teams would, in turn, bring more fans, boosters and lucrative post-season games.

But that goal has been frustrated at College Park since the mid-1980s, as the Terrapins have been trapped in a vicious circle of bad luck and bad decisions, and suffered from the underlying limitations of the campus' athletic program. Propelling the downward spiral were:

The death of Bias in June 1986, a tragedy that tarnished the school's reputation and led to controversial coaching changes, such as the ouster of Driesell and the subsequent hiring and firing of high school coach Bob Wade. The cost: $740,000 to buy out the contracts of the two men.

Although budget strains preceded Bias's death, changes the university made in the wake of it had intangible costs. They hurt recruiting -- in part because of tougher admissions standards and the school's image problem. The recruiting problems in turn led to weaker teams and a slackening of booster support.

A string of losing seasons in football, one of several factors that have kept the program from making money. The cost: Estimated annual football gate receipts dropped by $500,000 between the 1986 and 1989 seasons.

A basketball program that, even though it has continued to net a profit, has declined in recent years. The deterioration has further damaged recruiting and attendance and has curbed revenue from post-season play.

Lukewarm alumni loyalty and a booster program that has slipped along with team performance. The booster club over the past three years has been unable to fulfill its principal mission of paying for athletic scholarships, falling $500,000 short of the $2 million needed this year.

Steep increases in the mid-1980s in administrative costs within the department -- some to pay for academic tutoring required after Bias's death -- and escalating fees charged by the university for utilities and maintenance. Together these costs now top $1 million. The High Cost of Big-Time Sports

From the outside, big-time college sports looks like a money machine: Revenue from the annual NCAA men's basketball tournament exceeded $70 million in 1989, and the Final Four took home $1.3 million each. Major football bowl games can mean more than $1 million per team.

However, a close look reveals that Maryland and other schools have operated on the edge financially even in good years. But in the early 1980s, when Maryland teams were winning, balancing the budget was easy. A $69,000 deficit in 1980, for example, was made up with spending cuts the next year.

The university's athletic department must raise enough from ticket sales, mandatory student fees and broadcasting rights to pay the bills for all 23 teams. Traditionally, the cost of nearly 300 scholarships -- which at current tuition rates range from $7,382 to $11,438 a year -- has been borne by the Maryland Education Foundation, the school's booster club.

Basketball and football, the two "revenue sports," are touted as the twin pillars of the department budget, bringing in enough money from gate receipts, television rights and post-season play to pay their own way and subsidize other teams.

But more beneficial to the department's finances is the $119 yearly athletic fee paid by each student. That raised about $2.7 million in the 1989-90 school year, enough to cover the operating budgets of all non-revenue sports.

An analysis of the athletic budget over the past decade shows that, of the two supposed "revenue" sports, only basketball consistently turns a profit. It cost $785,000 to field the team last year, and the university expected to raise more than $2.5 million in gate receipts and media proceeds.

Football has actually been a drain on the department. The team was budgeted to spend $1.8 million last year, and it cost the department hundreds of thousands more in administrative and tutoring expenses.

"Football is close to a break-even, maybe even a little less," Perkins said.

At Maryland, the football program's costs include a staff of 11 coaches, much equipment, nearly $300,000 for out-of-state travel and 95 scholarships. Revenue generated by the program brings in about 30 percent of the department's budget, compared with an average of 54 percent at schools that belong to the College Football Association. University officials say Maryland football brings in less because Byrd Stadium seats only 41,000.

Still, the football program has escaped scholarship cuts, and it is slated to get expensive new facilities as officials move to take advantage of what they see as the moneymaking potential of fielding powerhouse teams.

Such monetary success is elusive. Even major football schools such as the University of Michigan are having budget troubles: officials at the school estimate they will lose $1.5 million this year.

Nationally, the cost of operating an athletic department has grown 35 percent in the last four years, and revenue has increased only 21 percent, according to the College Football Association. The figures, which suggest it is difficult to stay profitable, support the findings of a 1985 NCAA study that indicated that about 40 percent of big-time college athletic programs operate in the red.

Maryland's precarious finances were recognized by a task force assembled to look at academic standards for athletes in the wake of Bias's death.

Even then, the budget was "close enough to the margin that adversity could very well have a negative impact on {the athletic department's} ability to stay self-supporting," said Sheila Tolliver, an aide to former governor Harry Hughes who was on the task force. "We did not see that they had reserve funds that would carry them through." Bias's Death Brought Scrutiny

Bias' death triggered intense scrutiny of the school's sports programs, including the academic standards for new recruits, the progress of athletes toward degrees and the amount of tutoring support they received. As a result, College Park began allowing fewer athletes to be exceptions to its admissions standards and created tutoring programs that cost the Athletic Department $357,000 last year.

Perkins, who arrived in College Park in 1987 fresh from navigating Wichita State University through fiscal and ethical storms, said he was taken aback by Maryland's financial problems. "My eyes have been opened," he said in an interview a few weeks ago.

In 1980, it was relatively simple for the athletic department to pay its way. At about $4 million, the budget was still fairly small. The teams did well, ensuring good crowds. Ticket sales for football and basketball accounted for more than $1 million -- a quarter of the budget. Proceeds from television and radio contracts brought in $570,000. Student fees brought in another $1 million, and the boosters, a once-moribund group brought to life in the 1970s, easily paid for the $748,000 in scholarships.

By 1990, the budget had ballooned to about $12 million, driven largely by the cost of scholarships, overhead charges imposed by the university and a more sophisticated bureaucracy to market Terrapin sports. Administrative costs, which were less than 30 percent of the budget at the start of the decade, now eat up about 40 percent and include, for example, eight non-coaching jobs paying more than $50,000 a year.

All that leaves relatively less money for the teams: In 1980, basketball and football received more than 35 percent of the non-scholarship budget; by 1990, their share had fallen to 28 percent.

Meanwhile, the department now meets only 15 percent of its budget through ticket sales, compared with 25 percent a decade ago. The possible loss of television revenue as a result of the NCAA sanctions may drive the department's deficit as high as $6 million by next year, according to Perkins.

The university has already advanced money to cover some of that shortfall, which the department is paying back with interest in $275,000 yearly installments. Perkins said negotiations are underway with the university to manage the debt.

The department has now taken a step that would have seemed radical in rosier times, slashing scholarships in "non-revenue" sports such as soccer and lacrosse, and restricting some teams -- tennis, track, golf and gymnastics -- to local competition.

Maryland's problems may be more extreme, Perkins said, but colleges across the country are beginning to grapple with containing costs. "You look for ways to streamline your program," he said. "We're somewhat of a leader in what we've done."

Charles Smith, owner of a Montgomery County printing firm and longtime booster, sees the changes at College Park more simply. "It's run as a business," he said. "When they start losing money, they start cutting back services and employees. That's what businesses do."