Category Archives: Big Ten
Last week, the University of Michigan held their monthly university leadership meeting, where Athletic Director Dave Brandon announced the $146.4 million budget for fiscal year 2014 (the 2013-2014 school year). It is projected that out of the operating revenues of $146.4 million there will a budget surplus of $8.9 million.
With the continuous growth of Michigan’s athletic department, such as the addition of women’s lacrosse starting in fiscal year 2014, contributing to the increasing expenses “our objective is to do everything possible to fully support the health, welfare and competitive opportunities of the 900-plus student-athletes associated with our 31 teams,” added Brandon.
In addition to the increasing growth of the athletic program, Olympic facilities are also in the plan to be built.
“We believe that no sport should be left behind, and all of our student-athletes and coaches deserve practice and competition facilities that are truly the leaders and best,” said Brandon.
The University of Michigan is preparing for the Bridgestone NHL Winter Classic on January 1, 2014, which is helping to pad next year’s budget. The budget projects the athletic department will incur $600,00 in expenses when it hosts the event. Those expenses will be more than covered by the rental fee from the NHL: a cool $3.1 million.
Another area of revenue growth being projected is preferred seat donations and inessential gifts, which are budgeted to increase from $27.4 million to $32.3 million in fiscal year 2014.
As fiscal year 2013 draws to a close, Michigan Athletics is projecting a $10.2 million surplus, coming in $4.4 million higher than originally budgeted. The surplus will be used to help compensate in the funding of renovating the field hockey project and for the Schembechler Hall.
By: Hunter Mundy
The Connecticut Huskies will be hosting the Michigan Wolverines football team on September 21, 2013. For UConn, this may be the biggest home game ever scheduled. The game will take place at the Huskies’ Rentaschler Field, which has a normal capacity of 40,000 fans. This will be the second game in the contracted series between the two teams. The first game, a 2010 Wolverine victory of 30-10, was held before of a crowd of 113,090 at Michigan Stadium.
Connecticut normally allots 3,000 tickets to visiting opponents, but the contract with Michigan requires UConn to reserve 5,000 tickets for the Wolverines. In order to keep the same amount of season ticket opportunities, UCONN plans to add 2,000 temporary seats to the stadium’s capacity. While the Huskies have had numerous games in past years where crowds reached the 40,000 capacity, the additional seats, along with this game’s high demand for tickets, are sure to set a new record for football attendance.
In 2009, UConn’s average attendance was 38,229, and in 2012 the average number of spectators at Connecticut’s six home games was 34,672. Over four years, the ticket demand for Huskies football tickets has decreased by approximately 3 percent. Not taking into account required donations during the 2009-2011 cycle, tickets ranged from $150 for reserved seats to $210 for mezzanine chairs for a six-game home schedule. For 2013, which has a seven-game home schedule featuring the Wolverines, season ticket prices range from $175 for reserved seats to $280 for mezzanine chairs. UCONN/Michigan game attendees (outside of those purchased through the Wolverines allotment) will be required to purchase season tickets through the Huskies Athletic Ticket Office.
Some may ask why Michigan would not renegotiate or buy their way out of this contract in order to allow for an extra home game and the additional revenue that would generate. Dave Brandon, Michigan athletic director, stated to CBS Sports that even though he could have broken the deal, he opted not to because, “it would screw up [UConn’s] schedule” and force Michigan to “run around trying to find another game.” While cancelling this game would have led to scheduling difficulties for both groups, allowing this game to take place is truly a win-win for both institutions.
Michigan’s allotted 5,000 seats for this game does not nearly meet the expected ticket demand of Wolverine fans. With UConn located in one of the most populated areas of the United States, Michigan alumni are plentiful. For instance, the University of Michigan Alumni Club of New York, based in New York City, has over 13,000 members. Additionally, there are at least eight UM alumni clubs within a three-hour drive of UConn’s Rentaschler Field. UM Alumni Club members typically have the opportunity to purchase tickets for most home and away Michigan football games. However, it is the norm for these benefits to exclude rivalry games with Notre Dame and Ohio State as well as other games with traditional high-ticket demand.
As an example of the excitement and limited supply of tickets in the marketplace, the UConn game has also been added to the excluded list of games available directly to UM alumni club members. Look for UM fans throughout the region to either increase their UM athletic club donations and/or purchase UConn season football tickets in an effort to see their beloved Wolverines live and in person.
The 2013 season will be Connecticut’s first year in the newly named and configured American Athletic Conference. Having a home opponent on the schedule such as Michigan could not come at a better time. With losing former Big East rivals West Virginia, Syracuse and Pittsburgh from the Huskies schedule, the Wolverines visit to Rentaschler Field will give the university and its football program a spark and a chance to shine on the national stage.
Many college programs choose to schedule traditional powers in order invigorate their home schedules and grow their program’s budgets. For instance, UConn’s rival Rutgers hosts the SEC’s Arkansas Razorbacks on the same day the Wolverines visit the Huskies.
In 2010, Duke University hosted the Alabama Crimson Tide, which set a modern day attendance record at the Blue Devils’ Wallace Wade Stadium (35,237). The #1 Crimson Tide routed Duke 62-13 in front of what ESPN dubbed “a crimson coated stadium named for a former Alabama coach.” Duke also used temporary stadium seating to accommodate the extra Alabama fans for this big contract game.
Additionally, Michigan State, along with Central Michigan, Eastern Michigan and Western Michigan are a part of an agreement known as “Celebrate the State.” This contract contains 12 games from 2011 to 2020 with Michigan State facing each team four times during the period. One game of each these four game series will be played on the home field of Central Michigan, Eastern Michigan and Western Michigan. In 2012, Michigan State visited Central Michigan and won 41-7. This game set an attendance record for Kelly/Shorts Stadium of 35,127 spectators with plenty of green-clad Spartans fans in attendance. Johnny Adams, Michigan State’s cornerback, stated to ESPN, “It was a little different, a smaller environment; but at the end of the day it’s all football. It’s good for the fans and it’s good for Central to bring the fans out here and put on a great show.”
Athletic department officials do not believe that the field at Bart Kaufman Field is the first of kind, but it is certainly rare. The new home to Hoosier baseball features no dirt anywhere on the field. Turf fields are undoubtedly commonplace in place in modern baseball, but a turf field usually features dirt on the base paths, or at least around the plate and on the mound. This IU photo gallery shows the AstroTurf field, including the turf mound and warning track.
Over the years, turf baseball fields have gained popularity. As turf has become more commonplace, the amount of dirt on artificial fields has decreased. First, dirt on the base paths was reduced to the areas directly around the bases. Next, turf fields with only dirt in the area around the plate and on the mound appeared. In recent years, teams like Ohio State, Louisville, and Virginia Tech have unveiled turf fields that only have dirt on the mound. But Bart Kaufman Field takes it to the next level with an all turf mound. At least one other totally dirt-less field is thought to exist. Consol Energy Park is shared by a high school team and an independent minor league team and in Pennsylvania. The Hoosiers new home could very well be the first all turf field in college baseball.
Last season, two northern teams made it to the College World Series. Part of Kent State and Stony Brook’s success was credited to an unseasonably warm winter which allowed both teams more on-field practice than in normal offseasons. While the bitter cold keeps many teams indoors, the effect of winter weather on field conditions should not be overlooked. Indiana’s Associate Athletic Director for Facilities Eric Neuburger says the all turf field will allow significantly increased field on-time for the Hoosier baseball program.
At the Division I level, postseason baseball host sites are awarded to programs based on merit, though teams ranked number one have been outbid for the right to host in the past. As a ranked team with an outstanding facility, Indiana has a serious shot at hosting a regional. This should come as a welcome change for NCAA as many, including Big Ten Commissioner Jim Delany, have claimed that baseball’s early start date is unfair to northern teams and makes it impossible for them succeed or host postseason events.
While baseball traditionalists may cringe at thought of a diamond without dirt, the benefits are too overwhelming for northern programs to pass up. The profound impact on off-season training regimens will be very tempting for coaches and administrators of teams located in regions with less than ideal baseball climates. Having a field that is suitable for play year-round could be a major recruiting asset for northern teams. Look for more turf only fields to pop around the country in the future.
Luke Mashburn is a Game Day Operations Specialist at Kennesaw State University. You can follow him on Twitter @L_Mashburn.
A number of Division I conferences have recently increased the fees a member school must pay when it withdraws from the conference. These fees are commonly referred to as exit fees. The ACC is one of the conferences that recently increased its exit fees. And its exit fee provision has been receiving a lot of attention lately because of Maryland’s departure to the Big Ten.
The ACC actually increased its exit fees twice in the span of a year. The ACC first upped the fees from around $12-14 million to $20 million in September 2011 when it announced it would add Syracuse and Pittsburgh. The fees were then upped again this September after the conference added Notre Dame (in all sports except football and hockeyl).
The ACC’s current exit fee calls for a withdrawing member to pay an amount equal to three times the conference’s total operating budget at the time of withdrawal. Based on the ACC’s 2012-13 operating budget, this equates to an exit fee of more than $52 million. It is this amount that the ACC is seeking in its lawsuit against Maryland for the school’s move to the Big Ten.
When the ACC and other conferences increase their exit fees, the general thinking is that it further discourages members from leaving the conference. But, because of how courts analyze the legality of these exit fee provisions, increasing the amount of the fee can actually increase the chances of the exit fee provision being deemed unenforceable. So, instead of discouraging schools from leaving, it can actually embolden them to do so.
In legal terms, conference exit fees are known as liquidated damages. Liquidated damages provisions are commonly added to contracts. They set the amount a party to the contract must pay in the event it breaches the contract. Liquidated damages provisions are useful because they theoretically save the parties the time and expense of litigating the amount of damages caused by the breach.
But, the amount of liquidated damages specified in a contract cannot be randomly selected. Courts will generally only enforce liquidated damages provisions if (1) the anticipated damages in the event of a breach are difficult to ascertain at the time of contracting, and (2) the amount of liquidated damages is a reasonable estimate of the actual damages that would likely be caused by a breach. If a liquidated damages provision does not meet this test it is deemed a penalty and is unenforceable.
Assuming that the ACC’s liquidated damages provision fulfills the first element of the test, it is questionable whether it would meet the second element. The requirement to pay three times the conference’s operating budget does not appear to be related in any way to the actual amount of damages the ACC would suffer if a member withdraws. It just seems like an easy way to ensure that the exit fee continues to grow without having to continually vote on it. This makes it look like a penalty.
And the actual number that results from this provision, $52 million, is not a reasonable estimate of the ACC’s actual damages. For example, Maryland’s departure will not result in the ACC’s tv deal being reduced by $52 million. A good argument can be made that the ACC actually suffered no damage when Maryland left. Maryland’s departure allowed the conference to add Louisville. And the general consensus is that the ACC is now stronger athletically as a result (at least in the two sports that matter for tv revenue purposes, football and men’s basketball).
This is consistent with recent realignment history. Over the past two years the Big 12 lost Nebraska, Colorado, Texas A&M, and Missouri. Yet, after adding TCU and West Virginina, the Big 12 signed the most lucrative tv deal in the conference’s history this year. (The one exception to the no damage upon withdrawal argument would be the Big East. The defections in that conference have definitely hurt the value of its tv rights).
When a liquidated damages provision is determined to be invalid, the party attempting to enforce the provision is allowed to instead seek its actual damages from the breaching party. But, as discussed above, conferences often suffer minimal damage when a member withdraws, either because the member added little value to the conference or because the conference quickly replaces it with a new member of equal value (at least in tv executives’ eyes).
As a result, exit fees often leave conferences in a tough position. They have to be high enough to discourage a member from leaving the conference. But, if they are too high they could be declared an invalid penalty. And, if the exit fees are invalid, the conference would then have to prove its actual damages, which are usually much less than the amount of the exit fee. As a result, exit fee disputes have always settled without a court deciding the validity of the liquidated damages provision. Recent examples include the Big 12 settling with Nebraska, Colorado, Texas A&M, and Missouri for less than the mandated amount of exit fees.
So, what is the solution to the problems with exit fees? Grants of television broadcast rights. In these agreements, all of the conference members grant their television broadcast rights to their athletic contests to the conference for a certain period of time. If a member leaves the conference during that time, the conference retains the member’s television rights. Because the value of a school to a conference is the television revenue it can help generate, a grant of rights agreement makes the members essentially worthless to another conference that is looking for new members.
While grant of rights agreements do have potential issues (sovereign immunity issues being the biggest), they are not subject to a subjective test like liquidated damages provisions. Thus, they are much more likely to hold up in court as valid contracts.
Currently, only the members of the Big Ten, the Pac-12, and the Big 12 have executed grant of rights agreements. Other conferences that want to ensure stable membership would be wise to insist on their members signing similar agreements. (Yes, even the mighty SEC should have its members sign grants of rights). If the ACC had one in place, Maryland likely would not be joining the Big Ten.
By: Jason Singer
Mark and Nancy Hollis used to be just another two faculty members on the Michigan State campus. Yet, after their $1 million donation to the University, they are anything but just that.
The donation will be divided as follows: half of the money will go to the academic section of the University, and the other half will go to the athletic program. The athletic portion will goes towards funding the “North End Zone” project at Spartan Stadium. This project will help develop the facilities for both present and future student-athletes. Many sections of the stadium will be improved and renovated, including both the home and away locker rooms, the media center, concession areas and restrooms.
Mark Hollis, who was named the Athletic Director in 2008, knows first hand how important the facilities are to the program. He even stated that him and his family will “continue to support this expansion of Spartan Stadium, which is critical to the future of the football program and will improve the entire athletic program.”
When Mark and Nancy Hollis attended Michigan State together, they knew that their lives were influenced by fellow students, faculty members, and others who were involved with them on the MSU campus. They beleive this still stands true today. As a result, they decided to donate and create this scholarship fund to continue the positive influence on others that Michigan State has had on them.
The scholarship fund they created is known as The Hollis Family Endowed Scholarship. Only a portion of the invested income earned is spent each year. The remainder is added to its previous amount, which increases the scholarship from the initial year. Doing this will allow Michigan State to give out scholarships for years to come, long into the future.
By donating this great gift to their alma mater, Mark and Nancy Hollis have helped Michigan State for the better, as the renovations to Spartan Stadium, and the scholarships for incoming students, will improve this impressive university a great deal. The future of Michigan State is looking great, and people will always look back to the Hollis family as important campus influences.
BY: ALI JENKINS
Over a year and a half ago, construction broke ground for LaBahn Arena, the new $34 million home of the University of Wisconsin’s hockey team. To much anticipation, the doors finally opened Oct. 1, officially ushering in a new era in Badger sports.
The arena directly affects six University athletic programs, namely hockey. Boasting the new Lance Johnson Memorial Rink, a 2,273-seat facility, and state-of-the-art locker rooms, the recently displaced men and women’s hockey programs now have a place to call home.
In addition to the revamped dressing rooms, a new student-athlete dining area for team’s post-practice and pregame meals opened where the men’s basketball locker room once stood. Now both teams at the Kohl Center, hockey’s old home, and LaBahn Arena will get to reap the benefits of the new facility and the luxuries found within.
Other amenities include contemporary offices for women’s hockey, new dressing rooms for the swimming and basketball teams, video theaters and an expanded sports medicine area.
While the upgrade may seem a bit excessive, its main purpose is ensuring the safety of Badger student-athletes. In recent years, the men’s hockey team was forced to travel three miles off campus to the Bob Johnson Hockey Facility for practice, because the Kohl Center was decorated for basketball. The journey usually meant maneuvering through busy roads, like Park Street and John Nolen Drive, sometimes on scooters with heavy equipment bags in the dead of winter.
If that facility was unavailable, the team had to relocate to the on-campus Camp Randall Memorial Sports Center. Despite the Shell’s close proximity, team skates there required players to dress at the Kohl Center before traveling down busy Dayton Street.
The men’s hockey team wasn’t the only program displaced on occasion. The women’s hockey team, although based at the Shell, had to travel in similar circumstances when ice time became available at the Kohl Center.
The new arena will cut down on potential travel accidents and allow both programs a place to practice year-round.
The men and women’s swimming programs also benefit from the new arena. A bridge connecting LaBahn to the Southeast Recreational Facility will give swimmers easy access to their new locker rooms, coach and student-athlete lounges and athletic training facilities.
You can check out photos of the construction from start to finish here.
Author: Tyler Jamieson
A couple of weeks ago Cornell announced it was severing ties with Adidas over its labor practices. Now it appears Wisconsin is looking to be next in line to do so, and Wisconsin is willing to put its money where its mouth is for the cause.
Wisconsin’s current deal with Adidas runs through 2016 and is worth approximately $2.5 million annually. The University also receives licensing royalties from Adidas that have provided hundreds of thousands of dollars for need-based scholarships for students outside of athletics. However, the University is willing to sacrifice all that for its stance against sweatshop abuses in licensed-apparel manufacturing.
At issue is an Indonesian factory that was shut down by an Adidas subcontractor. Over 2,800 factory workers were owed $3.2 million. A small part of the factory produced Adidas apparel and some of that apparel was found to have Wisconsin logos on them. Other companies such as Nike and the Dallas Cowboys, who presumably had items that were manufactured there, have provided financial relief for factory workers, but to date Adidas has not done so and factory workers are still owed $1.8 million.
Is Wisconsin’s cause a noble one? Critics of the NCAA aren’t so sure. It’s not uncommon to hear the term “slave labor” tossed around when referring to NCAA athletes. Is it hypocritical for a big-time university like Wisconsin to take a stance on labor wages in the manufacturing of their apparel when it can be argued their returning 1st team All American and Heisman trophy finalist running back, who led the team to a Rose Bowl berth last season, is grossly under-compensated?
To its credit Wisconsin is consistent with its belief. They pride themselves on being at the forefront of aiming to stop labor abuse in licensed-apparel manufacturing and they have the history to prove it. This isn’t the first, second, or even third time they have ended license and apparel contracts over labor practice disputes. In 2008, the University ended its license agreement with New Era over labor practices. In 2009, the University ended its relationship with Russell over a closure of a factory in Honduras where it was alleged the factory was shut down as a hostile response to workers who were threatening to unionize. In 2010, Wisconsin ended its licensing agreement with Nike due to a similar circumstance as Adidas – a Nike subcontractor closed 2 factories and was alleged to have owed workers approximately $2 million in severance pay.
For now, Wisconsin is keeping tight-lipped on the dispute with Adidas due to pending litigation. Both sides agreed to mediation back in February, and after being unable to find a resolution the Wisconsin Board of Regents put the case in the hands of a court to decide if Adidas has met the Labor Code of Conduct term of their contract. Should be interesting to see the outcome of this case and to see if other schools will follow Wisconsin’s lead.
Yesterday, the NCAA levied what many consider to be unprecedented penalties upon Penn State. Including within the NCAA’s sanctions, was the imposing of a $60 million fine to be paid by Penn State over the next five years. This $60 million figure is clearly large, leading some to believe that while the NCAA did not impose the “death penalty” upon the football program, it nonetheless intended to decimate it.
How though, will the $60 million fine actually impact the operations of Penn State’s football program and the Penn State athletics department? In the grand scheme of Division I athletics, Penn State has posted impressive revenues in recent years. For 2010-11, the most recent year for which Department of Education data is available, Penn State’s athletics department reported total revenues of $116,118,026.00. The athletics department also reported expenses of $84,498,339.00. While many athletics directors will note that the numbers reported to the Department of Education are not inclusive of every cost incurred by an athletics department, these figures at least give some idea as to the type of budget Penn State’s athletics department is operating under.
That being said, it is arguable that at least when considering the Department of Education data, having to shell out on average $12 million per year over the next five years to comply with the NCAA’s sanctions is not going to destroy Penn State athletics. However, the story is not that simple. One has to take into consideration the multitude of budgetary factors Penn State’s athletics department is likely now facing as a result of the NCAA sanctions. Along with losing sponsors like State Farm and facing a possible credit downgrade by Moody’s, Penn State athletics likely now has to rework its budget to determine where the $60 million is going to come from.
Frank Hardymon is the Associate Athletic Director – CFO at Georgia Tech. While he can only explain the budget planning process engaged in at Georgia Tech, he notes, “I would guess our methods of planning and budgeting are similar to those utilized by other institutions.” This planning begins the spring prior to the July 1 start of the fiscal year, when the upcoming year’s budget is completed. “In our case, nearly every dollar which we project receiving is accounted for in the budget,” Hardymon noted.
Likely, a similar circumstance exists at Penn State. While the Department of Education arguably demonstrates that the athletics department is operating with a surplus, many athletics directors are quick to note that is not the case, as not every expense an athletics department incurs is reported to the Department of Education. As such, Penn State is likely looking towards contingency provisions in its budget to gather the money by which to pay the $60 million fine. “We build in as much contingency as we can every year; some years we may have close to $500,000.00 in contingency factors into the budget, other years that amount is quite a bit less,” Hardymon said.
It is unknown whether Penn State’s athletics department had any contingencies built into its budget. If so, it is highly unlikely that the contingency amount would allow for the payment of a $60 million fine. As such, Penn State will likely have to scrape from other areas of its budget to pay the imposed fine. Areas in which Penn State could cut from its budget would likely be from recruiting expenses, travel costs and future coaching salaries. However, the most likely area in which Penn State could draw from is facility improvements. While the department will have to continue paying under the loan terms for already existing improvements, it is unlikely that the athletics department will undertake any new building during the time period in which the fine is being paid. Hardymon noted, “We also maintain a detailed five-year income projection which we update frequently. That analysis factors in projected facility improvements needed during those five years.”
Overall, the financial sanction imposed upon Penn State by the NCAA is indeed a blow to the athletics department. However, given Penn State’s apparent athletics revenue along with proper budgeting moving forward during the next five years, it is likely that the athletics department will be able to continue to function financially.
Research by BusinessofCollegeSports.com Staff
Penn State is not subject to public records requests for financial data relating to its athletic department, which makes yesterday’s financial penalties hard to analyze. (For more on why Penn State isn’t subject to these disclosures read here.) However, taking a look at public schools in the Big Ten may shed some light on how important donations/contributions and football ticket sales are to the athletic department.
The first chart shows how football-related contributions (generally tied to tickets and suites) and football ticket sales impact an athletic department’s total revenue. Keep in mind, reporting practices vary with regards to how contributions are attributed, which is why we’ve included a second chart below to show total athletic department contributions, as some schools reported a large portion of contributions as non-sport specific.
For more on how contributions/donations play a role in Penn State’s future, check out this piece by BusinessofCollegeSports.com founder, Kristi Dosh, on ESPN.com.
Research by BusinessofCollegeSports.com Staff
A five-year snapshot of Penn State’s athletic department finances per filings with the Department of Education and IRS Form 990s.
It’s important to note that Department of Education filings do not always include all expenses. The 2010-2011 numbers include the information provided by Penn State regarding expenses not reported. Those notes are not available for previous years but the situation was likely similar in previous years.
Net Revenue: $53,228,446
Net Revenue: $31,619,687
*Note to Penn State’s report says: “As is referenced in the Caveat box in the Total Expenses section, Grand Total Expenses does not include $19,580,022 of debt service expense and $14,980,216 spent during the year on capital expenditures. Subsequent to addressing our debt service obligation, any remaining excess revenue is/will be used in funding current/future capital projects.”
Net Revenue: $50,427,645
Net Revenue: $26,354,087
Big Ten distribution: $20,039,504
Net Revenue: $42,635,760
Net Revenue: $19,478,286
Big Ten distribution: $19,172,047
Net Revenue: $37,228,333
Net Revenue: $12,294,879
Big Ten distribution: $18,785,520
Net Revenue: $29,404,224
Net Revenue: $4,353,456
Big Ten distribution: $14,010,190