Category Archives: Finance
Notre Dame and Tennessee Both Leave Adidas – Coincidence?
Notre Dame left Adidas for Under Armour when its contract ended last month. Ok, fine. It’s not completely unheard of for a college to change apparel companies, although it doesn’t happen that often.
Now Tennessee has announced its leaving Adidas for Nike.
Coincidence?
I don’t know, but it does raise my antenna.
What I do know is that last April I wrote a piece for ESPN about schools that were terminating or suspending their contracts with Adidas over a workers’ rights issue in Indonesia. The issue largely flew under the radar as only university and local papers covered each school independently. All together, however, I found at least 17 schools had terminated or suspended their contract with Adidas.
Neither Notre Dame or Tennessee made public any sort of disappointment or disagreement with Adidas surrounding the workers’ rights issue. Michigan and Wisconsin led the charge against Adidas, with the latter going so far as to file a lawsuit against the apparel giant.
In April, Adidas did settle with the workers in Indonesia. Although it went largely unnoticed by the national media, I believe the pressure applied by major universities like Michigan and Wisconsin played a pivotal role.
I also believe it’s not a coincidence that Notre Dame and Tennessee are both leaving Adidas. Something is going on there – either Adidas has decided not to make college athletics an emphasis or Notre Dame and Tennessee didn’t like something about the way Adidas was doing business.
Notre Dame is the #3 selling institution in the country for Collegiate Licensing Company, and Tennessee is #15. If Adidas wanted to remain in the collegiate athletics space, why wouldn’t it match or exceed any offer made by Under Armour or Nike?
Sure, Adidas would have to increase Michigan’s contract, as it has this clause requiring it to be Adidas’ highest-paying collegiate apparel contract:
“If during the Term, adidas grants to or contracts with any college or university … that provides for more favorable average annual value … than the current University (of Michigan) average annual value specified in this Agreement … then adidas agrees to make a written offer to grant to the University that same more favorable average annual value on the same terms and conditions that were offered to the other college or university within thirty (30) days of the execution of such other agreement.”
I find it hard to believe that’s the issue here. Michigan currently receives $3.8 million annually in cash payments and $4.4 million in equipment and apparel. Notre Dame’s new deal is reportedly $90 million over 10 years, or $9 million annually in cash and equipment/apparel. If Adidas wanted to stay in the college space, do you really think they wouldn’t bump up Michigan’s $8.2 million annual value in order to keep a major property like Notre Dame?
Tennessee’s new deal with Nike appears to be worth far less than Michigan’s deal (at a reported $34.6 million over 8 years), so Adidas could have matched or exceeded without issue.
It is possible the only story here is that Under Armour will allow Notre Dame the option to take some of its cash in the contract as Under Armour stock instead. It would be great timing for Notre Dame, as Under Armour’s stock hit an all-time high this week, rising 23 percent after releasing its better-than-expected fourth quarter earnings report.
And maybe Tennessee was just ready for a change. I don’t have any answers, but I do still have a lot of questions….
What do you think? Coincidence or not?
Battle at Bristol: The Biggest College Football Game Ever
A rendering of what Bristol Motor Speedway will look like transformed for the Battle at Bristol
On September 10, 2016, Bristol Motor Speedway will attempt to stage the “Biggest College Football Game Ever” as it hosts the Virginia Tech Hokies and the University of Tennessee Volunteers.
Transformed into a college football stadium, Bristol Motor Speedway will be capable of seating approximately 150,000 fans. If the speedway was filled to capacity, it would eclipse the previous two largest-attended college football games: 120,000 fans at Notre Dame vs. Southern California at Soldier Field in 1927 and 115,109 fans at Michigan vs. Notre Dame at Michigan Stadium this season.
It would take the average crowd for both Tennessee and Virginia Tech home games combined to hit the 150,000 mark. Last season, Tennessee ranked #8 in attendance amongst FBS schools with an average attendance of 89,965, and Virginia Tech ranked 25th with an average of 65,632.
“To be able to play in front of a crowd that is the largest to ever see a college football game is a once in a lifetime opportunity,” said Frank Beamer, Virginia Tech head coach. “With the great fan support that Virginia Tech and the University of Tennessee have, it should be a great atmosphere.”
Tennessee is equally as optimistic about the potential to make this, “The Biggest College Football Game Ever.”
“This is an unprecedented opportunity for our football program to play in front of the largest crowd in the history of college football,” said Vice Chancellor and Director of Athletics for University of Tennessee, Dave Hart. “Bristol Motor Speedway will be perhaps the most unique venue to ever host a college football game. Tennessee students, faculty, alumni, and fans will look forward to being a part of this great event.”
The evolution from speedway to college football stadium will need to take place over a short period of time, because Bristol will host a NASCAR race the August preceding the Battle at Bristol. Here are some key facts about the transformation provided by Bristol Motor Speedway:
- Immediately following the August 2016 NASCAR race at Bristol Motor Speedway, approximately 400 workers will immediately begin bulk cleaning, and then detailing, the Speedway
- Next an estimated 10-12 crews will begin pressure washing – a process that is normally done in February prior to the March NASCAR weekend
- Separate crews will clean all suites in seven days – a process that normally takes four-to-six weeks
- Turf and field build will be completed in eight days
- Approximately 8,500 tons of rock will be used to build the base of the field
- The rock will be brought in by approximately 400 truckloads. The complete haul-in process will take three, 10-12 hour days
- The base rock will be 3’-6” deep in the middle of the infield tapering to 1-1/2’ on sidelines to create the proper sloping effect for drainage
You can find more details about the event and sign up for ticket and event information at BattleatBristol.com.
UPDATE: The Richmond Times-Dispatch is reporting each team will receive $4 million as long as they sell at least 40,000 tickets, with escalators that could raise that amount to $4.5 million.
Kristi A. Dosh is an attorney and founder of BusinessofCollegeSports.com. Her latest book on the business of college football, Saturday Millionaires, is available now. Visit SaturdayMillionaires.com for retailers and a sneak peak at the first chapter! Follow her on Twitter: @SportsBizMiss.
Michigan Athletics Budget News
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.
Should Student Athlete Assistance Fund be Used to Send Parents to Final Four?
Imagine you have a son who plays basketball for a Division 1 school and they make it into the NCAA Tournament. You watched him pick up a basketball for the first time, you remember his first game, cheered him on in high school and now he is playing on national television in front of the entire country. Of course at this point you’re not going to stay home to watch his game from your couch. What if the cost of traveling from Washington DC to San Jose, California is too much for you? Maybe if your son plays for a school such as Ohio State University or Kentucky this wouldn’t be an issue.
Last year when Ohio State and Kentucky made it to the Final Four, both schools decided to show gratitude to the parents of the players by helping pay for their travel costs to New Orleans. Only costing a little more than $13,000 the schools purchased one additional hotel room for three nights for each player’s family. Both schools went to the head of their conferences (Big 10 and SEC) and asked for permission to use money from the Student Assistance Fund in order to afford all this to happen.
In my last post I mentioned the Student Assistance Fund when I broke down where all the NCAA tournament money goes. As I explained previously, the Student Assistance Fund is used to help student athletes who are either financially strained and can be used for a variety of things from buying clothes to paying for an application to graduate school.
The primary source of revenue for the Student Assistance Fund is generated from the NCAA men’s basketball tournament. With more than $66 million available, schools have plenty of opportunity to ask their respective conferences for money to do more deeds such as Ohio State and Kentucky.
Many would presume that student athletes would apply for the fund, with how many there are that complain they don’t receive enough and are hungry or don’t have clothes. However, several schools have told BusinessofCollegeSports.com that their students under utilize this fund despite knowing about its existence.
That being said, the money is still being used for its intended purpose. The fund paid out more than $53 million to 81,00o student-athletes during the 2010-11 academic year according to the NCAA.
When student-athletes aren’t applying individually to use the funds, however, schools like University of Maryland utilize the money to enhance the academic experience with iPads for all its student-athletes. The university spent $281,000 to help students in the classroom as well as stay in better contact with the Athletic department and their coaches.
Whether or not someone believes that this money is not being used for its intended purpose, NCAA spokeswoman Stacey Osburn told the IndyStar, “The conferences are responsible for administering the fund within the parameters,” when asked “is that a proper use of the fund, or an NCAA-permitted use of the fund?”
One of the biggest fears for any parent would be for something to happen to your child. When you’re watching your child from your couch in Atlanta, just like University of Louisville’s Kevin Ware’s parents did, watching your son break his leg cannot be easy. (It was hard for me to watch it, and I don’t even know the guy!) In cases such as these, when your son’s team makes it as far as the regional final and parents can’t make it to Indianapolis, it would be nice to see the schools show a little thanks to the parents. After all they wouldn’t have an athlete if it hadn’t been for mom and dad.
More schools such as University of Louisville are beginning to look more into fund uses. Many were unaware that they were even allowed to even do this. John Cams, Louisville’s senior associate athletic director for compliance told the IndyStar, “We’ve never been asked by our sports teams about doing so and we’ve never contemplated it because our conference isn’t throwing it out there”
Ohio State was the first school to start the trend, and even made a public announcement saying, “We are grateful for their [parents] support and dedication… We wish we could have done more.”
Surprising enough that it hasn’t been thought of until now, even Chad Hawley the Associate Commissioner of Compliance for the Big Ten, is taken back by how little the fund is accessed. Especially when the Big Ten received another $2 million after the 2011-12 academic year, bring the total to $7.6 million.
‘This is something that can have a direct impact on students, or maybe a direct impact on their families…” says Hawley. As any athlete knows, no one will support you as much as your family will. Who knows, maybe that was the key to Kentucky’s win last year.
If Money Could Buy a Championship
The saying goes “you get what you give.” Can the same phrase be applied to sports though? In recent years, schools that have won championships are the ones who have invested more money into their programs. Our very own Kristi Dosh, ESPN’s sports business reporter and founder of BusinessofCollegeSports.com, has a piece on schools with the highest revenue that have made it into the tournament, but what about the schools who have the highest expenses?
If it were to come down to spending, who would win it all? Here’s a look at all 64 teams including their overall expenses for their basketball program. All 32 games are broken down by region. The information below is from the Office of Postsecondary Education of the U.S. Department of Education.
|
South |
||||
| Kansas |
$12,740,720 |
vs |
Western Kentucky |
$2,708,422 |
| North Carolina |
$7,157,618 |
vs |
Villanova |
$6,398,678 |
| VCU |
$3,803,913 |
vs |
Akron |
$1,967,989 |
| Michigan |
$5,933,437 |
vs |
S. Dakota St. |
$913,067 |
| UCLA |
$7,216,738 |
vs |
Minnesota |
$5,071,500 |
| Florida |
$8,474,783 |
vs |
Northwestern St |
$1,000,408 |
| San Diego St. |
$4,432,238 |
vs |
Oklahoma |
$6,813,149 |
| Georgetown |
$10,015,207 |
vs |
Fla. Gulf Coast |
$1,089,569 |
| Winner of South: | Kansas |
|
West |
||||
| Gonzaga |
$6,138,269 |
vs |
Southern U |
$534,595 |
| Pittsburgh |
$7,344,213 |
vs |
Wichita St |
$4,644,724 |
| Wisconsin |
$6,839,111 |
vs |
Ole Miss |
$2,510,418 |
| Kansas St |
$4,347,318 |
vs |
La Salle |
$2,046,119 |
| Arizona |
$7,959,652 |
vs |
Belmont |
2,213,543 |
| New Mexico |
$4,448,245 |
vs |
Harvard |
$1,225,999 |
| Notre Dame |
$4,622,255 |
vs |
Iowa St |
$4,402,362 |
| Ohio St |
$5,956,288 |
vs |
Iona |
$1,691,344 |
| Winner of West | Arizona |
|
East |
||||
| Indiana |
$9,264,091 |
vs |
James Madison |
$2,273,522 |
| NC State |
$5,444,127 |
vs |
Temple |
$4,080,845 |
| UNLV |
$3,760,187 |
vs |
California |
$6,406,523 |
| Syracuse |
$14,214,993 |
vs |
Montana |
$1,532,926 |
| Butler |
$3,924,026 |
vs |
Bucknell |
$1,860,056 |
| Marquette |
$9,941,583 |
vs |
Davidson |
$1,727,330 |
| Illinois |
$6,584,190 |
vs |
Colorado |
$4,490,779 |
| Miami (Fla.) |
$5,795,451 |
vs |
Pacific |
$1,836,357 |
| Winner of East | Syarcuse |
|
Midwest |
||||
| Louisville |
$15,119,088 |
vs |
North Carolina A&T |
$223,483 |
| Colorado St |
$3,638,042 |
vs |
Missouri |
$6,112,025 |
| Oklahoma St |
$13,745,832 |
vs |
Oregon |
$5,897,791 |
| Saint Louis |
$3,101,169 |
vs |
New Mexico St |
$2,534,542 |
| Memphis |
$7,515,987 |
vs |
Saint Marys |
$2,533,902 |
| Michigan St |
$9,837,886 |
vs |
Valparaiso |
$1,781,911 |
| Creighton |
$4,404,350 |
vs |
Cincinnati |
$5,995,336 |
| Duke |
$15,901,099 |
vs |
Albany (N.Y) |
$1,384,377 |
| Winner of Midwest | Duke |
Before one makes an argument about Kentucky (the reigning champs, whose total expenses came to $15,119,088, about $300,000 less than Louisville), unfortunately money doesn’t buy a new recruiting class or guarantee a win.
Duke for example beats out Louisville by $411,145; and Louisville is the number one seed in the tournament.
If the Final Four were to come down to the biggest spenders of each region it would be Kansas, Arizona, Syracuse and Duke.
Taking a look at the winners of each region, could there be a connection between spending more and winning a national championship?
As you will see in this years bracket the winner would be Duke. Interestingly enough, Duke has the most National Championships compared to the other three remaining schools.
|
Final Four |
# of Championships | ||
| Kansas |
$12,740,720 |
3 (’52, ’88, ’08) | |
| Arizona |
$7,959,652 |
1 (’97) | |
| Syracuse |
$14,214,993 |
1 (’03) | |
| Duke |
$15,901,099 |
4 (’91, ’92, ’01, ’10) |
What makes up a team’s expenses is a multitude of disbursements that can include athletes room and board, equipment, and travel expenses, but a big part of team spending is used to pay the head coach.
Without quality coaching a team won’t even make it as far as The Big Dance, and the better the coach, the more a school is willing to spend to keep them. How much of the overall expenses are paid to the coaches? The information is from USA Today and the Arizona Star.
| Head Coach | School Pay | Other Pay | Total Pay | % Used for Coach Salary | |
| Bill Self (Kansas) | 3.4 million | $258,000 | 3.7 million | 29.13% | |
| Sean Miller (Arizona) | 1.1 million | 1.1 million | 2.2 million | 27.50% | |
| Jim Boeheim (Syracuse) | 1.5 million | N/A | 1.5 million | 10.70% | |
| Mike Krzyewski (Duke) | 4.7 million | N/A | 4.7 million | 29.30% |
The coaches whose teams that have made it to our predicted Final Four aren’t doing too bad for themselves. Coach Boeheim of Syracuse might want to look into asking for more money though, since he’s the only coach who isn’t getting paid at least a quarter of what is being spent.
Louisville, who was just short of Duke in expenditures, was the highest not only in revenue, but also net revenue. Just trailing slightly behind Louisville is Syracuse and Duke. As mentioned earlier, Louisville is the number one seed in the tournament, and is also favored to win by many.
All in all, could money be a beneficial factor in winning a championship? Only the next few weeks will tell.
Follow Mackenzie on Twitter: @KenzieThirkill
Editor’s Note: Creighton’s expenses were incorrectly listed as $404,350 in the original post. The error has been resolved.
How to Curb Spending in College Athletics
Nearly a year ago, this article asked, how much is too much when it comes to spending on college football? Assuming the answer is whatever they’re spending now, the next question is how to reform it. I have a thought. What if there was a cap on the amount of money universities could spend on college athletics? Think about it. University presidents and other observers are constantly decrying the “arms race” that exists today, yet nothing is done. The reason: presidents know (or suspect) their counterparts are going to keep on spending and gaining a competitive advantage, and no president is going to risk crippling their athletic programs and alienating the alumni base.
But what if there was an NCAA rule which capped the amount of money you could spend each year? Or perhaps a luxury tax imposed on those who spend over the cap?
A policy like this would allow presidents to put athletics spending on a more sustainable path, without the risk that competitors are going to exploit it and surge past their teams on the field. It would help address the concerns faculty and other constituents have about spending at the expense of academics, including the public relations problem of increased athletic spending at a time of shrinking state appropriations and rising tuition for students. Capping spending also means more schools would have the opportunity to compete for championships. This is a big one. Our country’s most popular sport by far, the NFL, has a hard salary cap to help provide all its teams with a realistic shot at taking home the trophy. Even Major League Baseball, which doesn’t have a salary cap, has a luxury tax that teams must pay if they go over the spending threshold.
But why should the University of Texas be prevented from or penalized for spending as much on its athletic programs as its leadership and alumni please? This is America after all! Read its leaderships’ comments on this issue here. They’re going to spend as much as they can and don’t see a problem with it. But there is a problem. Texas, Ohio State and others aren’t operating independently. They are voluntary members of a conference and an association, with other institutions, upon which they depend for competition as well as the revenue they love to spend. And the large majority of these institutions can’t and shouldn’t keep up. Texas President William Powers said you don’t tell Albert Pujols he can’t hit in the 9th inning because it’s unfair to the other team; but that isn’t the analogy that applies here. More on point would be the Angels can’t stack their lineup with nine Albert Pujolses without paying a hefty luxury tax. In the NFL, you don’t get a backfield with three Adrian Petersons because you literally won’t be able to field a team and stay under the hard salary cap. In leagues of athletic teams, rules are crafted to foster competition for the betterment of the league over and above the betterment of individual members. A spending cap is precisely this type of rule.
An issue that would need to be resolved simultaneously with something like a spending cap or luxury tax is the Division I membership, which simply has too many schools which cannot compete at the highest levels. I would not advocate for a system which tried to bring Texas football and Louisiana-Monroe football to a similar place in the financial “middle.” In 2010 for example, Texas spent $25M on football; Louisiana-Monroe spent just under $3M. They are both playing for the same championship. That’s a joke and needs to be rectified with a split into more divisions. But certainly you could do something with the top 50 or 60 (financial) football schools. Michigan, Miami and Nebraska each spent $18M on football in 2010. You think those schools are operating on the cheap? Is there any need for those guys to spend more money? Of course not, except for the fact Texas is outspending them by nearly 40%.
Whether it’s a hard spending cap or a luxury tax, there are controls that should and could be put into place to control spending in college athletics. However, they will only happen if the presidents collectively decide it’s something they want to do. Otherwise Mr. Powers and company at Texas will continue circling the Monopoly board, collecting properties, and charging obscene rent to the rest of the college athletics world.
Follow Daniel on Twitter: @DanielHare.
University of Tennessee Finances in Perspective
ESPN sports business reporter Kristi Dosh (who also happens to be BusinessofCollegeSports.com’s founder) had a piece yesterday giving some perspective to University of Tennessee’s financial situation. One of the points she makes is that Tennessee’s outstanding debt on athletic facilities isn’t out of line with the rest of the SEC.
Here’s a look at outstanding facilities debt at each SEC school and the annual debt service (payments) for the 2010-2011 school year (the most recent available). All information is from NCAA financial disclosures. Vanderbilt’s information is not available via public records requests.
2010-2011 SEC Athletics Debt
| School | Outstanding Athletics Debt | Athletics Annual Debt Service |
| Alabama | $207.2 million | $13.3 million |
| Louisiana State | $202.0 million | $13.5 million |
| Tennessee | $188.1 million | $7.7 million |
| Georgia | $120.8 million | $7.9 million |
| South Carolina | $112.9 million | $3.5 million |
| Auburn | $106.1 million | $10.1 million |
| Florida | $80.8 million | $5.8 million |
| Arkansas | $64.1 million | $7.3 million |
| Texas A&M | $45.8 million | $6.6 million |
| Mississippi | $41.8 million | $4.6 million |
| Missouri | $26.8 million | $3.1 million |
| Mississippi State | $24.8 million | $2.3 million |
| Kentucky | $18.7 million | $2.7 million |
As Dosh points out in her article, this isn’t a true apples to apples comparison. For example, she notes Kentucky carries no debt on Rupp Arena, because it’s owned by the city. Check out her piece for more information.
Documents obtained from University of Tennessee show its football season ticket base has dropped by approximately 10,000 people since 2009. However, net revenue (profit) from football remains above average amongst other SEC members:
Football Net Revenue 2010-2011
| Georgia | $52.9 million |
| Arkansas | $47.1 million |
| Alabama | $46.5 million |
| Florida | $43.2 million |
| Auburn | $40.2 million |
| Tennessee | $37.5 million |
| South Carolina | $35.4 million |
| LSU | $31.7 million |
| Texas A&M* | $30.0 million |
| Kentucky | $20.3 million |
| Mississippi | $10.8 million |
| Mississippi State | $10.8 million |
| Missouri* | $9.7 million |
*Texas A&M and Missouri were not yet members of the SEC in 2010-2011
The real issue, as noted in Dosh’s article, is the limited reserves Tennessee athletics currently has on hand: $1.95 million. That is one area not in line with other SEC schools, as AD Dave Hart notes in Dosh’s piece.
Davidson Says “No, Thanks” To The CAA, College of Charleston Says “Yes, Please”: What Happens Next?
Last week the Southern Conference made an announcement that had been rumored for weeks: Davidson has rejected the Colonial Athletic Association’s invitation to join and will remain in the Southern Conference. While some may be surprised at Davidson’s decision to remain in a less highly-rated conference, the decision actually makes sense for a number of reasons.
First, although the CAA is a higher rated basketball conference (14th in last year’s RPI compared to the Southern Conference’s 23rd), moving to the conference wouldn’t have necessarily benefitted Davidson’s basketball program. It could have actually harmed the program.
Davidson’s men’s basketball team is currently the cream of the crop in the Southern Conference. This would not be the case in the CAA. Although the CAA has recently received multiple tournament bids, it is usually a one bid conference like the Southern. In moving to the CAA, Davidson would be moving to a tougher one bid conference, thereby harming its chances of making the NCAA tournament on a regular basis as it recently has done as a member of the Southern Conference.
Second, I doubt Davidson would realize much, if any, financial benefit from moving to the CAA. Although the CAA did recently sign a television deal with NBC Sports Network that will increase the conference’s national exposure ( NBCSN will carry 18 CAA men’s basketball games nationally this season), the CAA members receive no money from the deal. NBCSN pays for the members’ production costs. That’s it. And there is no guarantee that any of Davidson’s games would actually be selected for a national broadcast. NBCSN did not select one of my alma mater’s games for a national broadcast this year.
It is true that the CAA has recently received much larger payouts from the NCAA’s Basketball Distribution Fund than the Southern ($3,355,296 versus $2,156,976 for the 2010-2011 season). However, most of the CAA’s larger payout has been a result of VCU’s recent NCAA tournament successes. With VCU now gone to the Atlantic 10 and Old Dominion leaving the CAA next year for Conference USA, the CAA is losing two of its basketball programs most likely to experience deep tournament runs. As a result, the Basketball Fund payouts for the CAA and the Southern will likely be much closer in the future.
Lastly, Davidson is just different than most other Division I members. It is content with its current position in the college sports pecking order. There is nothing wrong with that.
Despite Davidson’s rejection, the CAA didn’t leave its foray into the Southern Conference empty handed. On Friday, the College of Charleston’s board of trustees gave the school’s president authority to negotiate Charleston’s entrance into the CAA. Charleston’s president cited a number of reasons for being in favor of the move: stronger conference opponents, increased opportunities for at-large bids to NCAA tournaments, the ability to recruit better student-athletes, stronger academic support for student-athletes, alumni living outside South Carolina will now have access to Charleston games, and access to the resources of the Colonial Academic Alliance, which promotes undergraduate research, study abroad opportunities, and faculty and staff professional development. It’s obvious from this list that Charleston is looking to enhance its athletic and academic programs in making the move.
So, with Charleston in the fold where does the CAA go from here? Look for at least one other Southern Conference member to join Charleston in the CAA at some point. Rumors have focused on UNC-Greensboro, Elon, and Furman. Whatever happens, don’t expect the CAA to retain whatever membership configuration it ends up with for long. There are only 4 teams remaining from what was the CAA when I graduated in 2001.
On a side note, if there would have been fewer defections since then, along with a few additions, the CAA would be even better basketball-wise than it recently has been. Check out this hypothetical conference line-up: Richmond (left after 2000-2001 season), VCU (left after 2011-2012 season), Old Dominion (leaving after 2012-2013 season), East Carolina (left after 2000-2001 season), George Mason, Drexel, Delaware, William and Mary, UNC-Wilmington, James Madison, Northeastern, and Charleston. That conference would compare favorably to any other mid-major basketball conference in the nation.
UC Riverside Looks to Foreign Investor for New Arena
Guest author: Tyler Jamieson (BusinessofCollegeSports.com Intern)
You’re the University of California, Riverside. You made the leap to Division 1 just over a decade ago. You’ve got a pretty cool mascot named “Scotty the Bear”. You’ve tasted varying levels of success in men’s golf and baseball, and women’s basketball and soccer. You had a pretty decent football team until 1975 when the program was discontinued due to low attendance and Title IX compliance. You’re 60 miles away from the glitz and glam of L.A. and your basketball and volleyball teams play in the luxurious… Student Recreation Center. In an age of iPads and high speed internet you’re rockin’ a Commodore 64. So if you’re A.D. Brian Wickstrom how do you go about getting funding for a long over-due multi-purpose arena? Apparently you go to China.
Allan Steele at The Press-Enterprise has an interesting look at how Wickstom had to “think outside the box” when coming up with a way to get funding for a badly needed arena. Wickstrom knew there was no way in today’s financial climate he was going to get funding for an arena through more traditional ways, so at the advice from an architect he looked into the controversial federal program EB-5. EB-5 is an employment based immigration program that allows potential would be immigrants the opportunity to obtain a green card for investing $500K or $1 million in a U.S. enterprise that creates or funds at least 10 jobs.
The goal of the program is to find new ways to pump money into businesses and areas that aren’t able to get loans, funding, etc. with investors being rewarded with a green card. However, opponents of the fund say the foreign money coming in isn’t providing enough of an impact to call the fund useful and that in effect the U.S. is just selling what should be far more valuable green cards.
It sounds like Wickstrom is ready to test the merits of the program as his visit to China and several presentations at a conference designed to introduce American’s to potential investors there have him staring down the barrel of a potential $20-$30 million in committed funds. Even if UC Riverside can get potentially $20-$30 million in EB-5 funds Wickstrom says there are still several hurdles to getting a new arena built, however they could use the money to get the arena started and get people excited about donating.
As an alumni or fan of a University what are your thoughts on schools securing foreign money for University projects? Is this a case where Wickstrom came up with a potentially clever way to get funding for a smaller school that is having trouble funding the cost of a new arena, or would larger schools with bigger endowment programs and larger revenue streams consider using this method as well in order to keep costs down for donors?
Penn State’s NCAA Sanctions: The Impact On The Athletics Department
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.
