Commentary

Programs struggle to balance budget

Originally Published: July 13, 2009
By Mark Schlabach | ESPN.com

Stanford University won the Learfield Sports Directors' Cup, which goes to the country's top performing athletic department, for the 15th consecutive year.

[+] EnlargeStanford Gymnastics
Marilyn Indahl/Icon SMIStanford has won at least one national championship for 33 consecutive years.

The Cardinal have won at least one national championship for 33 consecutive years, including NCAA titles in men's gymnastics and women's rowing this past season.

Stanford sponsors 35 NCAA-competing varsity teams -- 19 for women, 15 for men and one coed squad -- and all of them do pretty well on the national stage.

But even at Stanford -- where Tiger Woods played golf, John McEnroe played tennis and Mike Mussina starred on the mound -- times are downright difficult in the current economic recession.

In February, Stanford eliminated 21 staff positions in its athletic department and cut funding to the school's nationally ranked men's fencing team. Stanford officials told the fencing team it would have to raise $250,000 to cover operating costs next season and raise additional money to create an endowment for future expenses.

"We have to cut $7 million over the next two and a half years," Stanford athletic director Bob Bowlsby said. "It's not an insignificant amount when you consider salaries and scholarships are a pretty set amount. It's substantial."

Across the country, Stanford isn't alone in its financial difficulties. Many athletic departments are struggling to balance their financial books after receiving less funding from state legislatures and fewer donations from alumni and boosters.

"There are people who have been profoundly affected by the economy and those who haven't been affected at all," Bowlsby said. "I expect the trickle-down will show its effects in sponsorships and multimedia deals and perhaps at the gates at places where tickets aren't in such high demand. We're a long way from the bottom of the well, in my opinion."

Stanford's economic woes are directly tied to the loss in value of its endowments, which are used to cover scholarship funding and other operating costs. In 2008, the Cardinal's athletic endowment was worth about $520 million. But the endowment lost about 20 to 30 percent of its value when the financial markets went south, dropping its current value to about $410 million. The value of the school's general endowment fell from $17.2 billion in 2008 to about $12 billion this fiscal year.

As a result, Bowlsby will have to cut $3.1 million from the athletic department's budget next year and $4.5 million in 2011.

Bowlsby said cutting sports at Stanford is "the course of last resort," but he isn't completely sure the Cardinal will be able to avoid it.

"I think we've stuck to our principles to this point, but we have to look and determine whether we can continue to sponsor 35 sports and continue to compete at a championship level," Bowlsby said.

Many schools across the country have already been forced to cut sports teams. Among them:

• Pac-10 school Washington shut down its men's and women's swimming teams in an attempt to save $1.2 million, which is about half of what the athletic department needs to cut from its budget.

• The Massachusetts Institute of Technology, which mostly competes in sports at the NCAA Division III level, cut eight of its sports teams (Alpine skiing, golf, wrestling, competitive pistol, men's and women's ice hockey, and men's and women's gymnastics) to save $1.5 million on its athletic budget. MIT students even kidnapped the school's mascot, Tim the Beaver, in protest of the cuts.

• Big East member Cincinnati plans to eliminate scholarship funding for three of its men's sports (track, cross country and swimming) over the next four years. The plan will save the school about $400,000 annually.

[+] EnlargeMichigan Stadium
AP Photo/Tony DingDespite the current economic situation, the Big House is getting bigger.

Elsewhere, Indiana State dropped its men's and women's tennis teams; Maine cut its men's soccer and women's volleyball teams; and Vermont dropped its baseball and softball programs. All told, nearly 30 schools that compete at some NCAA level have been forced to drop at least one sports program.

Across the country, athletic departments are searching for ways to save money. Colorado State cut more than $160,000 from its budget, most of which came from trimming marketing and facilities costs. UNLV eliminated insurance for its walk-on players and asked coaches (with the exception of the football team) to conduct more daytime practices to save on lighting costs. Florida International's athletic department won't fund the cheerleading squad, and it cut marching band and will invite high school bands to play at its home football games. Some schools in Texas stopped providing complimentary soft drinks to their employees and are exploring ways to save on utility costs.

Many schools, including Michigan, Ohio State and Wisconsin, have stopped publishing media guides and recruiting brochures and are instead producing DVDs, which will save on printing and shipping costs. Boise State even eliminated land-line phones from some of its offices and asked coaches to use only cell phones.

A few coaches, including those at Arizona, Arizona State, Clemson and Wisconsin, are taking unpaid furloughs.

Some conferences, including Conference USA, the Mid-American Conference, the Southern Conference and the WAC, have decreased the number of teams competing in their postseason tournaments. Some leagues have also eliminated gifts (duffel bags, shirts) for student-athletes and will no longer hold preseason media days.

William Kirwan, chancellor of the University System of Maryland and co-chairman of the Knight Commission on Intercollegiate Athletics, said his group was conducting a yearlong study on spending in college athletics. The Knight Commission was formed in 1989 to ensure that college athletics "operate within the educational mission of colleges and universities." The Knight Commission expects to release its report on spending next spring.

Kirwan said many colleges put themselves in their current financial predicaments because of excessive spending.

"In a lot of ways, I see parallels between the implosion of our economy and the excessive spending in college athletics," Kirwan said. "There was an assumption that housing prices would always go up and up. You could buy a house and everybody assumed its value would increase. Intercollegiate athletics has lived in this fantasy world and assumed corporate sponsorships and TV contracts would always go up. Now we're finding out that's not the case. I think we've dug ourselves a huge hole."

According to a recent study by the Chronicle of Higher Education, USC coach Pete Carroll was the highest-paid employee of a U.S. private university in 2006-07. The report said Carroll made $4.4 million that year, about four times as much as USC president Steven B. Sample. The report also found that most of the 10 highest-paid university presidents at schools with Division I football programs made about half of what their schools' football coaches were being paid.

"There was such an outrage about what corporate CEOs were making and now people are looking at what coaches are making compared to other university personnel, and I think there's the same concern," Kirwan said. "I think it's an outrageous situation. I think coaching salaries are certainly the driver of the excessive spending in athletics, but the arms race with facilities has been a huge contributor, too."

[+] EnlargeFIU Cheerleaders
Richard C. Lewis/Icon SMIFIU cheerleaders will be on the sideline of Panthers' games, but as a student club.

Nearly everyone in college sports is looking for any way to cut costs and raise additional money.

"As you walk across the department, you ask, 'Why are we doing that?'" Georgia Tech athletic director Dan Radakovich said.

Radakovich was forced to cut $3.8 million from his department's 2008-09 budget and laid off 13 employees. This coming season, Georgia Tech's football team will travel by bus to road games at Florida State and Vanderbilt. In the past, the Yellow Jackets would have traveled by chartered plane to those places.

Radakovich still feels fortunate that Georgia Tech's athletic department is in better financial position than others. Coming off football coach Paul Johnson's first season, in which the Yellow Jackets finished 9-4 and beat rival Georgia for the first time in eight years, ticket sales for the upcoming season have nearly exceeded projections. Georgia Tech has sold nearly 24,500 season tickets, according to Radakovich.

"I think it can't be understated," Radakovich said. "It is certainly better to come off a season like we had and try to sell tickets in a tough economy."

Like Georgia Tech, many of college sports' traditional powers haven't been hit as hard by the economy. Michigan's athletic department had a $9 million surplus after the most recent fiscal year. The Wolverines just completed several multimillion-dollar construction projects and have plans to build new wrestling and basketball practice facilities and a new soccer stadium.

Florida, buoyed by its second football BCS national championship in three seasons, will increase its athletic budget by $5.9 million this year. The Gators had the third-highest grossing athletic department in the country last year at $106 million, according to Street & Smith's Sports Business Journal. Texas had the biggest at $120.3 million, and Ohio State was second at $118 million.

Texas' football program generated $73 million last year.

"We're going to feel an impact at some point," Texas athletic director DeLoss Dodds said. "We're just very fortunate that we're in a state that's in good shape and in a city that's in pretty good shape. We have a lot of [alumni] out there. Football seems to be pretty much stable in terms of donations, suite sales and ticket sales. But we're going to feel it. I don't know exactly how much, but it's going to hit us."

Georgia athletic director Damon Evans, who oversees an $84 million budget, said the Bulldogs' proceeds from football ticket sales have declined between $2.5 million and $3 million this year.

"We didn't see people donating above and beyond [the minimum requirements to purchase season tickets] and didn't see as many one-time donations as we've seen in the past," Evans said.

[+] EnlargeTexas Scoreboard
Ronald Martinez/Getty ImagesEverything is big in Austin, where the Horns generated the highest revenue total of any college in the nation.

But Georgia, like other SEC schools, will reap the benefits of the league's lucrative TV contracts with CBS and ESPN. The 15-year deals are expected to generate $6.2 million more annually for each school, compared with the SEC's previous TV contracts. The SEC distributed $132 million to its 12 member schools this past year, with $52 million coming from its football TV contracts.

SEC commissioner Michael Slive said his league has tried to ensure that its athletic departments are contributing to their schools' academic programs during the recession. The athletic departments at Florida and Georgia recently pledged $6 million in donations to their universities. Those at Arkansas, South Carolina and Tennessee recently pledged $1 million each. Slive said each of the league's 12 members has made some sort of financial contribution to its university.

"We were and are sensitive, particularly with the success we've had in our media agreements," Slive said. "Every school has presidents and athletic directors who have sat down and made agreements to ensure revenue is flowing not only into the athletic programs, but also into the institution and the academic side."

Last month, Georgia also signed an eight-year, $92.8 million marketing and media rights contract, which is one of the richest in college sports. Ohio State recently signed a similar 10-year, $100 million sponsorship and media rights agreement.

"We always talk about life being about timing," said Evans, who recently was given approval to begin a $40 million project that will expand the building that houses the football team's locker room and weight room. "That TV deal couldn't have come at a better time for us. It's helped a lot of the institutions in the league. It's a heck of a deal. We're sitting in a better position than a lot of schools because of that deal."

The biggest fear among some athletic directors and conference commissioners is that the poor economy will only increase the disparity between college sports' heavyweights and smaller schools.

"I guess if you look at the Big Ten and SEC, the two leagues that have most recently put together the TV packages, I'm guessing the $20 million is helping those schools weather [the recession]," Bowlsby said. "But the majority of institutions around the country in Division I and other levels are feeling the effects of the economy. There are probably some instances where the rich are getting richer and the poor are getting poorer, but it's to their credit that they were able to put those deals together."

Cincinnati athletic director Mike Thomas said it's up to the smaller athletic departments, like the Bearcats, to use their limited resources wisely.

"When you throw everything in the pot, we don't have the same resources at our disposal," Thomas said. "But I tell our staff, 'It's not about getting a bigger slice of the pie, it's about baking our own pie.'"

Even if that pie isn't as big as it used to be.

Mark Schlabach covers college sports for ESPN.com. You can contact him at schlabachma@yahoo.com.

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