Hacky-sack tricks on the quad are nothing compared with what athletic directors must do to pay for the rising costs of college sports.September 01, 2011 6:00 AM
by Tim Loughran
Parents weren’t the only ones closely following recent news that in-state tuition and fees at Virginia’s colleges and universities will rise about 8 percent this year, down from an 11 percent jump last year. The leaders of the state’s largest intercollegiate athletics programs say tuition hikes make a big dent in their budgets.
That’s because scholarships usually rank first or second in highest annual intercollegiate athletic expenses at campuses across the nation, not just Virginia. And contrary to the age-old complaint that “dumb jocks” get tuition assistance that should go to more deserving non-athletes, athletic directors say they must raise the cash to educate, house, feed and train scholarship athletes.
“Tuition costs drive everything that we do,” says Jeff Bourne, the athletic director of James Madison University in Harrisonburg. “In this tight economy, as that scholarship number climbs, we have to make adjustments everywhere to be sure we can generate enough money to pay for them. It’s the dark horse on the track that we are watching constantly.”
Adds Terry Driscoll, the AD at The College of William & Mary: “When we begin our budget process, we start with the expense side … and tuition is at the top of that list … we react to our expected scholarship costs first.”
Anyone familiar with the dramatic increase in the costs of an undergraduate college education since 2000 should not be surprised that athletic budgets across the commonwealth have doubled, and even tripled, during the last decade.
Since official intercollegiate athletic spending data for the academic year ended June 30, 2011 won’t be released until later this year, let’s look at information from 2009-10. JMU’s athletic budget was $28.6 million, up from $13.8 million in 1999-2000. W&M’s sports budget climbed to $18.1 million from $9.2 million in the same time period, according to the Commonwealth of Virginia’s Auditor of Public Accounts.
The state’s two largest athletic programs have seen similar growth. The University of Virginia had the state’s highest athletics budget in 2009-10, $81.8 million, up from $63 million in 2004-05 and $37 million in 1999-2000. By comparison, Virginia Tech had a $63.6 million athletics budget in 2009-10, up from $45.7 million five years ago and $26.2 million in 1999-2000.
Yet the school with perhaps the most dramatic increase in the last decade has been Old Dominion University in Hampton Roads, which tripled its athletics budget to $32.4 million in 2009-10 from $9.5 million a decade earlier. Less than 20 percent of that increase is directly attributable to revenue generated by the school’s new football program.
Such increases raise the obvious question: In an era when nearly every academic department must cut costs: Why do Virginia’s largest institutions of higher learning spend so much on sports?
“A well-run, competitive athletics program can be a great source of pride to a university, for students, faculty, staff and the surrounding communities. It helps in every measureable way, from increased student applications, to private donations to all of our academic departments to enhancing the overall brand of the institution,” says Wood Selig, ODU’s athletic director since February 2010. (The Norfolk native returned home after 11 years as athletic director at Western Kentucky University, a position he took after working the previous 11 years in the athletics department at U.Va.)
“While at the same time a noncompetitive, poorly run program can be a source of great embarrassment that can fracture the university community very quickly, become very divisive and a great source of negative energy,” says Selig.
Lisa Rudd, associate director of athletics for financial affairs at Virginia Tech since 2008, used to work in the university’s budget office and says memories of the school’s dramatic run at the 1999 national football championship continues to benefit the school. “We still call it ‘the Michael Vick Effect,’” she says. “The number of applications and the quality of the students applying [to Tech] all rose dramatically. I travel quite a bit all over the country for both business and vacation and everyone knows about Virginia Tech, and that did not used to be the case.”
Under Virginia law the athletics departments of the state’s public universities are defined as “auxiliary enterprise programs,” or AEPs, whose only university support can come from a predetermined share of student activity fees. Otherwise, athletics departments are responsible for all their own operating revenues.
Top revenue sources, including student fees, are ticket sales, advertising, local media licenses, concessions, team merchandise, fundraising and revenue-sharing from the National Collegiate Athletic Association (NCAA) and the regional athletics conferences to which each school belongs.
For example, at Virginia Commonwealth University, George Mason University and JMU — schools that historically have collected relatively little from private donations and corporate sponsorships for athletics — student fees account for 70 to 80 percent of annual athletic revenues. However, at U.Va. and Virginia Tech, where gifts and donations total 25 to 40 percent of the budget, student fees are less important, accounting for just 15 percent and 10 percent of operating revenue, respectively.
On the expense side of the ledger, each athletics department must pay all of its own bills. They include scholarships (with out-of-state rates charged for recruits from other states and foreign countries), coaching salaries and performance bonuses, marketing costs and team travel. In addition, millions of dollars are needed annually to pay for new construction, renovations and maintenance needed for football and baseball stadiums, pools, tennis courts, basketball arenas, practice facilities and locker rooms.
Like all other AEP-designated entities on Virginia college campuses, the state’s collegiate athletics departments have the additional expense of repaying their parent universities a flat percentage of total expenses. These fees pay for the utilities (water, electricity and heat) needed to run athletic venues throughout the year as well as the cost of all administrative services provided to the athletics departments, from student-aid disbursements to payroll checks for coaches and any work activity the athletics department may have asked a university employee to perform.
In 2009-10, for instance, ODU charged each of its independent campus AEPs a 10.7 percent fee and W&M charged 22.4 percent. Virginia Tech charged the athletics department an 8 percent fee, up from 5 percent a few years earlier, according to Rudd. “A lot of people think we have a lot of money,” she says. “It’s a real challenge to keep everything in balance.”
“Most people see the tip of the iceberg, the games,” says Driscoll at W&M. “They don’t see the other things we have to do: build and maintain facilities, pay medical bills, look for low-cost travel, educate our students ... It’s hard for a lot of people to truly understand how we do it.”
At the end of every year, any excess cash from operations is kept by each athletics department to protect against losses in future years. Operating losses are usually covered with funds from each school’s athletic endowment, or charitable foundation, established to collect and disburse gifts, donations and bequests earmarked for athletics.
Since athletic budgets and overall university revenues are moving in opposite directions, athletic directors across the state are keenly aware that taxpayers and legislators are tired of the steadily surging costs of higher education. In response, ADs always are looking for fresh ways to reduce the student fees needed to fund their operations. Every year, they make greater investments to control whatever costs they can and spend more to goose private donations, sign-up more corporate sponsors, attract advertising income and squeeze more royalty payments from local radio and TV.
When U.Va. athletic director Craig Littlepage was hired in August 2001, the school’s board of visitors made it clear that unless the athletics department could generate an increasing percentage of its own revenue “our program would not succeed,” he recalls. “There was a concerted effort to look at philanthropy, not just in athletics, but across the board, to enhance the stature of the University of Virginia.”
Since he became athletic director, U.Va. has seen private gifts to the athletics department jump almost threefold to $34 million in 2009-10 from $13 million. Perhaps following U.Va.’s example, many schools across the state have hired outside companies to coach athletic department staffers who specialize in fundraising. Others have contracted with national firms to negotiate better radio and TV contracts, and create more advertising platforms for every intercollegiate sport on campus. They then sell those platforms to a wider audience of local and national businesses that want to profit from the passion and community spirit that successful college sports teams generate.
Those tangible bottom-line financial benefits (in addition to the often impossible-to-measure concept of university pride) are part of the reason that JMU athletic director Jeff Bourne wants every one of the school’s 18 sports (12 female, 6 male) to finish every season as conference champions or within the top 25 percent of each conference ranking.
He also wants to:
- improve the facilities for every sport to the level of those at ODU and W&M to attract more high-quality student athletes;
- fill the football stadium to capacity every fall weekend to generate more revenue that he does not have to share with the Colonial Athletic Association(CAA); and
- improve the men’s basketball program to the point where it can generate greater ticket sales, win the annual CAA championship, qualify for the NCAA men’s basketball tournament and get a larger share of postseason revenue.
“Parity and equity with other schools in our conference are important,” says Bourne. “These programs represent the university. The students wear our logo, are the brand and represent us. Our obligation and our responsibility is to do them all well.”
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