More money than sense

This Washington Post article tries to present the University of Maryland as some sort of poster child for what’s wrong with college athletics’ financial model, but what really jumps out at you is the epic level of dumbassery on display running the department – running it into the ground, as the school is in the midst of dropping eight programs to compensate for the deficit it’s running.

Convinced its football stadium was too small and its basketball arena too outmoded for its fan base, Maryland over the past decade expanded Byrd Stadium and added luxury suites, and built the Comcast Center. At the time of construction, officials said the upgrades would pay for themselves through a jump in ticket revenue. Instead, Maryland’s football and basketball teams have struggled, and attendance and revenue have dropped.

As a result, spending on buildings and grounds has soared nearly 78 percent over the past five years, from $4.6 million to $8.2 million, according to data supplied to the NCAA. Debt service on the construction projects alone totals $7.9 million this year — up from $6.9 million in 2010-11. That’s more than 11 percent of Maryland’s athletic department budget, and the figure escalates each year like bad credit-card debt.

That’s just one line-item in a Maryland athletics operating budget that increased 24 percent over the last five years, from $49.5 million in 2005-06 to $61.6 million in 2010-11. Spending on the Terrapins’ coaching staff climbed at an even higher rate, rising nearly 30 percent, from $18.7 million to $24.3 million.

Meanwhile, total revenue increased only 15 percent, from $53.6 million to $61.6 million in the same span.

Not exactly great bang for the buck there.  And here’s the punch line:  “And, for the first time since the NCAA financial reports have been required, Maryland football actually lost money in 2010-11…”  So this isn’t a situation where there’s some sort of structural flaw in place that’s doomed the athletic department from the beginning.  Instead, Maryland is now faced with paying the price for a series of bad decisions.  Decisions, by the way, that are still going on while the financial bleeding continues apace.

So, too, is the $500,000 in guaranteed annual compensation that Maryland is paying its new offensive coordinator, Mike Locksley, hired in January to help turn around a football team that finished 2-10 last season. And the $3 million cost of the new synthetic turf football field at Byrd Stadium could fund five varsity teams for a year. Maryland has declined to identify the private donor who footed the bill for the field.

You’ve got to be impressed with their consistency.

None of this is to say that there isn’t an overall issue with haves and have-nots in D-1 athletics.  Ask almost any school without a football program capable of generating significant revenue about that.  But that shouldn’t excuse Maryland from having to manage its athletic department sensibly.  And it definitely shouldn’t justify the inevitable pleas for outside help, like these:

So what’s the remedy for college sports’ spending compulsion?

The Knight Commission, a group of university presidents, trustees and former athletes who advocate for reform in college sports, offered a road map in a 2010 report, “Restoring the Balance: Dollars, Values and the Future of College Sports.” In it, the panel recommended the NCAA require colleges to publish the true cost of their athletic programs in comparable, complete terms, reflecting not only revenue and expenses but also the often-hidden debt service on facilities and subsidies from their universities’ general funds.

It also proposed that the NCAA cap the number of “non-coaching” jobs on certain teams — an expense that has ballooned in football, for example, with the addition of directors of football recruiting, operations, player development and strength-and-conditioning coaches for every position. And it recommended the NCAA reduce the number of football scholarships allowed by at least 10 from the current 85.

To date, none of those recommendations has gained traction.

“The people who could and should be responsible for fixing what almost certainly is going to be a train wreck are either unwilling or unable to do it,” Nichols said. “Unless you assume that television money is a bottomless pit — and there are no limits to the amount of money that television networks will invest — there is going to be a day of reckoning.”

That leaves two options for substantive change — both of them political and neither particularly palatable.

One: Persuade Congress to grant an antitrust exemption that would permit the NCAA to cap spending — whether on coaches’ salaries, scholarship costs or recruiting.

Two: Wait until the headlong rush for more money becomes so nakedly transparent that the Internal Revenue Service declares college sports a for-profit enterprise and revokes its tax-exempt status.

While you’re at it, they’d like a pony, too.

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10 Comments

Filed under It's Just Bidness

10 responses to “More money than sense

  1. paul

    Given what we’ve seen the last few years and the rate at which it continues to accelerate, if the Internal Revenue Service doesn’t declare college sports a for-profit enterprise and revoke its tax-exempt status in the very near future I will be amazed. But what the heck, big oil still enjoys tax breaks and receives subsidies to boot so I guess logic isn’t really in play when it comes to the IRS.

    • doofusdawg

      Using “big oil’s” legitimate business expenses as an example of the IRS’s logic or lack there of is weak. Realizing that the majority of the same people that want to demonize big oil would just as soon eliminate college football because of it’s misallocation of recources and unfairness is accurate. The IRS may be what we need to worry about but it’s the corrupt and extreme politicians that give them their marching orders. Do you have any idea how big the carbon footprint is for an sec football season… be afraid… be very afraid.

  2. Ubiquitous GA Alum

    Here’s a solution for MD. The MD legislature should require all residents to purchase season tickets & fine them if they don’t … just call it a tax … One stroke of the pen, kinda cool.

  3. JasonC

    Not very surprising when you consider the amount of debt the average citizen has or the government has. I mean when the people running the financial & risk sector- who should be experts- screw everything to hell, but then escape with golden parachutes or bailouts like Countrywide, AIG & GS, then how can we expect greedy university administrators to be any different?

  4. WarD Eagle

    This can’t bode well for NCSU who possibly hired Debbie Yow based on her sister Kay’s success as NCSU women’s bb coach and presumably good connections within the state.

    She hired a good BB coach. I wonder if she can find a good FB coach?

  5. Always Someone Else's Fault

    Duke manages to maintain a top-notch basketball program in a stadium which is a DUMP. It’s the Clown Car of college basketball venues: “Wow, how did they squeeze that many people into that wreck?”

    Every AD in the country has this impression that Success = Facilities Improvement. Maryland is just trying to keep up with Virginia, North Carolina, and other state universities who have been spending $10 mill a year on average for 2 decades improving their football and basketball facilities. As arms races go, it’s actually pretty funny – sort of like watching banana republics buy a fancy jet or two to satiate their egos. You know Georgia or Ohio State is going to splash the toy within a minute or two of hostilities starting, but in the meantime, they can dream.

    “If you build it it, they will come.” Um, no, they won’t.

  6. Connor

    Combined with the obvious bubble already forming in higher education, this is really something to watch. Government spending on education is down and the tuition bubble is becoming increasingly untenable. Football and basketball are about the only revenue streams left with any growth potential. Even if they are a mirage, the pursuit of them is largely demanded by the Alumni and boosters anyway.

  7. Doug

    Still amazes me Maryland is gonna cut all those sports just so they can make improvements to a stadium where Edsall’s team is still going to play like hot buttered ass regardless. It’s like demanding that your three smart kids come home and start attending vocational school so you can use their college funds to send your one dumb kid to Harvard.

  8. Dog in Fla

    Were anyone to ask Sally, I bet she still thinks Randy should have his ass hauled up for a General Court-Martial for dereliction of duty because Randy has not been nearly as big of an economic stimulus as Mike Leach would have been

    http://www.washingtonpost.com/sports/colleges/randy-edsall-has-maryland-entering-unchartered-waters/2012/02/16/gIQArzdAIR_story.html