A model approach

Screenshot_2019-02-08 Why Alabama’s dynasty will never really be over

This here’s a helluva piece about what makes Alabama tick under Nick Saban by SBN’s Spencer Hall and Steven Godfrey.  We’ve pondered the melding of the Georgia Way and the Process ever since Kirby Smart was hired.  Read this and tell me if you can see Butts-Mehre doing a full buy in.

This is not a perfect measure, but it is a start. To get an idea of how big football is as a financial entity relative to the rest of the university, I took the overall expenditures for the university for the most recent available fiscal year. Then I took the claimed football program expenditures, and compared the football expenditures as a percentage of total university spending.

There are a lot of caveats and clarifications to be made here. The money football programs spend does not necessarily come from the university, and could and does come from a lot of other sources: donations from alumni; ticket sales; TV contract money; merchandise and licensing, etc. That money isn’t even necessarily counted as university expenditures sometimes due to athletics and booster organizations being housed under tax-exempt non-profit 501(c)3 organizations.

The chief purpose of the comparison is to paint some picture of how relatively huge or small a program is compared to the university’s other reasons for being a university. It’s not science, but it is a visualization of how much of the overall economy at a school is dominated by football.

The size of a university has a bit to do with some of the discrepancies here. Ohio State and Texas, for instance, are both huge state schools with large budgets. Even an extravagantly funded football program would be a small piece of the overall financial picture at a behemoth like either of these.

Yet even compared to universities of its size, Alabama’s comparison is staggering. Florida State, another football-forward state school in the same region with just a slightly larger budget, spends what would be 3.48 percent of its total university expenses on football. Clemson and Oklahoma — both around the same size on the spreadsheet — spend around 4 percent each on football. Auburn, Alabama’s closest rival and another school of comparable financial scale, ups the ante by spending what would be about 5 percent of total expenses.

It’s widely known that Alabama spends the most annually on football. In 2017, the Crimson Tide spent $62.3 million on football alone, the highest budget in the sport. What’s new here is seeing that even on a scale relative to other schools its size, Alabama spends disproportionate amounts of cash on football.

As a percentage of total university expenses, Alabama’s football budget would equal 7.18 percent of overall spending, the highest in the 11-team sample here. That is a staggering sum given what other schools spend — even other schools like Clemson and Oklahoma, where football is openly and rabidly supported by the administration and community.

Following the money — even through a pretty simple comparison like this — shows how committed the university is to football. How committed are they? By the relative numbers, Alabama is more committed financially than any other team in the nation.

For me, the somewhat surprising answer to that question is maybe.  It depends on how much they can wring out of the donors.  That’s a part of the puzzle where ‘Bama has also been ahead of Georgia.

To understand how important football is to the university in 2019, consider what the university did in the 2000s just to get here. Most observers around the state will tell you that the big change happened with the arrival of one very important person not named Nick Saban: Dr. Robert Witt, who became President of the University of Alabama-Tuscaloosa in 2003.

Witt became the instrument of many boosters who believed the University had fallen behind as an academic institution and as an athletics program. According to a high-ranking source at UAB, “Some of the prominent alumni, Paul Jr. being among them, got very concerned that Alabama was becoming a very average school and a very average program.”

The two — the football program and school — were an inseparable brand. Rather than fight that, Alabama embraced it, mostly because they had no choice. Football was woven into the network of people who controlled the University of Alabama, and the brand was arguably as valuable as any other asset the University had.

That same UAB source says the message became clear. “Together they decided that Tuscaloosa was, and always had been, honestly, the crown jewel of the university system and that they needed to get that in order.”

The crown jewel of the university’s public face was football, and to reboot the school’s image and fatten enrollment, football had to be a visible, successful asset. And in the early to mid-2000s, Alabama football was visibly and painfully unsuccessful. Alabama’s facilities were average, their teams inconsistent, and their coaches a source of boredom at best (see: Mike Shula), and scandal at worst (see: Mike DuBose, Mike Price). Worst of all, the school was losing games to hated in-state rival Auburn, at one point dropping six in a row to the Tigers.

The creation of the Crimson Tide Foundation in 2005 embodied Witt and the boosters’ complete commitment to football. A 501(c)(3) non-profit, the Crimson Tide Foundation’s paperwork listed Paul Bryant, Jr. as its Chairman, and under its “exempt purpose” section stated that that the Foundation “… provides a channel through which gifts are solicited for the University of Alabama’s intercollegiate athletics program, including facilities, scholarships, and other areas of support.”

Using a nonprofit to channel a university athletics program’s finances is common in college athletics. A search of Guidestar’s nonprofit database pulls up nine programs in the SEC alone that filed the Form 990 that nonprofits usually send to the IRS yearly. Auburn, Ole Miss, Florida, Georgia, Mississippi State, and South Carolina all submitted forms for 2017. LSU, Texas A&M, and Arkansas all at least filed in 2016. There are archives showing basic financial statements going back to most of these organizations’s founding, sent in dutifully to the feds each year by administrators.

The University of Alabama’s charitable arm, the Crimson Tide Foundation, has one 990 on record: Filed in 2005, it lists the aforementioned officers, purpose, and basic information on finances, and an Astra SP — an upgrade from the Cessna the program had been using to make the rounds.

The jet would end up being a huge tool in Alabama’s endless football recruiting tours, but even that disclosure was enough for the program to give up reporting altogether. Since 2005, the Crimson Tide Foundation — still claiming 501(c)(3) non-profit status — has claimed it is exempt from filing those pesky 990s.

Instead, the Foundation’s numbers are included annually in the University’s financial reports. In their own words, the Crimson Tide Foundation is a “blended unit.” Translated: The Crimson Tide Foundation is a private organization that works under the umbrella of the very much public University of Alabama. The university includes some numbers about the program in that report, and the university also files required basic information about the program with the NCAA.

But overall, compared to other athletics programs in its conference alone — some of which produce their own 40-page annual audited summaries like small companies would — Alabama operates with a lower degree of transparency and a different reporting system than other schools do.  [Emphasis added.]

The unity of purpose there is striking.  Unity of purpose is something that was sadly lacking in Richt’s final seasons in Athens.  That’s all in the past, though.

McGarity said at the time of the Smart hire that the administration was looking for guidance from its new head coach as to where the program needed to head in order to succeed at a higher level.  Kirby brought the road map from Tuscaloosa.  Now it’s just a matter of herding the big pockets onto the bus.

31 Comments

Filed under Alabama, Georgia Football

31 responses to “A model approach

  1. 81Dog

    Does this include the effect/amount of bagman cash? The numbers for Alabama and AU would be a lot higher if that figure was included. Maybe Spencer can get the mob accountants over there who keep the secret books to violate Tide/Barner omerta

    Like

  2. Gaskilldawg

    We had an athletic director asking a rookie head coach for advice on how to improve the athletics department? Shouldn’t The J. Reid Parker Director of Athletics done some homework on his own?

    Like

  3. I’m surprised the IRS hasn’t gone after the Tide Foundation with all of the resources at its disposal.

    Like

    • 79Dawg

      What would they go after them for? They’re absolutely right, the foundation is part of a governmental entity and is therefore exempt from filing the 990s.
      We went through this a year ago – neither the Athletic Association or the Board are “independent” of the University; in fact, they are totally beholden to and controlled by it, which is why the board members are completely impotent. We probably continue filing 990s because our leadership looks at is as a way to get some “hey, look at how great we are doing” slap on the back p.r. The only p.r. Bama does – or gives a rat’s *** about – is on the football field…

      Like

      • None of that means the IRS can’t go after it. I think the IRS should challenge the NFP status of every one of these organizations, or Congress should revoke the exemption. These are for profit entities hiding behind the veil of 501c3 status.

        Like

        • ASEF

          Except the people who drafted those laws drafted them for the very loopholes and exclusions that Alabama and Georgia and all the others are exploiting. The universities didn’t come up with these schemes – big-time boosters brought their understanding of those accounting and regulatory structures from their business background to the universities.

          And politically, the same people running the show at these football non-profits are the same people writing the sorts of checks that have their names on Congress-critters’ speed dials. Total non-starter.

          Liked by 1 person

        • 79Dawg

          You misunderstand what “not for profit” means in the context of this issue: It does not mean there’s not an “economic profit” (there are, as you see, lots and lots of “economic profits”) – it means that there are not shareholders to whom those economic profits inure or to the benefit of. In other words, the residual “economic profits” are either plowed back into the non-profit’s mission (as is the case with the Athletic Association, where the economic profit is used to build a DJ booth in the locker room or given to the university’s scholarship fund) or used to pay grossly inflated salary and compensation to the officers (see, e.g., SCAD).

          Like

          • No, I understand exactly what this means … Many of these organizations were put together in the days of no conference TV deals, no $1,000,000,000 March Madness deals, no $7m coaches’ contracts, or no $30m indoor practice facilities (among other things).

            The NFP was focused on raising money for their athletic scholarships at the beginning … these organizations especially at the P5 have grown so far outside that mission that I don’t believe any of them deserve the exemption any longer.

            YMMV

            Like

  4. Hogbody Spradlin

    That article reaffirms my belief that everything, everything in the state of Alabama is rigged for Tide football. The Crimson Tide Foundation didn’t give up separate filing, it avoided it.

    Liked by 1 person

    • Reverend Whitewall

      Yep, remember around 2006/2007 when the regents nixed UAB hiring Jimbo due to “fiscal responsibility”, even though half his salary was gonna be covered by boosters? That was all about not having a hotshot coach in the system somewhere other than Tuscaloosa, or more transparently, they were hoping he would join Saban as OC.

      Dabo always talks about being “All in”, and there are several programs you could argue who have bought all in, but Bama takes it to a whole different level.

      Like

    • ElectroM

      This is why the SEC offices need to be moved out of Birmingham. I suspect a lot of the administrative positions are filled by ‘Bama graduates, including policy makers, not just the people in charge of officiating. The SEC is part of the Alabama football industrial complex and will remain so as long as it remains in Birmingham.

      Liked by 1 person

      • GruvenDawg

        All you have to do is look at the 2019 SEC bye week schedules for proof about that. The only challenger to Alabama’s birthright are the Dawgs. Our schedule with teams coming off by weeks compared to the rest of the conference is egregious. When that happened to Bama they went crazy! With ADGM we haven’t heard a peep.

        Liked by 1 person

        • ATL Dawg

          ADGM spends most of his time sitting in his office staring at financial spreadsheets. If asked, he’ll say that he’s waiting for his head coach to tell him what to do about it.

          Like

      • ASEF

        Greg Sankey, UNY-Cortland/Syracuse
        Mark Womack, Alabama
        Charlie Hussey, Ole Miss
        Tiffany Daniels, Georgia
        Torie Johnson, Baylor/UAB
        William King, Washing and Lee/Vandy
        Dan Leibowitz, Penn/Temple
        Herb Vincent, LSU
        Chris Waldsmith, Alabama
        David Batson, Texas AM
        Matt Boyer, Valparaiiso
        Leslie Claybrook, Mercer
        Byron Hatch, Central Arkansas/UA-Little Rock

        Those are the 13 highest ranking members of the SEC org chart, Commissioner and Associate Commissioners.

        Like

      • Doug

        You’re not looking high enough.

        The person with the biggest Bama bias—or rather Saban bias—is sitting at the top of the NCAA. Mark Emmert has been tight with Saban ever since they were at LSU together. As long as Emmert is in that office and/or Saban is in Tuscaloosa, there won’t be any investigations into anything Bama does.

        Like

        • Trbodawg

          I would argue, it’s not a deep enough dive. (Kudos for the effort to go that far, tho’) The Commissioners/Associate commissioners only know what they’re told by their support staffs. 90+% of which are Alabama fans, not necessarily graduates.

          Like

  5. Macallanlover

    They admit up front this is a weak comparison with a “lot of caveats and clarifications”, especially given the various sizes of the numerous schools included. It shows Alabama is more committed to football than others, not exactly “breaking news”. I realize there is no way to level the playing field and get a true apple to apples comparison but they kept digging and produced something anyway. Meh, nothing to see here, move on along. Water is still wet.

    Like

  6. Butler Reynolds

    An interesting starting point, but it shows % of total, which means that we need more graphs. In any case, no thanks to me except for watching TV ads, there’s a lot of $$ being spent on college football. If the higher education bubble ever pops, at least they’ll have these farm-league football programs to fall back on.

    Like

  7. Bulldog Joe

    Alabama’s university system structure has three institutions with Tuscaloosa in control. If they believe the cash cow is threatened, they will move quickly to shut down the threat (i.e. UAB football) and shift resources to Tuscaloosa.

    Georgia’s university system has 26 institutions after the mergers. Among the 26, the University of Georgia is not the largest entity. As far as public resources go, it is an entirely different political landscape.

    Like

  8. Doug

    Auburn’s getting some real bang for their buck there.

    Like

  9. Former Fan

    I wonder what changed so that the admin finally got on board? It’s not like CMR didn’t ask for a lot of things too, such as an IPF. It took a while for them to even start paying assistant coaches the market rate. It looks like something changed on the admin side. I would be curious to know the whole story at some point, though I likely never will.

    Like

    • stoopnagle

      Witt. They got a president who got the culture, took what they had, and took off.

      Like

      • ATL Dawg

        I think he’s asking what changed at Georgia, not Alabama.

        With that said, it could be similar. Morehead took over in 2013.

        Like

        • Bulldog Joe

          Richt wanted the IPF for years. In 2014, Pruitt raised it as a recruiting disadvantage, which he used effectively when recruiting against Georgia. The Athletic Board, no longer under the control of Dr. Adams, later gave a series of approvals (design and construction).

          The biggest change in the financial commitment for football came in Smart’s 2015 negotiations for the job. Given the lack of research in coaching alternatives at Butts-Mehre, Smart had virtually all of the leverage. I am convinced if Smart had walked away, we would have seen Will Muschamp as head coach and a much smaller financial commitment at Georgia.

          Like

  10. 69Dawg

    Until Saban retires or dies, Alabama is going to rule the SEC. His only real treats are Auburn, LSU and now TAM. We are the only team from the East that can compete with them. If we somehow manage to screw up and lose the East imagine the joy in Alabama at the thought of a SECC game against UF, UM or UT. Also as long as Bama only loses 1 or 2 games they will make the CFP unlike any other team. The deck is stacked, live with it, lord knows we have for years.

    Like