Thursday, July 1, 2010

College athletics in 2010: The Intersection of Conference Realignment and Transparency


The following post authored by Tony Weaver is the second entry in a series that will examine the role of conference realignment strategies of universities. The long term financial implications of conference realignment could be the key to financial stability and success for some schools, and have drastic revenue limitations for others.




In the midst of the conference realignment chaos that appears to have taken over the state of Texas, Richard Justice reminds us of the “other” schools that participate in Division I athletics in Texas. His blog caught my attention for a couple of reasons. One, it reminded me that although the massive realignment did not happen the way Justice hoped, schools outside of the Big 10, Pac 10, and Big 12 are going to be impacted by any realignment, now and in the future. And two, Justice briefly touches on a former football powerhouse, Southern Methodist University. He describes Southern Methodist University as “a model program of a realistic vision and a beautiful on-campus stadium”. While this may be true the model program has not been built without some concerns from members of campus, particularly concerns related to the increasing dollars budgeted to athletics and the lack of financial transparency from the SMU administration. As the thought of conference realignment remains in the minds of many athletic directors across the country, including schools like Houston and SMU, members of the Knight Commission have brought to the forefront the issue of transparency and financial accountably. On June 17th, as the media and most Division I athletic departments remained focused on the impact of conference realignment and played out multiple scenarios, the Knight Commission released the most current report titled Restoring the Balance: Dollars, Values, and the Future of College Sports. In the report, the Commission focuses on the area of financial transparency. However, the latest report is not the first time transparency in college athletics has been addressed. In fact, one of the leaders in the call for greater transparency has been the president at SMU, R. Gerald Turner.

When I read Justice’s article about conference realignment and SMU, I thought about an editorial in the Washington Post in December of 2009 written by SMU’s President R. Gerald Turner and William E. "Brit" Kirwan, chancellor of the University System of Maryland. At the time President Turner and Chancellor Kirwan wrote that “The real crisis facing college athletics is the sustainability of its business model, which is on a path toward meltdown.” The editorial continued, “We recognize that change can come only from collaborative actions, some of which may prove unpopular on some campuses. The first step will need to be true transparency regarding athletic spending.”

Transparency in higher education is a hot topic and not limited to just athletic departments. Similar to SMU, other athletic departments have been asked to produce financial, academic and athletic data, despite the fact that athletic departments already release a tremendous amount of financial data, especially in comparison to other departments on campus. To begin with, financial data such as high profile coaches’ salaries, sponsorship agreements, and NCAA revenue distributions and other forms of revenue generation find their way to media outlets. In addition, each institution provides information to the Office of Postsecondary Education of the U.S. Department of Education on an annual basis that allows the general public an opportunity to view the budgetary priorities of an athletics program. The available data however is presented with a “cautionary note” and perhaps does not answer every question but it certainly does address some issues of transparency. Over the years the data has become more detailed however each school has their own way of reporting the data.

The Knight Commission argues that the “real long-term progress in athletics financing across all NCAA Division I institutions requires the availability of clear, comparable, and complete financial data, together with strategies to improve accountability”, which I believe to be true. However, there can be a downside to financial transparency. The reality is that more data also means more information which in some cases could be used to actually quicken the pace of the ongoing “Arms Race”, not slow it down. Imagine if all athletic constituencies, coaches, administrators and yes, even boosters, knew exactly how much their arch rival was spending or how much the new facility cost or how much the athletic director was making. On one hand, data would allow constituents to hold the administration accountable for dollars spent. But, data gathered could be used as an ongoing benchmark highlighting exactly how much the completion is spending and where they are spending. Budget comparisons would be an ideal way to show why more money is needed, not less. For example, look at the escalation of coaches’ salaries. A major part of the reason why coaches’ salaries have escalated so quickly is because everyone knows what coaches are making. Contracts have become very transparent, yet that has not stopped the escalation, but rather they have been used as a guideline for the next salary negotiation. If additional financial information was readily available (which in many cases, it is) wouldn’t that just add to the Arms Race? Yes, it would create more accountability, but does it really stop anyone from spending?

Transparency at SMU

Since President Turner’s article in December 2009, the Daily Campus at SMU has examined the issue of transparency at SMU (see Hidden on the Hilltop below), and in particular the athletic department. SMU’s athletic budget is facing scrutiny for major increases in their athletics budget since 2006, and thus members of the community are calling for more access to financial information about athletic spending. But wasn’t the increases in athletic spending somewhat predictable and to the “trained eye” very transparent? SMU, the university not just the athletic department, is making a push to win. That is precisely why President Turner hired a proven athletic director in Steven Orsini from the University of Central Florida in 2006. Since Orsini’s hire SMU has rebuilt facilities, programs and coaching staffs, most notably hiring head men’s basketball coach Matt Doherty and head football coach June Jones; both of whom were head coaches at other high profile Division I programs. The only problem is that men’s basketball and football have not won at a consistently high level – yet. Although basketball continues to struggle, football finished last season with 8 wins, won the Hawaii Bowl and received a vote for the final USA Today Top 25 vote. These are certainly respectable results, but not necessarily when compared to the type of money being spent and the recent success of in state football rivals such as Texas Tech and TCU, programs that have recently received national attention for big wins in football.

Currently, SMU loses money on athletics…a lot of money, and apparently more than many other schools across the country; but another side of the SMU’s story needs to be told. Not everyone is disappointed with the direction of SMU athletics and President Turner. In fact, in an article that appears in the New York Times in December 2009, alumnus and writer Joe Drape praises President Turner for his leadership in making great improvements, including improvements with the football program. A few days later, Dr. Stanley Katz, a former trustee at SMU and currently professor at Princeton University wrote that it is “good to have SMU back”. More recently, the athletic department posted a press release highlighting their record setting fundraising efforts, an impressive mark in a tough economy for a small private school with a checkered past and no major recent victories on the resume.

But, major victories could come, perhaps as early as this fall. Keep these two dates in mind: Sunday September 5, 2010 and Friday, September 24, 2010. Why? On September 5th SMU will play Texas Tech in Lubbock on ESPN and on September 24th SMU will play host to preseason Top 10, TCU, also on ESPN. Imagine if SMU can win one or even both of those games and go on to a successful 2010 football season. Does transparency and their $19 million debt remain an issue or does the idea of bowl games and conference realignment make the pages of the Daily Campus?

Although conferences have stated that for now realignment is done, most believe that this stop is only temporary. As conferences begin to add schools again, SMU could be a school that eventually benefits from such moves. As Justice points out, they have made major moves to rebuild their athletic program and would provide a large media market (Dallas is Number 5).

Even if the desire to know more about spending in college athletics increases, it probably will not change the financial landscape. Currently, we have enough data to understand that even when a school like SMU wins football and basketball games, the school will probably not generate enough revenue to cover the cost of running an athletic department. Yet, athletic departments continue to go further into debt with the hope that future gains could come from a big football win or an invitation to a more prestigious and perhaps more financially lucrative conference. As issues such as financial transparency (what is) and conference realignment (what could be) continue to intersect, administrators will be left with yet another difficult decision of cost containment and accountability or investing in prestige and national recognition. If the past is a predictor of future decisions, prestige and national recognition will win.


SMU

Hidden on the Hilltop:

Part One

Part Two A

Part Two B

Part Three



The author of this posting was Tony Weaver, Assistant Professor of Leisure and Sport Management at Elon University. Tony has agreed to occasionally provide research summaries. Prior to teaching at Elon, Dr. Weaver was an athletic administrator at Iona College, Siena College and the University of North Carolina at Greensboro

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