Wednesday, April 29, 2009

Enhancing sales: He who hesitates is lost

The May 2009 issue of The Atlantic, has a thought provoking article by Virginia Postrel entitled "The gift card economy." The article opens by asking an interesting question - which are you more likely to buy as a gift on Mother's Day - a day-spa gift certificate that expires at the end of June or the exact same certificate that expires a year from now? Of course your purchasing choice is the card with the longer expiration date.

The article goes on to describe recent social science research that suggests that despite your best intentions, she is likely to be happier with the card that expires a month later. The reason? She is more likely to use the card with the shorter deadline.

It turns out that not only do people put off unpleasant tasks, but also good experiences as well. An experiment by Suzanne Shu and Ayelet Gneezy demonstrated the point. The researchers gave 64 students gift certificates for free cake and coffee at a local restaurant. 32 received coupons that were only valid for three weeks, the 32 received coupons that were good for two months. The results - only 12 of 64 bothered to redeem the coupon at all. But of the dozen redemptions, ten occurred in the group that had only three weeks to do so.

What does this mean for college athletic programs? Well, assuming that attending your games is a pleasant experience, it may mean a few things.

When considering ticket discounts or other enticements (e.g. mini packages) to get fans into your venue, the likelihood of someone acting on the discount increases if there is a short term deadline by which to act.

Likewise, in-game only discounts on concessions, apparel or other items can drive sales since the opportunity won't last forever.

Further, promotional activities like post-game autograph sessions or allowing fans on the ice to skate with a hockey team after a game may take on additional urgency if they are rare occurrences.

The perception of losing something of value enhances the likelihood of an individual making a purchasing decision. The longer a discount or opportunity exists, the less likely someone is to act. The shorter the time frame, and with it a pending loss of savings or value, the more likely a favorable decision will actually occur.

As the saying goes, "He who hesitates is lost." Getting your fans to overcome their hesitation with meaningful deadlines can help your department and teams benefit through increased attendance and sales.

Tuesday, April 28, 2009

Athletic Budget Cut Update #22 - Delaware State drops wrestling

The latest budget cutting news has Delaware State dropping their wrestling program, effective immediately. The rational for cutting the program included financial difficulties as well as the program's poor academic performance rating (APR).

Washington State, which had been contemplating moving the Apple Cup to Qwest Field has stopped all discussions about the possibility. The sticking point was the University of Washington's expectation that they would receive a greater number of tickets for the neutral site event than Washington State would receive.

Friday, April 24, 2009

Athletic budget cut update #21 - Beavers chopping east! and west?

The latest budget news has Oregon State Director of Athletics Bob DeCarolis suggesting that if their recently announced fund raising efforts are not successful the Beavers may be forced to drop teams.

Meanwhile, M.I.T., the largest athletic department in the country, followed through on its previously announced intention to cut teams by eliminating 20% of them in one giant bite. The eight sports that will no longer be sponsored by the Beavers include Men's and Women's Ice Hockey, Wrestling, Men's and Women's Gymnastics, Golf, Pistol and Alpine Skiing and will solve most of a $485,000 budget deficit.

University of New Orleans Chancellor Tim Ryan is indicating that unless some of the statewide cuts across the Louisiana State system are restored that they will consider eliminating their ENTIRE athletic program and 225 jobs.

Grambling is also facing a $1.4 million budget cut as part of the massive higher education cuts occurring in the state. The amount is 25% of the total necessary to close the institutional gap. Louisiana Tech is also looking to athletics to close its institutional budget gap, with 5% of the institutional cut directed towards athletics.

Wednesday, April 22, 2009

Athletic budget cuts #20 - Washington State facing budget issues

Washington State Athletic Director Jim Sterk is considering numerous options in an effort to close a $2 million budget gap, including: limiting roster sizes, travel restrictions, personnel reductions and possibly moving the Apple Cup to Qwest Field in Seattle.

In other news:

Bowling Green - Approved a $120/year student fee to help pay for the construction of a $36 million campus arena.

Lock Haven (PA) - Dropping baseball at the end of the season, saving approximately $110,000.

Sunday, April 19, 2009

Athletic budget cut update #19 - Quinnipiac facing Title IX lawsuit and Maine dropping teams

The on-going budget cutting has resulted in a Title IX lawsuit by the ACLU against Quinnipiac University for its decision to drop their women's volleyball team in response to budget pressures. Meanwhile, other athletic departments continued down the path of eliminating teams with Maine eliminating their men's soccer and women's volleyball teams to save $871,000 and Tennessee Martin dropping men's tennis at the conclusion of the season. Other news includes:

Nevada Reno - President Milton Glick has been devising various budget cutting options (between $200,000 and $700,000) for athletics with possible adjustments to include the elimination of two teams, restructuring coaching contracts and reducing scholarship support. Athletic Director Cary Groth has indicated that this will be the third straight year of budget cuts which have already totaled over $900,000 since 2007.

Florida - The University Athletic Association is going to send $6 million dollars to the University's general fund as part of its 10% budget reduction.

Florida State - Using pay cuts, furloughs and unpaid vacations to close the budget gap. President T.K. Wetherell indicated that "if anyone thinks that the Boosters and Athletics including coaches are not going to be involved in this pay cut and/or furloughs he/she is crazy."

Tennessee - Charged admission ($5) for the first time ever to its spring football game with the money going to the University's libraries.

New Mexico - Athletic Director Paul Krebs indicated that most sport teams will be taking a 10% budget cut with individual teams being allowed to figure out the best way to accomplish the task.

Purdue - Increasing the cost of men's basketball tickets by approximately $2, providing an extra half million dollars of revenue.

Florida International - New Men's Basketball Coach Isiah Thomas will work for free to help ease FIU's budget issues.

Philadelphia University - Dropped field hockey.

Principia College (St.Louis, MO) and Blackburn College (IL) both announced they are dropping football.

Wednesday, April 15, 2009

Danger or opportunity: Does your athletic department have a two goal lead?

There's nothing so dangerous as a two goal lead. I don't remember where I first heard this saying, but the moment I heard it, I committed it to memory. Its been running through my head over the past few weeks as I watched seemingly safe leads vanish in the blink of an eye during the just completed NCAA Men's Ice Hockey Championships. The most personally difficult of these was Princeton's loss to Minnesota-Duluth. But the same scenario happened again to North Dakota the next night when their two goal lead evaporated into an overtime loss to New Hampshire. Finally, the national championship game had Miami (OH) surrendering a two goal lead in the last minute to Boston University who then sealed the deal in overtime.

Its hard to pinpoint the reasons from game to game but a possible combination of factors would include:
  1. the team with a two goal lead takes their foot off the gas just a little;

  2. the team who just went down two goals wakes up and realizes that they have to work harder or focus more (I would note that in all three examples above, the lower-seeded team - a slight to significant underdog - was the team that surrendered the two goal lead and eventually lost);

  3. when a two goal lead becomes a one goal lead the momentum swings hard in the direction of the team who scored. They know rallying is definitely possible;

  4. the team with the lead begins to play not to lose, instead of playing to win (sort of like the prevent defense in football - the only thing it prevents you from doing is winning); and

  5. late in the game the trailing team pulls their goalie in favor of an extra attacker, a calculated gamble.

The saying applies nicely to lacrosse and soccer as well, but in reality every sport has their equivalent example of an apparently safe but not-as-safe-as-you-would-think lead. Some two goal leads last and some don't, but the first step in keeping the lead is realizing its dangerous.

Athletic departments also have their equivalent of a "two goal" lead, some examples might include:

  • expecting to win in a particular sport with a team that has dominated conference or national competition for an extended period of time;

  • a long-standing, successful coach that begins to live off his or her reputation and stops paying attention to the things that built their reputation; or

  • maintaining obsolete operational practices out of fear or to avoid the challenges that come with change.

Within the economic restructuring that is taking place, athletic programs will evaluate what to cut and how to save. If your program has a "two goal lead", creating opportunities to keep or build upon a "two goal" lead exist. Simultaneously, teams and programs that are trailing their competitors by "two goals" have an opportunity to close the gap and pass them with their own strategic choices. Play it safe or increase the pressure? The decisions each department makes right now may go a long way in determining which programs keep their two goal lead, and which ones don't. Danger or opportunity - it all depends how you approach it.

Sunday, April 12, 2009

Athletic budget cut update #18

The holiday weekend limited the latest budget cutting news......

Florida A&M - Projecting a $5.7 million deficit, athletics will now be overseen by central University financial administrators and a five year plan has been developed to close the gap.

U of New Orleans - Facing a $1.4 million budget deficit, the school is asking students to approve a $96 per semester increase in their athletic fee to close the budget gap.

Kutztown University - University President Dr. F. Javier Cevallos announced the athletic program is discontinuing their men's soccer and men's swimming programs. The decision was based in part on recommendations made by athletic consultants Alden &Associates.

M.I.T. - The Division III institution, with 41 sponsored sports, has informed student athletes and the campus community that a 24% reduction in general funds support means that the Institute will drop a yet to be determined number of sports. The decision about which sports to drop will be made by the end of April. The student athlete advisory council and team captains are developing recommendations to present to athletic director Julie Soriero about which sports make the most sense to eliminate.

Thursday, April 9, 2009

Athletic Budget cut update #17 - Cincinnati eliminating scholarships

The latest budget news shows on-going contraction in athletic department spending across the country, the most significant being Cincinnati Athletic Director Mike Thomas announcing that the department will stop providing scholarship support to three men's teams - track and field, cross country and swimming - beginning next year. The cuts will be phased in over four years and will result in $400,000 - $500,000 in savings when they are fully implemented. The choices were made in consideration of Title IX expectations as well as Big East membership requirements.

Other announcements included:

Iowa - Anticipating decreased revenue and all areas of the department have been told to cut expenses by Athletic Director Gary Barta. Travel expenses across the department are the primary focus of the article.

NCAA- The link provides an analysis of financial payouts each conference receives for participation in the NCAA Men's Basketball Tournament.

Sacramento State - Asking students to double their athletic fee over a three year period to close a $500,000 budget hole. Athletic Director Terry Wanless has indicated that failure to do so could result in the elimination of programs.

Minnesota - Losing $700,000 in University funding for athletics. The shortfall is expected to be made up with revenue streams from the opening of TCF Bank Stadium.

Colorado State - Athletic Director Paul Kowalczyk is seeking a 17% increase ($15) to the athletic fee, which would increase annual department funding by nearly $750,000 a year.

Big Sky Conference - Canceling annual football media day and shifting the volleyball schedule from a Thursday - Saturday format to a Friday - Saturday format.

Monday, April 6, 2009

Andrew Oliver case: Are agents going to become a daily reality?

An Ohio Court of Appeals has dismissed the NCAA's motion to deny Andrew Oliver's baseball eligibility, stating that an earlier injunction cannot be removed until the case has been ultimately decided at a jury trial beginning on October 19, 2009 in Erie County, Ohio.

The agent and amateurism issues in this case that were initially covered by have grown much larger and the NCAA's own language suggests they have very serious concern about the implications of this case related to agents and amateurism.

In simple terms, it appears that a large hole may now exist in the NCAA's bylaws as the case awaits trial. The following quote from the NCAA's lawyers on March 2, 2009 indicate the extent to which the Association's lawyers believe there is no enforceable arrangement as it relates to agents since the injunction is allowed to stand while awaiting trial:
  • "The sheer scope of the trial Court's order is no less than breathtaking. In its efforts to grant Plaintiff the ability to participate in a handful of additional college baseball games, the trial court substituted its subjective judgement for that of the the NCAA's membership and, with a stroke of the pen, "voided" long standing fundamental rules across all sports and all divisions of a national, private organization. Indeed it is important to note that the trial court's ruling was not confined to the Plaintiff's individual sport, or to the NCAA division of which OSU [Oklahoma State University] is a member. Rather, its broad brush extends to schools large and small in Divisions I, II and III and to hundreds of thousands of student-athletes who participate in every NCAA-sanctioned sport."

With the trial not scheduled to start for over six months, it appears that NCAA Bylaw which bans the presence of a lawyer at negotiation of a professional contract is in limbo. Similarly, Bylaw 19.7, which indicates an institution risks vacating its records and subjecting itself to financial penalties by allowing an ineligible athlete to compete in order to comply with a court issued restraining order is also facing legal questions.

If the case goes to trial, early court rulings suggest it is a very real possibility that the NCAA's rules will be partially or completely vacated. Losing at trial would be devastating to the NCAA in many ways and I have to believe they are pondering a possible settlement with Oliver to preserve the veneer of amateurism. Were a settlement to occur, it would certainly be for millions of dollars. But would Oliver settle?

Settlement may seem like an obvious choice, but there are a number of possible reasons a settlement is not inevitable, including:
  • The NCAA may not offer a settlement.

  • Oliver has to be emboldened by the courts initial rulings and strong language that allow him to maintain his eligibility.

  • Barring an unforeseen collapse of his skills or an injury, Oliver is likely to be a first or very early round draft choice in the 2009 draft since he is "draft eligible", having passed his 21st birthday. He is unlikely to return to OSU after this season since doing so would undercut his negotiating stance with a professional team. Signing a professional contract makes the possible loss of collegiate eligibility a non-issue, should he lose the case, bolstering the possibility of continuing to litigate.

  • Protecting Oklahoma State from possible financial penalties and having team records vacated for allowing him to participate would likely be part of any settlement discussion, making settlement more complicated.

  • Oliver's Ohio based lawyer, Richard G. Johnson specializes in legal ethics and legal malpractice. He is not a sports agent. His approach to this case questions the ethics and legality of requiring an individual to enter into a contractual negotiation without counsel. While Johnson's obligation is to represent his client, not all student athletes, he has hit the mark by pitting the NCAA's seemingly flexible amateurism philosophies against what should be an unquestionable right to legal representation, a topic that would catch the eye of a legal ethics practitioner if there ever was one. This may provide extra motivation to think about the bigger picture.

My previous article indicated that Andrew Oliver has an opportunity to be the Curt Flood of college athletics, stripping away significant NCAA Bylaws related to amateurism. For now, Oliver and Johnson will prepare for a trial. But my hunch is that they may have to ponder a settlement offer at some point and balance it against a much larger issue - their conviction about extent to which the NCAA's amateurism and agent rules should be abolished due to perceived inconsistency and unfairness. With an Oliver victory in the case, they may completely alter the rules for athletes at both the high school and collegiate levels, essentially making legal representation permissible across all areas of college sports.

Thursday, April 2, 2009

UMass skiing dropped, baseball survives

The University of Massachusetts announced that they are dropping their men's and women's skiing programs, saving approximately $100,000 as part of a plan to find $850,000 in budget savings. The baseball program, which had been cited by numerous media sources as the team likely to be cut, remains a varsity program at this time.

UMass is also eliminating media guides for its skiing teams.