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During our chat with Stephen Bailey, he passed along the link to the SU Senate Committee on Budget and Fiscal Affairs (SBC) Part II, which includes comments on the Athletics Department. Here is the link.
I have put some pertinent comments in boldface and I inserted a comment in brackets.
Athletics:
History and Background
There is likely no more controversial topic on campus than the role of athletics, generally, and its relationship to the University budget, specifically. As noted by our new Chancellor, there has also never been a comprehensive statement from the Administration of the University as to the policy towards athletics. The various views on campus are wide reaching ranging from those who think athletics are of fundamental importance to the success of the University to those who think we should drop athletics entirely and focus solely on academics. Our perspective is that most of the University community appreciates Athletics as a significant part of the fabric of our University. However, we are uncomfortable as to the perception of how it is managed and how it blends into the school’s overall mission. It is interesting that at the time of this writing, a story has been aired on ESPN about the rise and fall of the Big East conference that may shed some light on some of the issues we present. The recent decision by a regional office of the National Labor Relations Board has further implications for the cost of athletics at private universities.
Revenue Neutral? Contributory? Net recipient?
The athletic program at Syracuse has evolved significantly over time. Expenditures have grown and expanded as programs aspire to be the best. The New York Times recently reported that the growth of athletic programs spending nationally have exceeded expenditures for teaching, research and public service (“Colleges Increasing Spending on Sports Faster than Academics, Report Finds,” New York Times, April 7, 2014). There is impression on campus that the Athletic program may be drawing financial support from the Academic centers. This “feeling” is exacerbated by the absence of transparency of its budget and the role athletics plays in the overall budget process. With the advent of RCM and the inclusion of athletics as a responsibility center, some of these concerns were addressed as Athletics was taxed and contributed its portion of the participation allocation. During discussions with the SBC, it became apparent that Athletics is actually a net expense to the University overall, in that subvention is required to balance the books; that, in fact, the athletic program has a negative fund balance as spending outpaces revenues.
Beast of the East?
This committee cannot help but wonder whether, in an effort to remain competitive at the highest levels of college athletics, we have entered an arena where we must continue to get bigger to survive.That is similar to some business models where a contraction or a leveling off of growth will lead to the eventual downfall and demolition of the enterprise. There is an appearance that we must continue to expand our facilities, build new ways to generate revenues, and continue to expand our Athletic Department or be trampled by the competition. It seems clear that the move to the ACC was required by some of this thinking. The ESPN story and recent reports that a new stadium was proposed also seem to confirm this assumption.
Athletics cost shift
The committee was told that some of the financial costs of having student/athletes on campus have been shifted to the home college of each athlete. This creates an interesting budget issue in our opinion. For example, if a football player on a full scholarship resides in the College of Arts and Science, the tuition revenue is allocated to A&S, but there is a corresponding offset to the revenue because of the scholarship being counted in the expenses of the A&S budget.Yet, the tax is applied to the gross revenue, and participation is applied based on A&S’s overall revenues to total revenues. In effect, A&S will pay a tax and participation for the student/athlete, but get no corresponding cash flow offset for having done so. This results in a net cost to the school instead of just being revenue and expense neutral. The revenue that is generated by athletics remains in the Athletic Department’s budget. Although the cost shift makes some sense from an accounting perspective, what this effectively does is shift some of the cost of the athletic program to the home school or college thereby freeing funds to be spent on other athletic needs.
[Are they saying that they want the burden expense (“tax”) absorbed by the Athletics Department? How are other non-athletic scholarships treated?]
Implications of the NLRB decision
The recent decision by a regional office of the National Labor Relations Board (NLRB)
that Northwestern University football players were employees and had the right to
unionize has serious potential implications for the Athletic Departments at private
universities. Without delving into the merits of the decision or its prospects upon an
expected appeal, the question of whether student/athletes in revenue-generating sports
should share in the revenues they help to generate has been thrust into public discourse.
Should the decision be sustained, it would likely disrupt the funding of non-revenue
sports (a.k.a. Olympic sports) as more resources would be allocated to football and
basketball, the two primary revenue-generating sports. Of course, questions of equality in
compensation for the Olympic sports, especially through Title IX, would need to be
addressed. While it is premature to speculate as to the final resolution of this decision,
Syracuse University should begin planning in the eventuality that the NLRB decision is
upheld. (See Academe Today, March 26, 2014)
Final Comments and Suggestions:
Some policy statement on Athletics needs to be determined and communicated to the
campus as a whole that can explain the philosophy behind athletics, its expected
contribution to the overall academic mission of the University, and the way in which it
will be held accountable for its specific mission. It would seem that the continued costs
to be competitive in an expanded (and expanding) ACC will need to come from funds outside of the existing academic programs and accounted for separately. It is unlikely that athletics will not be a part of the University’s plan as there are countless ways that sports help to make SU what it is. However, a more clearly defined financing mechanism should be enacted that removes the apparent distrust of the existing system and puts the true cost of athletics squarely on the shoulders of the unit that not only generates the revenues, but also incurs the costs.
ACC benefit to enrollment
Lastly, the question of whether Syracuse University’s membership in the ACC would benefit its recruitment of students in the Southeast has been assumed. Data from the Enrollment Office has shown an increase in the number of undergraduate students matriculating from this region to have grown over the past several years. However, it appears that this increase predates ACC membership and is likely the result of enhanced recruiting efforts on the part of Admissions. The SBC has also questioned whether the added costs associated with travel to campus results in greater discount rates to entice this enrollment growth. Finally, the Ad Hoc Committee report “Major Effects of the Athletics Program at Syracuse University” called into question whether athletic team success influenced the enrollment decisions of prospective students. (See Ad Hoc Report to the Senate, April 2006)
I have put some pertinent comments in boldface and I inserted a comment in brackets.
Athletics:
History and Background
There is likely no more controversial topic on campus than the role of athletics, generally, and its relationship to the University budget, specifically. As noted by our new Chancellor, there has also never been a comprehensive statement from the Administration of the University as to the policy towards athletics. The various views on campus are wide reaching ranging from those who think athletics are of fundamental importance to the success of the University to those who think we should drop athletics entirely and focus solely on academics. Our perspective is that most of the University community appreciates Athletics as a significant part of the fabric of our University. However, we are uncomfortable as to the perception of how it is managed and how it blends into the school’s overall mission. It is interesting that at the time of this writing, a story has been aired on ESPN about the rise and fall of the Big East conference that may shed some light on some of the issues we present. The recent decision by a regional office of the National Labor Relations Board has further implications for the cost of athletics at private universities.
Revenue Neutral? Contributory? Net recipient?
The athletic program at Syracuse has evolved significantly over time. Expenditures have grown and expanded as programs aspire to be the best. The New York Times recently reported that the growth of athletic programs spending nationally have exceeded expenditures for teaching, research and public service (“Colleges Increasing Spending on Sports Faster than Academics, Report Finds,” New York Times, April 7, 2014). There is impression on campus that the Athletic program may be drawing financial support from the Academic centers. This “feeling” is exacerbated by the absence of transparency of its budget and the role athletics plays in the overall budget process. With the advent of RCM and the inclusion of athletics as a responsibility center, some of these concerns were addressed as Athletics was taxed and contributed its portion of the participation allocation. During discussions with the SBC, it became apparent that Athletics is actually a net expense to the University overall, in that subvention is required to balance the books; that, in fact, the athletic program has a negative fund balance as spending outpaces revenues.
Beast of the East?
This committee cannot help but wonder whether, in an effort to remain competitive at the highest levels of college athletics, we have entered an arena where we must continue to get bigger to survive.That is similar to some business models where a contraction or a leveling off of growth will lead to the eventual downfall and demolition of the enterprise. There is an appearance that we must continue to expand our facilities, build new ways to generate revenues, and continue to expand our Athletic Department or be trampled by the competition. It seems clear that the move to the ACC was required by some of this thinking. The ESPN story and recent reports that a new stadium was proposed also seem to confirm this assumption.
Athletics cost shift
The committee was told that some of the financial costs of having student/athletes on campus have been shifted to the home college of each athlete. This creates an interesting budget issue in our opinion. For example, if a football player on a full scholarship resides in the College of Arts and Science, the tuition revenue is allocated to A&S, but there is a corresponding offset to the revenue because of the scholarship being counted in the expenses of the A&S budget.Yet, the tax is applied to the gross revenue, and participation is applied based on A&S’s overall revenues to total revenues. In effect, A&S will pay a tax and participation for the student/athlete, but get no corresponding cash flow offset for having done so. This results in a net cost to the school instead of just being revenue and expense neutral. The revenue that is generated by athletics remains in the Athletic Department’s budget. Although the cost shift makes some sense from an accounting perspective, what this effectively does is shift some of the cost of the athletic program to the home school or college thereby freeing funds to be spent on other athletic needs.
[Are they saying that they want the burden expense (“tax”) absorbed by the Athletics Department? How are other non-athletic scholarships treated?]
Implications of the NLRB decision
The recent decision by a regional office of the National Labor Relations Board (NLRB)
that Northwestern University football players were employees and had the right to
unionize has serious potential implications for the Athletic Departments at private
universities. Without delving into the merits of the decision or its prospects upon an
expected appeal, the question of whether student/athletes in revenue-generating sports
should share in the revenues they help to generate has been thrust into public discourse.
Should the decision be sustained, it would likely disrupt the funding of non-revenue
sports (a.k.a. Olympic sports) as more resources would be allocated to football and
basketball, the two primary revenue-generating sports. Of course, questions of equality in
compensation for the Olympic sports, especially through Title IX, would need to be
addressed. While it is premature to speculate as to the final resolution of this decision,
Syracuse University should begin planning in the eventuality that the NLRB decision is
upheld. (See Academe Today, March 26, 2014)
Final Comments and Suggestions:
Some policy statement on Athletics needs to be determined and communicated to the
campus as a whole that can explain the philosophy behind athletics, its expected
contribution to the overall academic mission of the University, and the way in which it
will be held accountable for its specific mission. It would seem that the continued costs
to be competitive in an expanded (and expanding) ACC will need to come from funds outside of the existing academic programs and accounted for separately. It is unlikely that athletics will not be a part of the University’s plan as there are countless ways that sports help to make SU what it is. However, a more clearly defined financing mechanism should be enacted that removes the apparent distrust of the existing system and puts the true cost of athletics squarely on the shoulders of the unit that not only generates the revenues, but also incurs the costs.
ACC benefit to enrollment
Lastly, the question of whether Syracuse University’s membership in the ACC would benefit its recruitment of students in the Southeast has been assumed. Data from the Enrollment Office has shown an increase in the number of undergraduate students matriculating from this region to have grown over the past several years. However, it appears that this increase predates ACC membership and is likely the result of enhanced recruiting efforts on the part of Admissions. The SBC has also questioned whether the added costs associated with travel to campus results in greater discount rates to entice this enrollment growth. Finally, the Ad Hoc Committee report “Major Effects of the Athletics Program at Syracuse University” called into question whether athletic team success influenced the enrollment decisions of prospective students. (See Ad Hoc Report to the Senate, April 2006)
