The rich are different from you and me, F. Scott Fitzgerald once observed, to which Ernest Hemingway famously added: Yes, they have more money.
The so-called Power Five conferences are different from the American Athletic andMountain West conferences. They have lots more money.
Wood Selig knows all about that. He is athletics director at Old Dominion University, a member of Conference USA. His school, which resumed playing football in 2009 and moved up to the Football Bowl Subdivision in 2013, makes an interesting case study in haves and have-nots. Virginia recently passed a state law that will limit the amount of subsidy that schools can take from student fees and other university sources to fund athletics departments — in ODU’s case, no more than 55%.
That puts Old Dominion in a double-bind: Trying to increase its football profile while trying to decrease its dependence on a primary source of revenue. Others in the AAC, Mountain West and C-USA face different challenges, but similar pressures: They are schools in lesser leagues with designs on keeping up with Power Five programs, but typically without the means to underwrite their dreams.
DATABASE: A look at every Division I public school’s finances
“I think the pressure is going to get intense in the next five years,” Kansas State president and NCAA Board of Governors chair Kirk Schulz told USA TODAY Sports. “A lot of schools where (administrators) are going to go, ‘We don’t have as much money from the state, we’re jacking tuition up, we can’t afford anymore to send this amount of money over to Athletics. They’re going to have to stand on their own.’ ”
By the NCAA’s benchmark for self-sufficiency, just 24 of 230 public schools in Division I stand on their own, up from 20 a year earlier, according to an analysis of the 2013-14 school year by USA TODAY Sports, based on data gathered in conjunction withIndiana University’s National Sports Journalism Center.
By NCAA definition, self-sufficiency means an athletic department’s generated operating revenues — not counting money from student fees, university funding or direct government support — are at least equal to its total operating expenses, which is legalese for taking in more money than you spend.
Oregon led the nation with $196 million total operating revenue and an $83.5 million difference between its generated revenue and its total operating expense of $110.4 million. However, the school reported that its revenue included in-kind facility gifts of $95 million — the value of a football training facility funded primarily by Nike co-founderPhil Knight and his wife.
The other 23 schools meeting this standard are all from the Southeastern, Big Ten,Pac-12 and Big 12 conferences, including Texas, which led the nation in total operating expenses at $154.1 million and reported transferring another $9.7 million back to the university. Texas’ total operating revenue was second to Oregon’s at $161 million.
The Atlantic Coast Conference, the other member of the Power Five, did not have any schools meeting the NCAA benchmark, though North Carolina State came close, with a deficit of just more than $165,000. That means athletics departments at schools in conferences outside the Power Five all ran deficits — and four of the six largest are from schools in the C-USA, AAC and Mountain West.
Rutgers, which was then in the AAC but has since moved to the Big Ten, had 2013-14’s largest deficit at $36.3 million. The AAC’s Connecticut had the third-highest ($27.1 million), ODU the fourth-highest ($26.8 million) and Mountain West’s Air Force the sixth-highest ($25.8 million).
The deficits get smaller and the number of self-sufficient schools gets larger if viewed another way. Though athletics departments get money from student fees, university funds and government support, they also send money to their schools through payments for scholarships and facilities and through transfers like Texas’.
When those amounts are balanced, USA TODAY Sports found, all 50 of the public schools that were in a Power Five conference in 2013-14 were self-sufficient. But only three Bowl Subdivision schools outside the Power Five and two non-FBS schools were self-sufficient.
“You’ve still got 300 other Division I men’s basketball schools where” self-sufficiency doesn’t exist, Schulz said. “So, even if we give that broader definition, I still think that pressure on those 300 schools is going to be intense. … There are a lot of really outstanding schools (that) have to rely on state dollars coming from general funds to do those athletic programs and to remain competitive with the haves.”
But clearly many schools and states find value in financially supporting major college athletics programs. Public officials in at least three states — Wyoming, Utah and North Carolina — are appropriating taxpayers funds or increasing student athletic fees to prop up athletics programs in conferences below the Power Five. But none of that works for Old Dominion because Virginia does not allow tuition money or state appropriations to subsidize the auxiliary side of universities. And now state schools can no longer easily raise student fees.
An analysis by USA TODAY Sports found Old Dominion’s athletics department subsidy from student fees for 2012-13 was 73% and for 2013-14 was 65%. Selig said ODU would need to increase its revenue from outside sources by roughly $3 million to reach a 55-45 ratio. “The law puts more onus on athletics to generate more revenue privately,” he said, “but that was already a path that we were taking before the bill was introduced.”
STATES’ DIFFERING APPROACHES
Kirk Cox, a Republican Virginia state delegate who sponsored the new law, said there was a good deal of “angst” among Virginia public colleges when the bill was in the discussion stages. “We wanted to start bending the cost curve,” Cox said.
HB 1897 takes effect on July 1, 2016, and schools will have five years to get into compliance. If not, schools can get five more years, “but then it’s like double-secret probation,” Selig said. “We’re not acting as if the back five-year window exists. I daresay Old Dominion will be in compliance well in advance of” the original deadline in 2021.
Here is how the law will work: Schools from Power Five conferences will be able to get no more than 20% of their budgets from student fees and other university sources — that means ACC members Virginia and Virginia Tech, which are already below that threshold — while Football Championship Series schools such as James Madison and Norfolk State will be able to get no more than 70% from fees and school sources. Schools without football such as George Mason and Radford no more than 78%.
Old Dominion is Virginia’s only FBS school outside of the Power Five — and the only school to have its student-fee threshold set at 55% by the new law.
“ODU was a unique case,” Cox said. “Basically, we created another category for them.”
Selig said a separate category was needed because it wouldn’t have been fair to group the Monarchs with the Cavaliers and the Hokies: “Obviously we are not at all like Virginia and Virginia Tech in conference revenue distribution, in stadium size, ticket revenue, donor revenue. We are FBS, but there is a big difference between where we are in revenue streams — and where they are.”
So ODU and C-USA number-crunchers looked at the subsidies that their FBS peers were getting in five conferences outside the Power Five: C-USA, AAC, Mountain West, Sun Belt and Mid-American. Selig said ODU president John Broderick provided the results to staffers for the state General Assembly, who in turn were conducting independent research of their own.
“It was a collaborative exercise in trying to be fair,” said Tony Maggio, a legislative fiscal analyst for the state’s House Appropriations Committee. Maggio said the numbers each side came up with were close.
Cox has not heard from legislators in other states who may want to pass similar laws, but Selig thinks it is only a matter of time. “I don’t think this is going to an anomaly,” Selig said. “My sense is other states are going to take note.”
In Utah, Wyoming, and North Carolina, however, more help is on the way for athletics.
In February, the University of North Carolina System Board of Governors approved student athletic fee increases for the 2015-16 school year for all of the system’s 11 Division I schools except UNC-Chapel Hill, N.C. State and N.C. Central. The board also approved further increases for 2016-17 for six schools, including AAC member East Carolina and C-USA’s North Carolina Charlotte.
In March, Wyoming lawmakers approved up to $4 million in taxpayer money that will be given to the University of Wyoming athletics department as matching funds for money Wyoming, a Mountain West school, is seeking from private donors. This was on top of $1 million in matching funds that the state previously had approved on a $1-for-every-$2-raised basis.
About a week after Wyoming’s action, Utah’s legislature approved an additional $1.5 million annually for the athletics department at Utah State, another Mountain West school. The move was led by Lyle Hillyard, a Republican from Logan — where Utah State’s campus is located — who is the senate chair of the legislature’s Executive Appropriations Committee. He specifically cited the funding for Wyoming as a reason for the appropriation.
“I’m convinced we’ll make more than that (amount) in economic development — from people coming to the games,” said Hillyard, who added that the legislature has provided other help for college athletics programs in the state, including letting all of them retain sales tax dollars as long as the money is used to support women’s teams.
LOOKING FOR ANSWERS
New NCAA legislation will allow schools to pay the full cost of attendance for scholarship athletes. That will not be a challenge for many of the schools in the Power Five conferences, but it will be for schools like Old Dominion.
“We have done the calculations,” Selig said. “We have 16 athletic programs and if we pay full cost of attendance to all of our athletes, that would represent $800,000 more of cost — $800,000 that we would have to find from private resources. There is no way we can get it from student fees. Now, if we do it need-based that would cost $250,000. Or we could do some hybrid model in between. We’re still trying to formulate our strategy.”
Selig said ODU has looked at as many as 40 options on what that model might be. He said the full cost of attendance is an extra $2,975 per student, but that $1,100 of that is the estimated cost of three round-trip airfares per school year. Given that at least half of ODU’s athletes are from in-state and would not need airfare, “maybe there’s some wiggle room there. … Philosophically, we are in favor of supporting student-athletes to the highest allowable possibility. But there is also reality and we need to make sure that we have ample funding to cover those costs.”
So where can ODU find more money? Selig said much of the athletics department’s increased revenue in recent years has come from donations to the ODU Athletics Foundation, which has increased its donations markedly since the school moved up to major college football in 2009.
“We have challenged all of our revenue-generating areas to increase 10% each year,” Selig says. “For example, the foundation is raising $4.2 million in unrestricted annual gift support so a 10% increase means we need to generate $420,000 more next year and we have been able to do that for the last three years. You keep doing 10%, 10%, 10% — it’s aggressive but you make great strides.”
Selig spent 11 years in the University of Virginia athletics department: “I’ve been at a high-resource school. It’s not like they don’t have their financial challenges and concerns. But when the revenue from TV and the College Football Playoff and maybe if they have a TV network within their conference, they’re generating new revenue in such large increments that it is easier for them to absorb cost of attendance than it will be for many of us.”
ODU moved to C-USA from the Colonial Athletic Association in 2013. Selig said ODU was getting “several hundred thousand dollars” in conference revenue distribution each year in the CAA and that in the C-USA that will soon be $2.2 million or $2.3 million per year. Still, that pales in comparison to the roughly $21 million in conference revenue distribution that SEC members got a year ago.
“The high-resource schools have means available to them that most of us will never enjoy,” Selig says. “That’s OK. Because at the end of the day, in football they can still only sign 85 scholarships. In (men’s) basketball, they can only sign 13. There are thousands of great athletes throughout this country and internationally that give Division I institutions a huge pipeline for athletic talent that goes beyond those 65 high-resource institutions. They just can’t capture all the talent, despite all the facilities they’re going to build and all the coaches they’re going to pay.”