Pittsburgh Sports Report - PSR In Depth: Fiscally Unfit. The Economic Gap in Division I Athletics By Scott Koskoski

Pittsburgh Sports Report
December 2004

PSR In Depth
Fiscally Unfit
The Economic Gap in Division I Athletics
By Scott Koskoski

If the common notion that six wins punches your bowl ticket holds true, then local college football fans should stock up on snacks. Because all three Pittsburgh-area Division I football teams have reached the magic number. We're going Burgh Bowling, everybody!

Not exactly. Although Pitt will be headed to a major bowl, televised and sponsored by a corporation you've probably heard of, Duquesne - with seven wins and a Metro Atlantic Athletic Conference championship - will focus on final exams instead of football this month. Robert Morris won't be going anywhere either, as they finished 6-5 in the Northeast Conference. An average record may be good enough for a Big Ten team to start packing, but not even Joe Walton's panache will help the Colonials sniff a minor bowl game, let alone anything lucrative - ever. The only bowl these teams get invited to is something called the 'ECAC Classic,' pitting the MAAC and NEC champs, and that game was cancelled after a long run of two years.

While these three teams technically all compete under the NCAA Division I umbrella, it's clear that the line between Division I-A and I-AA is represented as much by finances as anything.

In 2003, the maligned Bowl Championship Series generated $109 million in revenue, according to the NCAA. Of that, $104 million went to 64 schools competing in the six BCS conferences, while the remaining $5 million was spread among the 54 schools in the five non-BCS Division I-A conferences and independent teams. Not only did the $5 million fail to even sparsely cover expenses at those 54 schools, non-BCS schools lost an average of $1 million each on their football programs. Even non-BCS schools who qualified for bowl games were left in debt - and that's after the bowls typically cover travel and entertainment expenses.

'In no college sport is the financial gap more readily apparent than football,' says Daniel Fulks, the NCAA's financial analyst. 'BCS conference revenue has escalated, while other leagues are staying flat.'

Reportedly, the 64 BCS schools have together earned over $460 million since they began the BCS arrangement five years ago. The 54 non-BCS conference schools have earned shared revenues totaling $17 million in that time.

'Obviously, the financial gap continues to grow, and the challenges that non-BCS schools face are getting more and more difficult,' said Karl Benson, commissioner of the Western Athletic Conference, of which two members have dropped some male sports altogether due to the inability to fund them.

Of course, Duquesne and Robert Morris play football at the Division I-AA mid-major level, where there is no BCS and definitely no football revenue sharing. Such is the state of modern Division I college athletics, where the divide between 'haves' and 'have-nots' continues to widen.

College football's finances recently caught the attention of antitrust enforcers on Capitol Hill. The House of Representatives examined whether serious 'monopoly' problems exist within the BCS system that are meant to exclude teams from non-BCS leagues from major bowl participation.

After all, the enforcers claim, schools from non-BCS conferences are denied equal access to the same television revenue and national clout as those with BCS membership privileges.

'It's clear that some schools are on the outside looking in, maybe unfairly,' said Scott Branvold, faculty athletics representative and professor of sport management at Robert Morris.

Disparity In Basketball

Although there is no BCS in men's college basketball, the disparity can be even more visible. Teams such have Pitt have early-season schedules dotted with the likes of Howard, Bucknell and Loyola (Md.), but don't think the underdogs aren't happy to play Pitt.

The 'guarantee' major college programs provide weaker visiting teams - in layman's terms, the rent-a-victim payment doled to the incoming sure losers - is revenue lower Division I schools count on to fill gaps in under-funded athletic departments.

These games are a godsend to smaller schools looking for an avenue to fatten their athletic budgets. Depending on the contract, these smaller schools can earn anywhere from $30,000 to $55,000 per game.

But there is a downside. While guarantee games are a fiscal boon, smaller Division I teams hurt their standings by risking humiliating defeats.In many cases, these colleges often find themselves hopelessly overmatched.

"Getting the money is one thing," said Thomas Trotter, coach at the University of Maryland-Eastern Shore. "But if student-athletes are constantly subjected to 40 and 50-point losses in front of partisan crowds, sometimes on TV, what is the ultimate benefit?'

The implications can be tracked over an entire season. If budget gaps force a lower Division I school to exchange wins for money over the majority of a 12-game non-conference schedule, that school may enter league-play well under .500. If that same team wins its conference tournament, it likely enters the NCAA Tournament with a mediocre record and a guaranteed sub-12 seed in the field. The first-round match-up? You guessed it: probably another Pitt, Kansas or the like. The cycle continues.

Allow corporate sponsorship and ticket dollars to sub in. Over time, major national companies want to support winners and schools that promise the company maximum exposure to fans. Fans, of course, follow winners, and are willing to pay whatever the bandwagon conductor says the ride is worth. Even at the collegiate level, sponsorship deals can be worth millions per school each year, and ticket prices can reach professional levels. Ever try to scalp a ticket to the Final Four?

Therefore, only a small core of loyal, philanthropic companies (or firms with alumni or trustee connections) tend to support programs with struggling budgets and small fan bases.

Lower Division I athletic departments then struggle to promote and market sagging programs, mostly because the fans, sponsorships and media coverage are elsewhere.

Pittsburgh is a perfect case study, since the Steel City is home to Division I basketball programs on three different tiers. Pitt hosts the classic guarantee games in a sparkling new arena and can compile a strong record entering conference play.

Duquesne, an Atlantic 10 member, can pay lesser-ranked opponents to come to the Palumbo Center as guarantee contests, but could also cash in on the road against elite teams if they would so choose.

Robert Morris, meanwhile, relies more on guarantee games to offset the cost of its other 21 intercollegiate sports. The Colonials' 2004-05 schedule includes money trips to Pitt, Ohio State, Virginia and Northwestern, but only one non-conference 'instant win' visits the Sewall Center.

Coaching salaries also drive a wedge in the financial gap. Across the country, high profile football and basketball coaches earn salaries resembling those of pop culture stars, far exceeding the pay of university presidents or top faculty. Even Pitt's Walt Harris, believed to make around $600,000 annually, reportedly makes more than Chancellor Mark Nordenberg, whose total compensation is $553,414, including salary and benefits, according to The Chronicle of Higher Education.

Social vs. Economic Capital

Peter Orszag, a member of the Knight Commission, an NCAA-sponsored initiative on fiscal reform in college athletics, believes dollar figures should be de-emphasized while the motives of a school's investment should be remembered.

'The real debate should be what value does intercollegiate athletics bring to a school?' said Orszag.

Does runaway spending on athletics bring winning? Increased donations? More TV exposure? Orszag recently presented the Knight Commission with results of an eight-year study that refuted popular myths about athletic spending, such as that increased spending leads to more winning or that higher winning percentages automatically lead to larger alumni gifts and higher admissions rates.

'The evidence and conclusions are inescapable,' wrote Knight Foundation president Hodding Carter in a recent report. 'Runaway costs do not equate with winning or more revenue for universities. There continues to be little or no financial value on paper.'

There is another kind of value, however. Robert Hemenway, chair of the NCAA Division I board of directors, points to the concept of 'social capital' as a motive to spend, spend and spend more in Division I.

A full football stadium or basketball arena creates a community of support that is not fiscally countable, said Hemenway. 'The return on investment for college athletics is more in the social capital than economic capital.'

So while a school such as Pitt may not generate enough income to support a costly athletics program through ticket sales, television or donations, nothing can beat the sight of a packed Heinz Field or Petersen Events Center for a big game. In Pitt's case, football and basketball are clearly ways to add to the university's marketing value.

'At Robert Morris, athletics is mostly driven by our ability to generate increased enrollment,' Branvold said. 'When we added football in 1994, we knew that meant an additional 120 male students, some from out of state, would enroll and pay tuition. The role athletics plays here is much different than its role at Pitt.'

In fact, under the NCAA's broad-based distribution fund, Robert Morris receives $18,600 annually for each sport starting with the 14th sport the school offers.

'With ice hockey, golf and lacrosse added for men and women, we can make almost $200,000 extra each year, which makes the cost of running those programs a lot lower and helps us with our enrollment goals,' said Branvold.

'Those are not the reasons a high-profile Division I school operates an athletic program. We're not trying to become a Pitt, or even a Duquesne,' added Branvold.

But can a school like Robert Morris ever compete in the financial, marketing and talent 'arms race' that is modern Division I athletics?

'Obviously, the occasional Gonzagas of the basketball world break the curve,' Branvold said. 'But given the chance, I don't think any of our players would turn down the chance to play a top-tier team in a packed house for risk of losing the game.

'We're happy with who and where we are.'

Scott Koskoski is freelance writer based in Pittsburgh.