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OU'S BUDGET DEFICIT
Your Turn: Sports cuts a dishonest case of expenses
exceeding income
Letter to the Editor
If I told you I earned $250,000 per year (unfortunately I
don’t), you might be impressed. But if you found that I was spending $300,000
per year in my household budget (fortunately I’m not), you would quickly
realize that I had a problem. That problem is called a deficit. Regardless of
how impressive my income might be, the real bottom line of my finances is income
minus expenses. When expenses exceed income, a deficit occurs.
I appreciate Nate Saum pointing out in his letter on
April 9 the huge sums of money that OU football brings in for playing many of
their games. To earn $500,000 for one game is certainly impressive! But Nate,
what is the real bottom line? Income is only half of the equation. Can you
ignore what the football team spends or costs the university each year? It’s
easy to bring in millions and still have a gigantic deficit — just spend more
than you bring in.
I need to say here that I am not opposed to OU football
in any way. I am not even opposed to OU football losing millions of dollars each
year. In fact, I am not even opposed, in principle, to the university ceasing to
fund other things in order to fund a sport that, on the surface anyway, is
losing money. If the university benefits from having an impressive football team
(no doubt this matters to alumni and impacts their giving), then make the
responsible and rational cuts you need in order to support the football program.
But be honest!
If you are directing funds to football because the
university benefits in some tangible or intangible way, then don’t say
“Title IX made me do it.” No, you chose to do it. When pressured at the Feb.
15 Board of Trustees meeting to divulge the real reasons for the elimination of
four OU sports, Athletic Director Hocutt took a step toward honesty when he said
“there are financial savings and investments in cutting these other sports.
The university has decided to strategically invest in other sports.” Why
wouldn’t he admit that on Jan. 24 when the original announcement was made?
Nate suggested that I do some more digging to find the
real culprit. How about digging into the May 25, 2006 OU Internal Audit, Review
of Intercollegiate Athletics? It states that fiscal mismanagement in the
athletic department “has resulted in ICA exceeding its budget in recent years
and accumulating a deficit that must be repaid to the university. The debt
includes operating deficits of more than $1,000,000 from both FY05 and FY06
(projected), capital debt from the Peden Stadium renovations and from the
lowering of the football field.”
I could drag out many similar quotes from this document
and other public documents, but would rather summarize by quoting former OU
track and cross country coach Elmore Banton in his Feb, 5 article in The Post:
“According to the last year’s NCAA report, Ohio University spends $491 per
track athlete per year, $10,000 per football athlete per year and $22,000 per
basketball athlete per year.” He goes on to say “in addition, the Ohio
University football program had a $1.9 million deficit and basketball had a
$331,000 deficit last year. To anyone looking at these figures, it might appear
that we are attacking the wrong animals. The cows have gotten too big for the
barn, so we are throwing out the chickens instead of putting the cows on a
diet.” I want to meet Coach Banton someday — he’s got a way with words!
In my profession I have the privilege of counseling
people regarding their personal finances. When someone’s expenses exceed their
income, I advise them that they need to either raise income or cut expenses.
Cutting expenses is almost always the easier route. But when they ask me if they
can just stop making their car payments, credit card payments or the payments on
their big screen TV, I have to remind them that those are obligations they took
on willingly. Their budget cuts will have to come in other categories, like
cutting down on their groceries or moving to a cheaper apartment. Integrity
demands that you honor your obligations, even when it’s uncomfortable or
inconvenient. Ohio University’s athletic department entered into an obligation
to swimmers, lacrosse players and track athletes when it recruited them and
signed them to compete for OU. Budget cuts need to be made; but commitments need
to be honored. OU could honor its commitment to these athletes by allowing their
sports to phase out during the next three years. Meanwhile, make responsible
budget cuts somewhere else — or maybe just do as Coach Banton suggests, and
put the cows on a diet.
Honesty and integrity. Recurring themes that Nate has
probably noticed in the “letter after letter” he has read on this issue. I
hope lots of people have noticed. I’m still hopeful that President McDavis and
Athletic Director Hocutt will take heed. They do read The Post, don’t they?
Greg Sargent writes from
Mason, Ohio, and is a member of United Swim Parents.
2007-02-08
By Jonathan Hunt
Athens NEWS Writer
Since the
day in late January when they announced four varsity sports teams would be cut,
Ohio University Athletics officials have said Title IX gender-equity law and a
burgeoning debt within the athletics department forced their hand.
But what are the actual spending numbers and trends within the program, how did
a $4.8 million dollar debt come about in just a few years, what did the football
team's bowl game cost, and what exactly does Title IX mean?
"It was a two-headed monster," said Robert Andrey, OU's associate
athletics director for business and internal operations, about the challenges
posed by Title IX and the deficit. OU hired Andrey in January 2006, and he said
Tuesday that he knew by last March that a budget crisis was imminent.
Budget figures supplied by Andrey pinpoint how the debt began growing steadily
around the end of the June 2004 fiscal year.
Spending categories rose across the board, the data show, but scholarships and
fellowships, professional fees, travel and entertainment, and supplies were the
fastest growing categories.
The department went into debt to the tune of $1,141,564 in fiscal year 2005, and
then another $1,327,495 during fiscal year 2006, owing $2,469,060 after that
point.
Add $1,655,953 of debt in 2007, and you get a whopping $4.1 million of red ink.
A bond issue to fund the lowering of Peden Stadium's playing field accounts for
another $650,000 of debt, said Andrey. That bond note is due in five years, he
said.
The balance of the $4,775,013 total debt OU Athletics officials expect to owe by
July this year is essentially being floated by Ohio University as an
institution, according to Andrey.
OU's vice president of finance and administration, William Decatur, explained at
a Monday public meeting about the team cuts that total revenue for the athletics
department had remained static since 2003.
Total expenses for the department rose from $11.5 million in 2003 to $16.4
million in 2006.
Gate receipts in football and men's basketball rose slowly but steadily to
$394,356 for football and $320,474 for men's basketball by 2006, but they don't
make up for the gap between revenue and expenditures, budget figures show.
Royalty income has nearly doubled since 2003, but it reached just $165,491 in FY
2006.
"We weren't able to increase our ability to raise revenues at the rate that
our expenditures were increasing," said Andrey.
The athletics department's new Bobcat Club fundraising arm has increased
unrestricted gifts that aren't earmarked for specific teams 73 percent in the
past year to an anticipated $500,000 for this fiscal year, he said. That figure
does not include endowments and gifts to individual sports.
Beyond the $650,000 field-lowering project, Andrey discounted any notion that
Athletics Director Kirby Hocutt had inherited any debt from his predecessor,
Thomas Boeh. Hocutt took over the position in 2005.
"I don't think what's happened is an indictment of the prior administration
at all," Andrey noted, adding that he meant either Boeh or the OU
administration as a whole.
The associate AD said a $1.5 million pledge by the OU administration to be
funded over three years was not delivered on. Only about $500,000 of that money
has actually become available, he explained. To some extent, the department
relied on receiving the extra $1 million, Andrey acknowledged.
"We have 20 sports that are under-funded," said Andrey. "Are we
the ones who created it? Who cares?"
Although total athletics department payroll and benefits have risen from
$4,501,600 in 2003 to $6,321,228 in 2006, Andrey said it wasn't just for
football coaches and administrators - positions such as that of Bobcat team
physician Dr. Will Rosenberg were also added during that time.
OU'S APPEARANCE in the GMAC Bowl in January in Mobile, Ala., cost the university
$182,550, an Institutional Bowl Expenses summary prepared by Andrey showed.
"That is what our out-of-pocket expenses were from the bowl game,"
said Andrey.
The bowl game does, on the other hand, serve as free publicity for OU on
primetime national television, he noted.
"The only revenue we get is from the ticket sales," added the
associate AD. OU received $48,000 in ticket sales and also received $300,000 in
travel reimbursement for the game from the NCAA, Andrey said. The university's
$592,200 in bowl-related expenses minus its $348,000 in revenue and
reimbursement equals the $182,550 net loss.
An internal audit of OU's budget happened in 2006, added Andrey, at about the
same time that the athletics department hired consultant Lamar Daniel, a former
Title IX compliance investigator for the federal government.
"They brought to light that we need to revamp our funding model," he
said about the audit and the consultant.
The three-decade old Title IX mandates equal opportunities for women in their
entire college experience, irrespective of athletics in any specific sense.
But if the institution receives federal
aid, which many do, the numbers of men and women participating in sports must
roughly match each other in order to comply with the law. Some characterize this
as an undesirable quota, while others point out that the law has allowed women's
sports to flourish since the early 1970s.
The gender breakdown of varsity student-athletes at each college is also
supposed to correspond to the overall proportions of women and men in each
college's student body. In OU's case, women outnumbered men 8,670 to 7,976 among
the university's 16,646 full-time undergraduates when data were last compiled in
June 2006 by the U.S. Department of Education.
OU had 359 male participants in varsity sports, compared with 258 female
participants, according to the 2006 report, a difference of 101. There are
actually 91 more male student-athletes than female ones, but some of them play
more than one sport, according to the data.
Ball State, Miami University and the University of Toledo each have more female
roster spots available as a percentage of their overall female undergraduate
population than OU. Several MAC schools, however, are no more Title IX-complaint
than OU by this measure, or else are notably worse in this regard.
Title IX supporters have criticized the role that football and basketball, with
much higher per-athlete expenditures, play in the overall formula. Football
teams with lots of non-scholarship walk-ons - there are 107 total participants
on OU's team - also tend to skew the gender balance at Division I-A schools.
Critics routinely refer to the drive by mid-major conference athletics
departments to increase "self-generated revenue" from football and
men's basketball by building winning teams as the "arms race."
The OU football team, which finished 9-5 this year, had total operating expenses
of $1,082,469 during the 05-06 reporting period, according to the data.
The NCAA gives Division I-A schools who have more than 14 teams an automatic
$22,000 of funding for each team above that number, and OU will lose $88,000
annually by cutting four varsity sports to stem the deficit and better comply
with Title IX, said OU Student Senate member Matthew Bell at Monday's meeting.
A three-prong test has been formed by courts and legislative review committees
to determine Title IX compliance: 1) the intercollegiate-level participation
opportunities for male and female students at the institution have to be
"substantially proportionate" to their respective full-time
undergraduate enrollments; 2) the institution has to have a "history and
continuing practice of program expansion" for the underrepresented sex, or
3) the institution has to be "fully and effectively" accommodating of
the interests and abilities of the underrepresented sex.
Over the years, interpretation of the law has varied, with the participant
quotas mostly serving as the test.
A 2004 analysis by a Penn State-York political science senior instructor used
four criteria previously developed by the Chronicle of Higher Education to rank
Division I-A schools' Title IX compliance. The report named OU "the runaway
champion in the Mid-American Conference," and said OU was also the overall
national champion in Division I-A.
In 2002, then U.S. Education Secretary Rod Paige formed a commission to examine
Title IX's effect on men's Olympic sports following cuts at several Division I-A
colleges. The three-prong test emerged intact. Paige has said publicly, however,
that he disapproves of universities cutting men's sports teams in order to
better comply with Title IX, and advocates of the law have expressed similar
sentiment.
Consultant Lamar Daniel's report to the OU athletics department assessed the
team's gender-equality compliance as inadequate, which would have been correct
at the time using the proportionality test. OU also had the second-highest total
number of male roster spots for student-athletes in the MAC as of last July.
That could open up the university to NCAA sanctions or private, civil lawsuits.
Several universities have been involved in Title IX lawsuits over the years, and
compliance reviews are also scheduled by the NCAA.
In some cases, male students from jettisoned teams have countersued - mostly
unsuccessfully - under Title IX, claiming that they had been discriminated
against as males.
QUESTIONS HAVE BEEN RAISED over several other budget- related items for OU
athletics, such as a proposed indoor training facility, the fact that the
football team stays in hotel rooms the night before home games in Athens and the
amount of money the department spends on things ranging from graphics to
fireworks shows.
* Hocutt said Monday that he hoped an indoor training facility the department
would like to build for several of its teams to use would include a full,
100-yard football field.
The AD has said that most of the money for such an indoor facility - which can
easily cost more than $10 million - would likely come from private donations.
* The athletics department spent between $85,000 and $100,000 on inspirational
graphics inside the Peden Stadum fooball facilities, Hocutt told The Post, OU's
student newspaper, in October.
* Andrey confirmed that the football team
stays at the Burr Oak State Park lodge on the nights before home games during a
typical season. The move costs the department about $31,000 per year, he
estimated.
"There's some dedicated time for academic work out there - some game
focus," Andrey assessed. "It takes place in probably 90 to 92 percent
of all Division I-A schools." Eleven of 13 MAC schools do the home-game
hotel stays, said the associate AD.
Head football coach Frank Solich wanted the Burr Oak retreats, and they may help
the teams compete at a higher level, said Andrey. It's difficult to find
corporate partners for player accommodations in rural southeast Ohio, he
asserted, unlike some of OU's peer institutions.
* Lights at Peden Stadium, which the university uses in the fall for practices
and to show potential student-athlete recruits the facility, according to Andrey,
are not expensive to operate even though the lights have been seen burning for
hours in broad daylight on several occasions. "I have been told that the
cost to have those lights on is literally pennies on the dollar," said
Andrey.
* Andrey said a marketing, advertising and sponsorship deal with a
Winston-Salem, N.C., firm, ISP Sports, does not cost the university much, if
anything. A contract with ISP that OU recently re-upped through July 2011
indicates OU grants ISP "the exclusive right to market and sell all
advertising and sponsorship inventory related to OU Athletics," in return
for a guaranteed $1,775,000 in consideration over the life of the contract.
Sports Programs' Deficits
"From The Athens News"
Thursday, March 15th, 2007
During
the fiscal year ending last June, the only major Ohio University sports program
that operated in the black budget-wise was men's basketball, according to a
recently released state financial audit of OU.
The independent audit, conducted by Deloitte & Touche LLP, shows that in FY
2006, the men's basketball program took in revenues of over $1.52 million and
had expenses of under $1.06 million, to end the year $463,899 to the good
financially.
The men's football and women's basketball programs, by
contrast, ran deficits of more than $428,000 and $227,000 respectively, the
audit shows.
All other sports programs at OU combined racked up a deficit of more than $2.1
million, according to the audit, though non-program-specific sports (a separate
category) helped cover this shortfall, ending the year with more than $2 million
of revenues over their expenditures.
Overall, intercollegiate athletics programs at OU accounted for a loss of
$281,557, the audit shows.
The audit, which looked closely at various parts of OU's budget, acknowledges
that "in many respects, FY 2006 was a trying year for the university,"
because of widely publicized problems with computer security breaches and
student plagiarism.
However, the auditors add, "with many eyes on its response, the university
has taken ownership of those issues and is working diligently to address the IT
(information technology) issues and to make good come out of those 'teachable
moments' for our students."
One positive budgetary sign that shows up in the audit is an increase over the
previous year in OU's total net assets at fiscal year's end. This number - total
assets minus total liabilities - has increased from $462 million in FY 2004, to
more than $482 million in FY 2005, and to more than $506 million in FY 2006.
As the audit makes clear, however, this increase has been made possible, in the
face of falling state subsidy, partly by steadily increasing tuition rates.
OU increased tuition by 6 percent for undergraduates and 3 percent for graduate
students, and increased room rates by 4 percent in FY 2006. The previous year,
OU had increased both undergraduate and graduate student tuition by 9 percent,
and hiked both room-and-board rates by 3 percent.
From FY 2004 to 2005, OU's state money support fell by more than $2.76 million,
then fell by more than $2.25 million the next year.
However, "student receivables" - mainly tuition and fees - went up by
more than $3.16 million from FY 2005 to FY 2006, owing to the tuition increase.
OU continues to build and renovate campus facilities, and after seeing its debt
obligations in the form of outstanding bonds and notes drop between FY 2004 and
2005, from more than $175 million to about $167 million, that number went up in
FY 2006 to more than $192 million.
Projects completed during FY 2006 include renovation of the Biddle Hall
dormitory ($5.2 million), upgrade of the Lausche heating plant ($3.2 million),
extension of steam to the Ridges ($1.8 million), conversion of part of Scott
Quad from offices to student rooms ($1.3 million) and replacement of South Green
conduits ($1 million).
Cumulative costs of projects still underway during FY 2006 - ranging from the
new Baker University Center to the renovation of Alden Library's second floor -
represent a cost of about $82.4 million, the audit says.
From FY 2005 to 2006, the university shifted its mix of investments. (These
numbers do not include the sizable investments handled by the OU Foundation.)
OU has put more of its investment money in stocks and less in bonds. Compared to
FY 2005, when the university had about 2.8 percent of its portfolio in common
stock and 40.5 percent in equity mutual funds, those numbers went to 4.3 and
44.1 percent in FY 2006.
From having about 2.6 percent of its portfolio in corporate bonds and notes, and
about 43.3 percent in bond mutual funds in FY 2005, OU in FY 2006 lowered those
percentages to about 1.2 and 39.3 percent.
It also moved more heavily into mortgage-backed securities, upping its portfolio
percentage from about 1.9 percent to about 6.4 percent.
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DROPPED
TEAMS
2006
Women's Lacrosse Team
Swimming
and Diving
and
Track
and Field
|
