PRESS RELEASE – APRIL 7, 2020
For immediate release
For more information:
Dr. B. David Ridpath, Ed.D.
President
The Drake Group
www.TheDrakeGroup.org
740-677-2642
Coronavirus Crisis and Financial Issues in College Athletics: What Do We Do Now??
NEW HAVEN, CT. –
There is no doubt that the Coronavirus is affecting everything, including the sports world. The cancellation of events like March Madness and postponement of The Masters underscores the seriousness of the pandemic. Without NCAA Final Four Basketball revenue[1] and other sources of income, it is clear that the intercollegiate athletics industry faces difficult financial choices now to deal with 2019-20 revenue shortfalls, and will confront a continuing crisis until a Covid-19 vaccine and adequate testing is in place to permit a return to large group gatherings and team travel.
- David Ridpath, President of The Drake Group, stated, “This means that every college athletic director must have a plan in place that anticipates reduced or cancelled 2020-21 fall and winter sports seasons, reduced institutional and student fee athletic program subsidies stemming from declining enrollment (over 98% of all athletic programs require significant subsidies) and the imposition of austerity measures commensurate with those forecast for academic units. Even if the pandemic didn’t occur, higher education would be facing continuing declines in enrollment due to lower birth rates as opposed to 20 years ago.[2] Tuition dollars and mandatory student athletic fees are tied to enrollment and the future is not bright in that area. Couple this reality with the understandable decision by the NCAA to allow member institutions to determine if they have the financial ability to grant scholarships in 2020-01 for those spring sports athletes who had their sport cancelled this year due to the virus and [3] the country’s broader economic collapse, we must conclude that the financial future for intercollegiate athletics becomes more precarious than it has been in years. It is far better to show foresight and plan for an economic downturn or financial crisis and be wrong than create false hope and be caught flat-footed.”
The Drake Group strongly urges institutions to resist the easy and shortsighted solution of dropping non-revenue sports programs under the guise of fiscal responsibility during this crisis when there are many other budget areas that can be cut or changed. A knee jerk reaction such as Old Dominion University’s April 2, 2020 decision to drop its successful wrestling team carries a high risk for a backlash. Even without an imminent financial crisis, terminating a sport program typically ignites (1) the wrath of hundreds of former players in that sport who are now alumni donors, (2) a local media investigation that reveals coach salaries that appear excessive, lavish facility projects, team trips to the Caribbean or wasteful expenditures that they suggest could have avoided such a financial decision and (3) months of debate about institutional leadership that only muddies the institutional brand. Better to reduce the funding of a sports program than to announce its demise before taking other needed financial steps.
We urge athletic administrators to create a list of the financially responsible actions that will impress prospective donors, parents and the institutional community. In turn, it will be more likely to result in their future financial support. All institutions should consider a “students first” approach such as announcing a commitment to retain all sports, no reductions in scholarship commitments and no reductions in staff/operating costs for direct college athlete services such as athletic training, insurance, medical expenses, academic support, etc.
In addition to scholarships, the other big items in athletic department expenditures are salaries and wages, travel and capital projects. The last one is easy — freeze all plans for any new athletics-only facilities or facility improvements. The largest savings will come from salary reductions which will require a more aggressive approach. TDG commends actions by Iowa State University and other institutions where highly paid coaches and administrators are giving back portions of their salary during times of crisis.[3] This is the right thing to do. However, additional salary actions should be pursued:
- An immediate freeze on all salaries in the athletic department
- Prohibit bonuses for the next year and, if required by contract, ask the employee to voluntarily forego receipt and permission to announce this action publicly
- Institute temporary salary reductions based on current salary levels — specifying higher percent reductions for the highest salary levels graduated down to 0% for lowest paid employees. Such actions can save entire teams and could even pay for the additional spring 2020-21 scholarships.
- Offer financial incentives for older employees to take early retirement
- Carefully evaluate numbers of assistant coaches and assistant athletics directors and possible moves to part-time rather than full-time employment
- Carefully evaluate the personnel costs for film analysis, social media graphics, and live streaming to determine whether whether they are needed if sports are not operating or can be outsourced as a less expensive alternative
Also, consider the public’s respectful response if more head coaches contribute their salaries to fund athlete scholarships or NCAA President Mark Emmert donated his salary to the NCAA Student Assistance Fund. While there are CEOs of major corporations in the seven-figure salary range foregoing their entire salaries, the athletic community should hold Emmert to a much higher ethical calling. We need leaders right now to make a strong stand consistent with the NCAA mission of supporting the personal investment and sacrifice of so many college athletes, Emmert, who has at least announced a personal 20% pay cut and 10% salary reductions for other staff, should do more and forego his personal financial interests during this crisis and donate his salary to the NCAA Student Assistance Fund which can be used to fund scholarships in 2020-21.
Now is also the time to create significant savings in team operating and travel costs. Starting with a small 5-10% percent across the board cuts in operating budgets (no exceptions). This may be the time to consider placing an equal percent of male and female athletes (to comply with gender equity laws) into two or three financial support tiers (high priority, medium priority, low priority sports) in order to better control operating costs, recruiting and travel restrictions.
Drake President Ridpath concluded, ” Some of these suggestions are very tough, such as personnel reductions, but many universities are going through exactly these processes in their academic departments. Athletic programs must reject any stance that maintains they are too important to suffer the sacrifices that every other aspect of higher education is about to endure. Athletic departments can reframe financially while preserving sports opportunities for all athletes. We must also continue investing in fundraising – especially relationship-building with major donor prospects who would reward financial responsibility. Currently there are few constraints on athletics expenditures even at the lower levels of Division I. We can control providing multi-million dollar coaches salaries and contract buy-outs. We can control the building of lavish, athletes-only facilities and excessive recruiting expenses. We simply just have not done it. The old saying, ‘never waste a good crisis’ applies to college athletic finances more than ever before. This is a time for all college sports programs to recalibrate financially and reasses their place in the college athletics marketplace.”
_________________
Media and other queries may be directed to Drake expert B. David Ridpath Ed.D.
[email protected], 740-677-2642
