Defusing The Intercollegiate Athletics Arms Race

This past summer, the Chancellor's Committee on Intercollegiate Athletics released their final report analyzing the current woeful fiscal state of Cal's Athletic Department and recommending a number of steps that must be taken to get the department back on solid financial ground.  There were also recommendations for further, more drastic steps, of which some but not necessarily all need to be taken.

Over the next week or so, I'll be taking a look at the various recommendations made by the committee, as well as some tangental implications of the issues raised by the Athletic Department's financial crisis.  Part of the blame for this financial crisis must certainly fall at the feet of the national intercollegiate athletic landscape, a system which at times seems to positively abhor fiscal restraint.  When a school (Alabama) is willing to shell out $32 million dollars over 8 years to pay its head football coach (an average salary 34 times larger than that of the typical professor at Alabama), something in the system must we be broken.  When that coach then leads his team to a national title within 3 years, triggering massive alumni donations that help ensure none of the coach's salary comes from taxpayer money, we begin to understand why the system might be broken.

Today, we'll look at the potential for top-down changes to this culture that could help to bring down expenses across the country, with the Committee recommending that Chancellor Birgeneau use his position to take a leadership role in this movement.  However, in examining the proposals put forth, I remain skeptical of the prospects for real change, as there is too much focus on limiting allowable expenditures, and not nearly enough on alleviating the enormous pressure to throw money at big-time college football, pressure that drives the spiraling costs in the first place.

Overall, I thought the final report was a sober, even-handed response to the Chancellor's charge.  Its recommendations were generally keeping in line with values that have made the Berkeley campus great, including the value of having a broad-based and competitive intercollegiate athletic program.  If there was a criticism you could level at it, it was that the recommendations put forth were either not always as forceful in their necessity as they could have been, or were vague in their implementation details (partly due to honest disagreements amongst committee members as to which specific remedies might be most effective).  Personally, however, I felt this struck the right tone, as the committee sought not to lay down specific policy for the athletic department, but rather to lay down guiding principles by which the appropriate policies, to be determined by department officials intimate with the terrain, must ultimately adhere.

While I didn't find too much surprising in the committee's final report -- indeed, I found myself continually nodding to myself in agreement as I read it -- there were a number of interesting points brought up throughout its 15 pages (found here
, I recommend reading the whole thing yourself) that I thought worthy of further comment.  Here's one of them, the second of three structural factors the committee sees as causing the persistent and growing funding gap within Division I-A athletics:

The competitive spending race within the national system of intercollegiate athletics, which has driven up salaries, amenities standards, as well as team rosters.

Later in the report, among several "choices for further change" presented, the committee proposes that part of the solution could be some real leadership from Chancellor Birgeneau at the conference and national levels:

Chancellorial leadership in the Pac 10 and NCAA: For many years, everyone has decried the spending race in intercollegiate athletics, but no one has actually done anything about it.  Even though the arms race has been debilitating for many – indeed most – schools, efforts at cost control have largely failed.  The Council has come to two conclusions.  First, discipline in the spending race must be provided above the Athletic Director level, at the Chancellorial or presidential level, because the willingness to take a competitive risk by limiting expenditures must be defended by the head of the institution.  Second, this discipline will not emerge by simply suggesting or requesting cooperation from other divisional leaders – the logic of collective action means that the members of the group will always prefer to wait to see if someone else will take the risk.

Thus, the Council believes that Chancellor Birgeneau can and must be the first mover in an attempt to slow athletics spending.  He is exceptionally well-positioned to do so, first, because of the national leadership for which he is so well recognized; second, because of his membership on the Executive Committee of the Pac 10; and third, because he has already, through appointing this Council, taken significant steps to unite his local constituencies behind him

Unsurprisingly, many are skeptical of this plan's chances of success:

UC Berkeley will not be able to cut spending without help from other schools, said Bob O'Donnell, an alumnus who served on the committee.

"If there's an arms race on, you don't want to just unilaterally disarm," he said.

Berkeley chancellors have tried unsuccessfully in the past to advocate for lower-cost athletics programs, warned an expert on college sports. Murray Sperber, a visiting professor of education at UC Berkeley, recalled that a former chancellor was "laughed off the stage" when he spoke at a national college-sports convention in the 1980s.

"I don't think people at other schools want to be lectured by Berkeley," said Sperber, a retired Indiana University professor and author of the book "Beer and Circus: How Big-Time College Sports is Crippling Undergraduate Education." Birgeneau "should speak out as much as possible, but getting results would certainly shock me."

However, let's postulate for a second that Chancellor Birgeneau could be successful in amassing broad agreement amongst I-A programs across the country to voluntarily reduce the rate of "arms race" spending.  How would he do it?  What spending, specifically, would be reduced?  This, to me, is the crux of the problem.  Getting university officials across the country to agree the spending is spiraling out of control is not a difficult task; figuring out how to solve that problem is where real change will lie.

With that in mind, the committee does recommend several areas where downward pressure may be applied:

The release of the Restoring the Balance report may provide an ideal platform for this Chancellorial initiative, putting Berkeley at the leading edge of a reform movement aimed at ending the spending race and restoring the centrality of academic values to IA.  In keeping with the Knight Commission report, we can imagine a number of ways that Berkeley could take leadership in its reform agenda, resulting in significant savings: restricting the size of travelling squads and supporting entourages; reducing the number of athletic scholarships (which would also increase walk-on student-athlete participation); moderation in the escalation of coaching salaries, particularly in revenue sports; and reductions in the number of non-coaching personnel. We encourage exploration of the Commission’s recommendations.  We further note that the Commission’s recommendation that media revenues be distributed in part in relation to academic success would likely be very favorable to Berkeley.

Going through these proposals point-by-point:

1) Restricting the size of traveling squads and supporting entourages

My impression (without looking through the arcane tome that is the NCAA rule book) is that traveling squads are already limited (I know there's a limit for traveling football teams).  Still, limiting support personnel would certainly bring savings, and while it might not be huge, it would certainly be a start, and should be worth doing.

The one reservation I have is that the NCAA should be wary of putting traveling teams at further competitive disadvantages.  If the home team has 105 dressed players and 25 coaches/support staff, while the visitor brings just half those numbers, how is that fair?  Thus, I believe the successful implementation of such a proposal involves coupling it with the next two proposals.

2) Reducing the number of athletic scholarships (which would also increase walk-on student-athlete participation)

It's a nice, cost-controlling idea, and increasing walk-on participation is one of those ideas that just seems to tug at our collective Rudy heartstrings.  Yet I feel it's important to note that scholarship costs are mounting annually not because of any arms race (scholarship limits are already firmly in place) but because educational costs themselves (on which the cost of scholarships are based) are themselves spiraling out of control.

Moreover, I feel strongly that when you're looking to trim the fat in intercollegiate athletics budgets, cutting out educational spending (which is what scholarships are, whether they are awarded on an academic or athletic basis) should be one of the last things to go.  To the extent that such scholarships are fully endowed, I see no fiscal benefit to cutting them.

3) Reductions in the number of non-coaching personnel

This here is something I can get behind.  An NCAA-wide reduction in the number of support staff allowed could bring about some real cost reductions as schools no longer feel compelled to hire any number of ancillary staff to keep up with the Joneses.  Teams, of course, do need plenty of non-coaching staff to do any number of tasks, from laundry to travel support.  However, some schools have taken this to extremes, with some going as far as beefing up their coaching staffs with personnel who are not technically employed as coaches (due to existing NCAA limits on this matter).

4) Moderation in the escalation of coaching salaries, particularly in revenue sports

Anything that could be done to bring this about would be a win in my book.  Not that successful football coaches don't work hard or aren't worth plenty of money, but seven-figure salaries that far outstrip what University Presidents take home seem somewhat at odds with the academics-oriented mission of NCAA member institutions.  Trouble is, what can possibly be done about this?  An NCAA-wide salary cap?  A rule that no coach can be the highest-paid employee at their university?  You already see how professional sports teams can circumvent their leagues' respective salary caps, whether it is through low salaries coupled with huge signing bonuses, or Ilya Kovalchuck's recent contract with the New Jersey Devils, a 14-year monster that warps the "average annual salary" calculation of a contract by heavily front-loading the contract, then extending it a ridiculous number of years (since rejected by the NHL reworked).  It may sound cynical, but who really thinks that if a school finds that it can win more games and bring in more revenue by spending more money on a football coach, it won't find a way to compensate that coach at market rates, salary caps be damned?

And let's not limit ourselves to coaching salaries here.  Facilities, fringe benefits, flashy marketing campaigns, whatever -- the college football arms race encompasses any area where schools think they might be able to win more games by spending more money.  It's not being driven by university Presidents collectively thinking the most glorious thing they can bring their institution of higher learning is a crystal trophy of a football; they may all support the presence of their sports teams, and actively root for their success, but money keeps pouring into collegiate athletic programs because, at schools at the pinnacle of success, even more money comes spilling out.

A recent primer on intercollegiate athletics financing put out by the Knight Commission on Intercollegiate Athletics broke down how big-time college athletics are financed in a number of ways.  Most interestingly, they split Division I-A into 10 deciles, each of approximately 12 schools, based on total athletics operating expenses.  As the graph below shows, schools that are able to spend their way to victory are generally able to turn a profit, while those at the bottom of the pile find themselves in a pile of debt.  This is why the above proposals -- all attempts to limit spending in specific areas -- will necessarily have only moderate effects:  if you can spend more money than anyone else, and spend it well enough, your athletic program can turn from a fiscal albatross into a sound financial investment.

Fig_9a_medium

So how does one really stop an arms race?  Either win the race (spend everyone else into oblivion) or call the whole thing off (collectively agree to some fiscal restraint).  The former option would be an unmitigated disaster, leaving only the latter as a viable way out.  This would require NCAA-wide agreement on spending limitations, as well as some effective measure of enforcement.  And, with the big money rolling into college football via various media deals (the annual amount now earned by the Big 10/11/12 and the SEC can begin to be classified under the heading "crazy money"), it's hard to imagine everyone toeing the line when the stakes are so high.  The only thing that seems remotely likely to encourage downward spending pressure would be some major NCAA-wide revenue sharing; the sort where throwing $4M/year at a head coach just isn't financially justifiable because the economics of revenue sharing mean a school couldn't hope to see that kind of return on their investment.

However, I do not wish to be a cynical man.  I would love to hear any and all ideas on this matter.  Anything at all, really.  Because if there's one thing I know won't work, it's Chancellor Birgeneau getting up in front of a nationwide audience of major college administrators and extolling the virtues of funding phones for English departments instead of phones for the football coaches to call up 17-year-old defensive linemen who happen to be able to run 40 yards in under 4.7 seconds.

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