Economy Taking Big Hits at Major College Programs
International Herald Tribune - February 11, 2009
The Associated Press
ATLANTA: State U. is seeing red, as the sagging economy begins to pull down athletic departments, including some of the largest and most prestigious programs in the nation.
Among the latest developments:
Radakovich says his and other athletic departments must make some of the same painful decisions as businesses and other parts of the university, with endowments and state aid dropping.
"It's going to be different," Radakovich said. "We must be able to understand when you look around the region and you see the number of layoffs and cutbacks that corporations are having, what would make one think that we would be immune? We're not."
Radakovich said the economy was the primary topic at last month's meeting of the Atlantic Coast Conference's athletic directors in Fort Lauderdale, Fla.
He and other athletic directors have launched studies "looking at every part of our business, much like every other business owner is, to see if what we're doing really helps bring dollars to the bottom line of our operation," Radakovich said.
Declining ticket sales, like those at Florida State, are not the only problem. Rising tuition costs which lead to more expensive scholarships and a decline in corporate sponsorships and contributions from boosters also are making it more difficult to balance budgets.
"It's not that people don't want to support us, they're having to make real-life decisions," Athletic director Randy Spetman said. "It hasn't been drastic yet, but where we normally see a 3- or 4-percent increase each year, we're flat or under."
Radakovich said Georgia Tech completed a few deals just in time. The university recently announced a new 10-year agreement with multimedia provider International Sports Properties. The deal is worth at least $48.95 million, and the value could grow through a revenue-sharing plan.
Georgia Tech also recently completed a 13-year deal with Coca-Cola worth almost $6 million and a 10-year, $22.6 million deal with Russell Athletic.
Radakovich said it would be more difficult to begin those negotiations now. "From that standpoint we were very fortunate in moving forward at the times that we did," he said.
Rising tuition costs, loss of corporate sponsorships and shrinking budgets for ticket-buying fans are legitimate concerns for athletic directors. But John L. Fizel, professor of economics at Penn State, said ADs have to balance cut-backs with fielding a winning team.
"The studies do show that consumers of college games are relatively less sensitive to price and income and more sensitive to wins and losses," he said. "I would expect a lower revenue, just from gates receipts, but not a huge impact."
The competition for the biggest stadium, newest practice facility and most lavish office buildings are signs of what Fizel calls "an arms race" in college football.
"If indeed the economy puts some brakes on that, one might argue from the consumers' standpoint, or even from the relative well-being of the university, that's exactly what you want, some brakes on that arms race," he said.
The Associated Press reported last month Stanford is projecting a $5 million loss in athletics revenue over the next three years. Cuts in staff and sports teams are being considered.
Ohio State athletic director Gene Smith said recently the Buckeyes' athletic department will lose money for the fiscal year in part due to a decrease of $300,000 to $500,000 in revenue for men's basketball.
A dramatic economic hit was felt last month when Division II Western Washington, which began playing football in 1903, announced it is dropping the sport. The school said football was eliminated to protect 15 other sports from budget cuts.
"We are facing a dire financial crisis now and the university wasn't prepared to continue to bail us out and absorb our budget cuts and our foundation issues," Western Washington athletic director Lynda Goodrich said.