Minnesota's Golden Gophers Face a Financial Hole

By WELCH SUGGS

The athletics programs at the University of Minnesota-Twin Cities don't exactly havea sterling history.

About once a decade, the Golden Gophers have gotten into trouble with the National Collegiate Athletic Association over some kind of rules violation. The football team's golden years are far behind it, and the men's basketball team is still suffering from the latest incident, in which secretaries and others did course work for players under the indirect supervision of the coach, Clem Haskins.

Now, Minnesota's sports programs are becoming a case study for the current round of problems confronting college sports. Facing a $55-million deficit over the next five years, Minnesota is staring at a financial crisis at least as bad as any in the NCAA.

In December, the university released a report explaining that its general funds have been making up large differences between revenues and expenses in the athletics departments. In 2001, more than $10.1-million in university and state money went to support sports, more than at any other institution in the Big Ten Conference.

The report lays out an unusually detailed and stark description of the bleak budget picture facing a major athletics program like Minnesota's. It is also unusually candid in identifying the culprit: the university's hugely expensive football program.

But the prescriptions offered for fixing the problem include merging the separate men's and women's athletics departments, which has officials and supporters of the women's program -- one of just four remaining in Division I-A -- screaming bloody murder.

In a year in which state legislators are confronting a $2-billion deficit, some Minnesotans are asking whether the Gophers are worth all that money.

"There's no question that the institution is going to put money into both athletics departments," said David R. Metzen, a member of the university's Board of Regents, which is looking into the financial issues. "The question is, how much? I'd venture to say, if you look around the country, how many colleges and universities are making money or breaking even [on sports]? Less than 20?"

Middle of the Pack

Tonya Moten Brown, the university vice president in charge of athletics, commissioned the report (available online at http://www.umn.edu/urelate/athleticfriday.pdf -- requires Adobe AcrobatReader, available free) after noticing the size of the gap between the athletics departments' revenues and expenses.

At present, according to the report, Minnesota is in the middle of the Big Ten pack for spending on sports. With 22 sports and 635 athletes, the Golden Gophers' total budget for the 2000 fiscal year was $40.9-million, about $700,000 more than the conference's average. Athletics costs at Minnesota rose 141 percent between 1990 and 2000, roughly the same rate as the rest of the Big Ten but far higher than other departments within the university.

More interesting is what is happening on the revenue side of the equation. The University of Minnesota and the state are propping up the athletics departments far more than other Big Ten institutions do their programs. In 2000, $8.8-million went to support sports, roughly 22 percent of the departments' combined budget. In the 11-college Big Ten, just Northwestern University, the league's only private institution, gets a higher percentage of its budget from university allocations.

Flagging Football

Ms. Brown is very clear about the reason why Minnesota is falling behind the rest of the Big Ten in the revenue race. "Football's the biggest factor," she says.

Despite some noticeable successes on the field, the Gopher gridiron squad has the lowest profit margin in the conference, making only $2.5-million more in 2000 than it spent. Pennsylvania State University at University Park, by comparison, cleared more than $17-million from the Nittany Lions' football team.

"One point that a lot of people haven't picked up is that the increased spending on football has tracked fairly consistently with the increased institutional support over the past four years," Ms. Brown said. "I don't want to make the point that we're subsidizing football, but when you have needs that keep escalating, how do you allocate scarce resources?"

In 1997, the university began a major effort to make the team more competitive, investing roughly $17-million in new facilities, higher coaching salaries, and other areas in the program over four years. Slightly more than a third of that money came from the university; private donors kicked in the rest.

Minnesota has succeeded on the field: Under the coaching of Glen Mason, the team went to bowl games in 1999 and 2000 and has beaten powers like the University of Wisconsin at Madison, Ohio State University, and Michigan State University in the past two years. However, that didn't seem to impress fans in Minneapolis and St. Paul.

Fibbed Attendance

Attendance figures reported to the NCAA are usually wildly exaggerated, and the authors of the Minnesota report are scrupulously honest about how the university overstates its own. In 2000, the Golden Gophers' reported attendance was 47,352, well under the Big Ten average of 66,500.

Even those numbers, however, included tickets given away, and counted everyone else in the stadium, ranging from nacho sellers to sportswriters to band members.

In reality, 42,155 people bought tickets to Minnesota games on average, and only 36,050 per game actually showed up. In the cavernous Hubert H. Humphrey Metrodome in downtown Minneapolis, that's barely half of capacity.

"Even a reinvigorated football program has yet to draw the audiences necessary to allow the football program to generate the revenues required to adequately support athletics," write the report's authors.

The Minnesota Vikings have lobbied city, state, and university officials for money for a new stadium, possibly one built on Minnesota's campus. In the report, the authors refuse to discuss the issue of a new stadium, but they make it clear that playing off-campus, in a facility that the Vikings and baseball's Minnesota Twins are trying to leave, has a major effect on the Gophers' financial situation. James B. Pollard, an associate athletics director at Wisconsin, agrees.

"They're the only institution in the Big Ten that plays football in a nonuniversity facility," says Mr. Pollard, who is also president of Collegiate Financial Services Inc., a consulting firm that compiles financial data on college sports. Not having its own facility is probably a major factor in the athletics departments' financial difficulties, he says.

Men's basketball and hockey teams at Minnesota are both far better at producing revenue, generating profits of $6.3-million and $4-million respectively -- the best of any Big Ten university.

The authors of the report say they believe revenue is maximized from these two sports, but they voice frustration that the football team hasn't been any more successful on the balance sheets.

On the expense side of the equation, Minnesota devotes more of its budget to paying down its debt than any other Big Ten institution does.

While it hasn't built anything as impressive as the new buildings and additions at Ohio State or Penn State, the university invested $49-million in new facilities during the 1990s and still had $38-million left over in capital debt from projects in the 1980s. Now, the departments shell out $4.1-million annually, nearly 11 percent of their expense budget, on debt service.

Fairness Toward Women

The section in the report that has generated the most attention, though, has nothing to do with football and very little to do with debt. It is the status of the women's athletics department.

The report devotes a paragraph and two lengthy footnotes to heading off critics who say that financing women's athletics should be the university's responsibility, not that of men's revenue sports. Major universities throughout the country have an obligation to field outstanding women's teams, and most of them can finance those programs without resorting to general funds, the authors write. Minnesota kicked in roughly $7-million in university funds and an annual earmark from the state last year for women's athletics.

Only three other colleges in Division I-A -- Brigham Young University and the Universities of Arkansas at Fayetteville and Tennessee at Knoxville -- have truly separate men's and women's athletics departments, each with its own administrators, coaches, marketing and media specialists, and other employees.

The authors don't quantify how much would be saved by merging departments, but say that the duplication is costly and redundant.

The lack of coordinated planning between the two departments is "contributing to the financial exigency facing intercollegiate athletics," but the women's athletics director, Chris Voelz, and her supporters are adamant that the current setup is the fairest way to treat women.

At a public hearing last week, athletes, staff members from other departments on campus, and legislators called on the university to keep the departments separate. Donors to the women's program have threatened to withhold money if the merger goes through.

But Ms. Brown is adamant that merging the departments is on the table. While it might not save Minnesota a great deal in the short term, the indirect benefits may outweigh the ill feelings from supporters of the women's department, she says.

That doesn't please Deborah R. Olson, who has helped finance facilities for women's hockey, soccer, and tennis over the past decade.

"I spoke at the hearing, and one of the things I said was that I didn't believe this was the only model that worked, but I didn't want them to mess with the model because it's worked so well here," she says. "I believe what the university's doing within the women's department is wonderful, but I don't believe the men's department has had good leadership for the 10 years or so that I've been involved."

Nervous About Scandals

The scandals in men's athletics make Ms. Olson nervous about what would happen if the two departments were merged.

Furthermore, she says, administrators who have major responsibilities for the men's revenue programs aren't going to put the same effort into promoting women's nonrevenue sports.

In the background of the debate is an NCAA investigation into the women's basketball program. Its former coach, Cheryl Littlejohn, is accused of paying players and giving them other benefits. Minnesota fired her last summer, but because the university is still on probation from the debacle with the men's program, the NCAA could come down hard on the women's team.

National Implications

For the past couple of years, the NCAA's president, Cedric W. Dempsey, has called for colleges to end the "arms race" in college sports. A small number of universities can generate tens of millions of dollars from their football, men's basketball, and occasionally men's hockey teams.

A tiny number -- most observers think fewer than 20 -- make enough money from athletics to provide all of their teams with the best coaches, facilities, uniforms, and travel opportunities money can buy. The other 300 or so teams in Division I try their best to keep up, but often must dip into institutional coffers to try to keep up with the top teams.

Minnesota's situation is interesting because the Gophers compete for wins and recruits with some of the richest members of the elite, such as Michigan and Ohio State. When Ohio State spends $150-million on stadium upgrades, and has a $75-million annual budget for athletics, it puts a lot of pressure on an institution like Minnesota to keep up. The point isn't lost on William E. (Brit) Kirwan, Ohio State's president, who is on an NCAA committee to study the financial arms race.

"I think we do bear some responsibility," he said last month at the association's convention. However, until a wider study of the financial situation on his campus and others is completed, Mr. Kirwan said nobody really knows what could be done to curb spending on sports without violating antitrust laws.

The Minnesota report doesn't make any suggestions, except for hinting strongly about a merger between the two departments. Nor does it suggest cutting sports. Either of those solutions would net the university only a few hundred thousand dollars a year -- a rounding error in comparison with the $55-million in general funds the university expects to contribute to sports programs over the next five years.

But "20 nickels make a buck," Ms. Brown says. "Five hundred thousand dollars doesn't solve a $30-million problem, but if you look at the $3-million [additional] deficit we're projecting for the next fiscal year, that helps a lot."

According to Mr. Metzen, who played hockey for the Gophers himself during his college days, Minnesota and other Big Ten institutions need to think creatively about their financial situations. Perhaps the conference should split into divisions to cut down travel costs, or find other ways to avoid major expenses. That wouldn't help just Minnesota, he says.

"Maybe it's just that misery loves company, but I really don't think we're alone on this," Mr. Metzen says.

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Copyright 2002 by The Chronicle of Higher Education