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Rutgers Football Fails Profit Test as Students Pay $1,000, other schools lose money

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Dead Man

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Source: http://www.bloomberg.com/news/2012-...-fails-profit-test-as-students-pay-1-000.html

Like most of Rutgers University’s almost 30,000 undergraduates, Matt Cordeiro has never put on shoulder pads and played football on a Saturday before a sea of scarlet-clad fans.

Yet Rutgers athletic teams cost him almost $1,000 this year, the most among schools competing in the top category of college football. The total includes mandatory student fees and university funding of the money-losing sports program, both of which rose more than 40 percent in five years. That’s enough to buy meals for more than a month, or books for a semester, or student health insurance for almost a year.

“They are in a tight spot, but I feel like they could be doing more,” said Cordeiro, a 22-year-old senior from North Arlington, New Jersey, who was this year’s president of the Rutgers Student Assembly. While he isn’t angry about the cost of athletics, he says, he wonders whether money from students and the university really fund nonrevenue sports as intended.

Rutgers funneled $28.5 million from the university budget and student fees into sports, the most among 54 U.S. public universities in the biggest football conferences, based on data compiled by Bloomberg for the fiscal year ended last June. It was at least the second straight year at the top of the list for the state university of New Jersey, despite cost-cutting after lawmakers and faculty protested that academics were losing out.

“Rutgers puts too much money into athletics at the cost of basically every other department,” said Stephen Sweeney, the Democratic president of the New Jersey Senate, in an e-mail. He applauded efforts by Athletic Director Tim Pernetti to increase revenue. At the same time, he said, “the faculty, student body and the families of students who are supporting them through school simply pay too much.”
Faculty Council’s Demands

Pernetti reduced spending by $4 million, or 6.3 percent, in fiscal 2011. Bloomberg filed open-records requests and obtained financial reports on athletics from taxpayer-supported universities in the six largest football conferences.

The Rutgers belt-tightening wasn’t enough to make up for a drop in revenue from a losing football season. The school’s faculty council voted March 30 to demand $5 million of cuts in university funding of athletics by fiscal 2016 and a referendum on sports fees required of students. The group called college athletics a financial “arms race.”

The vote was “unusual and commendable” in demanding transparency, reduced funding and a student referendum, said John Nichols, co-chairman of the Coalition on Intercollegiate Athletics, who is a retired journalism professor at Pennsylvania State University. The organization, representing faculty senates of 59 universities including Rutgers, advocates financing, safety and governance changes in college football.
Academics Versus Athletics

College athletic directors like Pernetti are at the center of a struggle between sports and academics at state-sponsored universities. Strapped legislatures have slashed taxpayer funding, fueling record tuition increases. U.S. student-loan debt reached $1 trillion this year.

At 48 of the colleges with the biggest football programs, sports cost more than they made in fiscal 2011, according to financial reports filed with the National Collegiate Athletic Association. Rutgers, whose main campus is in New Brunswick, was one of 33 money-losers that increased university financial support from the previous year.

“Rutgers’ investment in athletics, which continues to be less than 1 percent of the overall university budget, returns dividends through increased revenue, positive branding, exposure and visibility for our university and the State of New Jersey,” said McCormick, who is stepping down in June to resume teaching. “A revenue-generating athletics program with a commitment to stabilize and reduce university support clearly benefits the entire university.”

Robert Barchi, named to succeed McCormick, won’t assume the presidency until Sept. 1 and “is not available to speak at this time” on Rutgers matters, said E.J. Miranda, a university spokesman. Barchi, a neurologist, has been president of Thomas Jefferson University in Philadelphia since 2004.

After three years as athletic director, the 41-year-old Pernetti hasn’t succeeded in generating enough income to reduce funding from the university. Almost all American college sports programs rely on money from football tickets, licensing and television to help pay for their nonrevenue-producing teams.
Football Money Machine

Few sports departments fully succeed, based on the data compiled by Bloomberg. The financial reports were for public universities in the six main conferences that compete in football’s Bowl Championship Series: Atlantic Coast, Big East (including Rutgers), Big 12, Big 10, Pac-12 and Southeastern.

Among the 54 public institutions in those conferences, six reported no financial support for athletics from the university or student fees. They were led by powerhouses in football, the highest-revenue college sport. In fiscal 2011, the University of Texas at Austin had the richest athletic budget, at $150.3 million, and Ohio State University in Columbus was second, with $131.8 million.

By contrast, Pernetti’s operating budget at Rutgers was $60.2 million, below the average of $76.9 million for the 54 schools. Football accounted for 32 percent of the total, and the $28.5 million in financial support from the university and student athletic fees made up 47 percent.

Fiscal 2011 included the first losing football season in six years. Ticket sales for all sports, led by football, plunged by $3.1 million; contributions fell $1.5 million; and income from royalties and licensing declined $477,558. The lost revenue more than offset the spending reductions Pernetti was making.
Revenue Shortfall

Pernetti squeezed athletic administration salaries 12 percent by negotiating lower pay for new employees and shifting responsibilities of people who left or retired to remaining workers. He reduced travel costs 21 percent. And he lowered fundraising, marketing and promotion expenses 24 percent by using more e-mail.

Pernetti still needed $9 million from student athletics fees and $19.4 million from the Rutgers general budget, according to the school’s report. The total worked out to $969 a student, more than three times the average among the 54 universities.

Students paid $319 in athletic fees in the 2010-2011 school year. That was part of the $27,677 that attending Rutgers cost New Jersey residents last year, including tuition, fees, books, supplies, room, board and other items, according to the school. The expense of attending has jumped as state appropriations fell from covering two-thirds of the Rutgers budget in 1990 to one- third this year.
Student Fees Rise

The $19.4 million that Rutgers allocated to athletics from its general budget would have been enough to hire about 256 assistant professors or 132 full professors, based on salary figures provided by Rutgers.

In the current fiscal year, ending June 30, the faculty persuaded the university’s board to reduce general-fund support by $1 million, or 5.1 percent. Sports fees paid by students nonetheless rose 3 percent to $9.3 million.

In return for their athletic fee of $328.50 this year, Rutgers students can sign up for free tickets to football and other games, which are distributed on a first-come basis.

Pernetti argues that student fees shouldn’t be counted as part of the university’s support for athletics because they offset the cost of some students attending athletic events.
No Student Vote

The university’s Board of Governors sets student sports fees. Kristen Clarke was the nonvoting student representative to the board last year and served on the student fees advisory committee, which can make nonbinding recommendations.

“We think it’s odd that students don’t get a vote,” Clarke said. The fee also supports nonrevenue Olympic sports such as track and swimming, she said.

“Ninety-nine percent of students don’t know” that they pay some of the highest college athletic fees, Clarke said.

Cordeiro, the president of the student assembly, who is majoring in planning and public policy, says students think athletic fees are too high, without transparency on where the money is spent.

“We love our student-athletes, but we also notice how other athletes don’t get treated as well as the football players,” Cordeiro said.
Academic Focus Blurred

He and 35 other students were arrested and charged with blocking the entrance to the student lender Sallie Mae in Washington during a March 26 protest by an association of college leaders against rising student debt, according to the Rutgers campus newspaper, the Daily Targum. Washington police declined to confirm the arrest. Bloomberg filed a request under the Freedom of Information Act, to which police haven’t responded. Cordeiro didn’t reply to phone calls and e-mails.

The academic focus of Rutgers is being blurred, said Spencer Klein, 20, a third-year philosophy major from Livingston, New Jersey. He is a member of the University Senate, a voting body including students, faculty and staff from New Brunswick as well as from Rutgers campuses in Newark and Camden.

“A winning football season is great,” Klein said. “But we developed one of the first vaccines for tuberculosis here. We’re going to walk farther with a cure for autism, a cure for cancer, not only in terms of its benefits for the world at large, but improving the Rutgers name.”

The university, chartered in 1766 as Queen’s College, has a rich academic and athletic history. It calls itself “the birthplace of college football” after winning the sport’s first game in 1869 against the school now known as Princeton University. Graduates include the economist Milton Friedman and the actor Paul Robeson.
Not Enough Faculty

In the U.S. News and World Report ranking of U.S. colleges, Rutgers was No. 68 this year, down from 57 in 2003. According to the Shanghai Jiao Tong University worldwide academic rankings, Rutgers was 59th in 2011, compared with 38th in 2003.

Spending on sports is wasteful because it detracts from the academic mission, says Mark Killingsworth, a professor of economics at Rutgers since 1978. He backed the faculty resolution to slash athletic funding.

“We don’t have enough money to hire faculty to teach,” said Killingsworth, a Rhodes Scholar. “Mr. and Mrs. New Jersey think their kids are getting taught by real professors. At least in economics, two-thirds of the time, they’re not,” as graduate students, lecturers and part-time professors lead classes.
Lost-Coach Windfall

Pernetti has an incentive for shrinking student and university funding: a potential $10,000 bonus on his $410,000 annual salary. He has never earned it. The athletic director can collect as much as $20,000 in bonuses related to winning football and basketball seasons. His department got a financial boost this year when the football team went 9-4, including a victory in the New Era Pinstripe Bowl at Yankee Stadium, and revenue rebounded.

“The hardest part in football was trying to establish a winning culture,” Pernetti said in an interview. “That culture has been established with six bowl games in the past seven years.”

The departure of football Coach Greg Schiano to the National Football League’s Tampa Bay Buccaneers will help balance the budget. Pernetti inherited a contract paying Schiano more than $2 million a year before bonuses. To fill the vacancy, the athletic director promoted Kyle Flood from assistant to head football coach, paying him $765,000 annually plus bonuses.
Hot Dogs, Pizza

Pernetti may save $500,000 to $650,000 a year by negotiating a comprehensive apparel and equipment deal for all 24 of the school’s teams. Nike Inc. (NKE) had contracts that expired this year which paid fees to the football and the men’s and women’s basketball coaches for the right to outfit their teams. It was a longstanding practice around the country. As coaches’ contracts expire and new coaches are hired, schools like Rutgers are claiming the funds for the athletic department.

Rutgers can make more money selling hot dogs, pizza and soft drinks to football and men’s and women’s basketball fans, Pernetti says. He put the food concessions at the football and basketball venues up for bid and expects an increase of at least $100,000 in revenue from $1.4 million for concessions and parking this year, he said.
New TV Contract

Those changes match practices that financially successful athletic departments instituted years ago. It has taken time for Pernetti to get out of coaches’ contracts and other business arrangements he inherited, while moving to increase revenue from advertising and sponsorships.

The biggest potential increase in revenue may come late this year when the Big East Conference negotiates a new television deal. Under the expiring accord, Rutgers collected about $6.5 million from the conference’s television and bowl distribution funds this fiscal year. A new agreement will at least double the school’s income, Pernetti says.

While Pernetti declines to make budget projections, the savings from lower football coaching salaries and reduced costs for uniforms and gear, and increased income on concessions and more conference television revenue may total more than $8 million. Some of that could be used to drive down university funding and student athletic fees.

Next: Basketball Revenue

Pernetti says his plans don’t stop there. In a fundraising program announced in September 2010, athletics collected $66.6 million by the end of February, the athletic director says. The department raised its goal to $100 million in private donations unrelated to funds from students and the university.

Pernetti is making plans to spend $30 million to $50 million to increase revenue from games at the basketball arena. He has long maintained that Rutgers athletics doesn’t spend too much money; it doesn’t generate enough revenue. Some of the renovations to the basketball structure would add high-priced club seats, dining areas and retail shops.

“We took some significant steps to move the expense side in the right direction, and we’re still spending 90 percent of our time to infuse the budget with new revenue,” Pernetti said. “The goal from Day One was to reduce the university support to athletics at every opportunity.”

I have never been a fan of the way college sports works in the US, seems players and students get fucked over so a few people can make huge money and some rich boosters can feel good. But GAF told me football is a profit making undertaking for these schools, so I thought as long as that was the case then okay. But Rutgers is costing each student $1000 to run its sports program? Ridiculous. If tuition was cheaper there would be less student debt, or if the money was actually put into academics the education would be better. 132 professors is what football cost them. Seems like most of the big teams get support from university budgets:


(Interactive version at the link)
 

DominoKid

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Pretty sure a good bit of our student charges at my school go to football.

It is what it is.

Creates some interesting resentment and jealousy of the football program.
 

Adam Blade

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May 4, 2006
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If I'm reading this correctly, college sports in general are losing money for many schools at the expense of academics?
 

Kastrioti

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Mar 5, 2006
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If each student is paying for it then I guess it is not generating enough to sustain itself.



But they're not. Think of all the revenue generated by filling a stadium this big, coupled in with T.V. ratings.

People love their foozball, don't hate.
 

Cyan

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But GAF told me football is a profit making undertaking for these schools, so I thought as long as that was the case then okay. But Rutgers is costing each student $1000 to run its sports program?

That's not quite right. This article is (unintentionally?) muddying the issue by conflating football and the sports department.

You need to distinguish between football and non-revenue sports. Almost every sports department loses money. But football is generally a profit center. It's the non-revenue sports that put sports departments in the red.
 

GoldenEye 007

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Rutgers should shut down the football program. I'm sure they will be better off without it. Everyone will want to go there.

Sirpopopop, your take as a resident Rutgers slut?
 

TAJ

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But they're not. Think of all the revenue generated by filling a stadium this big, coupled in with T.V. ratings.

People love their foozball, don't hate.

Nope.
They're taking that into account. That's why some schools like Texas A&M are at $0 on that graph.
 

MWS Natural

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I'm confused they are saying the entire athletic department is losing money. Well duh. Everyone know football and basketball bring in the money while all the rest of the sports leech off of that. The problem isn't the big time sports it's women's golf and men's lacrosse that are the real loss leaders.

Are they factoring in the impact that major sports have on school enrollment?
Fraternal researchers Jaren and Devin Pope recently completed their study of the impact of college sports success on admissions, finding that the number of applications increases between 2 percent and 8 percent for the top 20 football schools and top 16 basketball schools each year.

The variation in the percentages can be attributed to the schools' rankings in their respective sports. For example, the team finishing first in either sport will likely experience the 8 percent applicant pool increase, whereas the schools finishing 16th or 20th will see the 2 percent rise.

Dubbed the "Flutie Effect," the research is based on the 30 percent application increase in the two years after Doug Flutie's Hail Mary pass gave Boston College a win over defending national champion Miami in 1984.

http://www.collegiatetimes.com/stories/11027/athletic-success-leads-to-admissions-influx/print
 

Malleymal

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Rutgers hasn't been ish since that kid Ito hit that field goal against Louisville ...

Thing with sports in college is that you need to make sure you cut expenses with non income generating sports .

The Boston college women's soccer team shouldn't pay to fly down to Miami for a game. They should stay and play local teams like Boston and uconn and Harvard or whatever . Putting out all that money for an event that won't bring in income is ridiculous.
 

GoldenEye 007

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Oh, and it is pretty commonly known that athletics departments as a whole run at a deficit, except for a select few. However, football alone generally makes a profit - basketball too.

The losses come when a school then chooses to fund too many sports in general that don't make a profit and also is required to prop up unprofitable sports(i.e sports that nobody cares to watch except for the athletes' parents basically) for regulatory purposes.

Football definitely can cause a loss and is expensive to run, which usually occurs if you don't have your own stadium or a stadium large enough to generate revenue or if nobody cares about your football program. But just ask Boise St what the football program alone has done for them in seeing increased applications to the school and the extra publicity/notoriety that goes with it.

Boise St is essentially a household name because of their football program - not a STEM program, not the arts. Because of football. They've increased their academic profile because of it. Not in spite of it. Same goes for plenty of other programs across the country.
 

trs1080

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On the local sports radio in Chicago it was speculated that colleges may have to drop football at some point due to possible lawsuits stemming from former players who end up with chronic traumatic encephalopathy.

Or if not drop, shield themselves from liability somehow.
 

Salazar

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The losses come when a school then chooses to fund too many sports in general that don't make a profit and also is required to prop up unprofitable sports (i.e sports that nobody cares to watch except for the athletes' parents basically) for regulatory purposes.

Well, a co-educational institution shouldn't really be spending a disproportionate amount of money on a disproportionately male pursuit.

And an educational institution in general shouldn't be spending preposterous amounts of money on sport.

But if you have to do it, propping up unprofitable sports operating at modest levels sounds better than pumping obscene amounts of money into a feeder league for sports franchises and tv corporations that don't give a fuck about anything to do with education.
 
Dec 8, 2008
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My school (Michigan) takes no money from students. Not a dime.

That's all I have to contribute here. That, and now I know why the B1G didn't include Rutgers in its expansion. I can't believe they ever will given this.
 

DY_nasty

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It also takes brains to know how to implement the cash. Otherwise you are just tossing money and not getting results.
Its obviously an investment...

Can't blame them really.
 

Drek

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Well, a co-educational institution shouldn't really be spending a disproportionate amount of money on a disproportionately male pursuit.

And an educational institution in general shouldn't be spending preposterous amounts of money on sport.

But if you have to do it, propping up unprofitable sports operating at modest levels sounds better than pumping obscene amounts of money into a feeder league for sports franchises and tv corporations that don't give a fuck about anything to do with education.

Which isn't what's happening here.

The athletic department at Rutgers gets over 30% of its budget from the football program. That budget is over $60M. So Rutgers football alone is doing about as much to subsidize the other sports as the non-student athlete component of their student body.

This article is just about people saying that it feels like the football team is treated better and therefore reaping the rewards of this campus funding. Which is idiotic. The football team is making them bank. If they picked and chose their sports programs based on what didn't need funding the last program they'd get rid of is football. The one after that would be men's basketball. Everything else would probably get flushed.

The blunt truth of the matter is that in a post-Title IX world we're saddling universities with a ton of loss leader athletic programs just to balance out scholarships between men and women. When the NCAA lets you have 80 scholarship athletes on your highly competitive and highly profitable D1A football program you then need to offset that with 80 scholarships to women. Other than women's basketball (maybe 20 scholarships at the most) where can you put those scholarships that amounts to anything but giving away money?

Also, notice how the SEC (i.e. the most football crazy conference in the country) places the lowest average demands on students? Their football programs are subsidizing the entire rest of the athletic programs. So when the women's field hockey team makes the national championship game and gets to fly to it instead of ride a bus for 10 hours straight it's thanks to the fact that the men's football team went 8-8 and played in the whogivesafuck bowl which paid the school $5M for showing up.
 
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