For college and university athletic departments, the COVID-19 pandemic is exacerbating longer-term financial difficulties as well as structural and operational challenges. In 2015, The Washington Post found 25 institutions in Power Five conferences ran athletic departments with deficits. For example, Cal Athletics ran a $75.8 million deficit in the four years leading up to the pandemic. Between 2014 and 2017, the University of Cincinnati’s athletic department ran a $102 million deficit. However, Power Five institutions are not the only ones facing athletics-related budgetary challenges. The current budgetary crisis caused by the pandemic puts a stark spotlight on these deficits, causing institutions large (University of Minnesota), small (Furman University), public (University of Massachusetts, Dartmouth), and private (Stanford University) to cut multiple sports teams. Some institutions, such as UC Riverside, are considering even more drastic tactics such as eliminating all sports programs to address budget deficits.
Over the coming months and years, EAB believes that higher education institutions must assess the financial stability of their athletic departments and how athletics supports the institution’s strategy (rather than the reverse). Institutions must ask tough questions about which sports to continue to invest in and where changes and cuts need to be made. This challenging task requires institutions to evaluate a variety of factors during their decision-making process. Absent an effective strategy to review and realign the athletics portfolio, institutions risk the depletion of their financial and reputational resources, which is being accelerated due to the impact of the coronavirus pandemic.
Applying lessons learned from academic portfolio review to athletics departments
Institutions can learn from best practices in academic portfolio review when tackling the challenge of reviewing their athletics programs. EAB endorses a systemic and routine approach to academic portfolio review that fosters a continuous improvement mindset, rather than relying on one-off, herculean efforts. Annual program assessments guide strategic decision-making about revitalization and discontinuance of programs in a structured and transparent way. This approach to annual health checks for academic programs may provide a useful framework for institutions to apply to a strategic review of the athletics portfolio.
College Athletics in the Time of COVID-19
UK Executive VP for Finance and Administration, Dr. Eric Monday, and Athletic Director Mitch Barnhart join EAB’s Carla Hickman for a discussion of how the fall semester is going so far.Listen to the podcast
Imperative #1: Transparency is key to an effective review process
The athletics review process should be transparent from the start so the entire institutional community understands the purpose of the review, what the review will entail, the timeline involved, and who will be involved, including student-athletes and coaches. Failure to do so may lead to questions about the rigor of the review and whether the outcomes of the review were pre-determined from the start, which will inherently challenge the power of the review to bring about positive changes for the athletics program and the institution. Or, even worse, a disputed review may force the institution to restart the review process and waste precious time and other resources.
Imperative #2: Assemble the right data for regular health and performance conversations
As with annual academic program reviews, regular athletic portfolio reviews must begin with the right data. While institutions could target many possible metrics, the goal is to prioritize those that provide an accurate snapshot of program health without overtaxing data collection capabilities. The following three categories of performance measures provide a starting point for athletic programs to consider; however, the weight for the different measures will vary by the goals the institution has for each sport and the overall athletics program.
Cost and revenue by team
- Revenue by team
- Expenses by team (personnel, non-personnel, and financial aid)
- Number of staff by team
- Number of teams running budget deficits, for how many years, and amount of institutional, athletics program, and/or conference reserves or loans used to cover deficits
Philanthropy and engagement
- Number and percentage of former student-athletes who are donors and the dollars generated from them
- Overall dollars generated by athletics fundraising
- Number of major ($100K+) and principal ($1M+) gifts to the institution (beyond athletics) that engagement with athletics helped facilitate
- Number of people and dollars generated through athletics activities, including season and individual ticket purchases, seat licenses, and tailgates and other events
- Student-athlete demographics (gender, race, ethnicity, and geography) vs. the overall student population
- Student-athlete GPAs vs. overall student GPAs
- Student-athlete retention rates vs. the overall student population
- Student-athletes graduation rates vs. the overall student population
- Social media impressions, including likes and re-posts
- Social media followers by channel, including Facebook, Instagram, Twitter, and YouTube
- Media mentions by team, including print, radio, and television
- Competitive records by team, including the future probability of being competitive in the conference vs. the resources required to do so
Imperative #3: Provide watch-list programs with structured guidance and a set period of time to improve
The empirical data that grounds the overall review, such as the metrics spotlighted above, will help identify underperforming programs to be placed on a watch-list. These metrics can also shape guidance and goals for what underperforming sports need to do in order to succeed going forward. While the focus should remain on improvement and revitalization, there should be a defined time allowed for this improvement, with progress reports provided at agreed upon intervals. Beyond this period, there should be a clear understanding of what actions will be taken for programs that do not show improvement, up to and including elimination of underperforming sports.
Imperative #4: Ensure program discontinuance minimizes stakeholder disruption
For underperforming programs on the watch list, it is necessary to also build transition plans into the review process in case programs are unable to meet the desired metrics for improvement. At a minimum, these plans should include a commitment to support scholarships and transfer plans for student-athletes in those sports, and alternatives—including operational support and funding—for sports and student-athletes to continue playing at the club level.
Imperative #5: Maximize cost savings resulting from the review process
The goal and expectation of the review process should be to maximize cost savings to set the athletics program on a financially sustainable path. Rather than reinvesting cost savings, use the savings to balance or even decrease the overall athletics budget. If there is a desire to stabilize or invest in specific sports, then consider cutting even more than is needed to reinvest in those programs without expanding the overall athletics budget. Additionally, address short-term opportunities for cost containment while the review process is underway, including inefficiencies in central athletics administration that may be ripe to migrate to a shared services center (e.g., communications, facilities, human resources, finance).