SBJ/January 9 - 15, 2006/SBJ In Depth

Brand shares NCAA vision

When Myles Brand accepted the job as president of the NCAA three years ago, it signaled a shift in the way the nation’s universities view the role of the NCAA. Brand’s predecessors all came from the athletic corners of university campuses. Walter Byers, the NCAA’s first full-time executive director, was hired out of the Big 10 office. His successors, Dick Schultz and then Cedric Dempsey, were athletic directors at Virginia and Arizona, respectively. Brand is the first to come from the ranks of the college presidents, moving to the NCAA after heading Indiana University, where he forever will be remembered as the man who fired Bob Knight. Not surprisingly, his emphasis thus far has been on academic reform. Brand recently spoke with SportsBusiness Journal senior writer Bill King at the NCAA’s headquarters in Indianapolis.

Brand

As you look forward to what is your state of the union address — your speech at the annual NCAA convention — what do you see as cornerstones of your agenda for the coming year?

One is clearly the academic focus of intercollegiate athletics. We have to assure that intercollegiate athletics is embedded into the mission and purpose of the university. That is the single most important principal that I want to advocate for. I am continuing to try and articulate it better as I learn more. The role of intercollegiate athletics as a part of higher education, and particularly the athletic experience as contributing to the education of student athletes, becomes the focal point of our agenda.

Does that mean better integration of athletics and athletes into the college campus as a whole?

Absolutely. It comes back into integrating them into campus as a whole and making sure that student athletes are students. I’ve been saying in Division I for some time now that student athletes graduate at a higher rate than the general student body. And actually it improved a little this year. So why are we putting so much pressure on academic achievement? You’re already doing better than the rest of the student body. You may have a problem case or two — football in a minor way; men’s basketball in a greater way. Why don’t you just pay attention to those two sports? What are you pushing here?

Here’s the answer: Good enough is not good enough in athletics. Good enough isn’t going to make any coach happy. You have to always perform at your highest level. If student athletes performed at their highest level academically, I think they would do better. They do have some built-in advantages, with the advising and peer pressure and coaches helping them. So we would expect them to do their very best in the classroom, just as they do athletically. Good enough is not good enough in the classroom.

It must be difficult to legislate academic progress and write legislation in a fashion that incorporates all the different possibilities that a school’s athletic department might see as beyond its control — athletes who may transfer, for example, or who may leave to pursue a professional career in baseball or basketball or football. How do you do that?

If the young man leaves when academically eligible, to transfer or to go to the professional leagues, programs are not going to be hurt in terms of APR [the formula used to track academic progress] so long as the athletes are academically eligible. They may see that as a burden right now just to meet the numbers. And maybe it is. Maybe it’s a bit paternalistic, but what we’re doing is we’re setting the young men up to earn their degrees. We have an obligation as educators to do everything in our power to put the young man in position to get a degree. You may think right now that you don’t need it. But we’re not asking that much of you. We just want you to finish the year you’re in. And then you will be in a position to graduate. I hope the coaches appreciate that, too. We’re thinking about the young man. Everyone won’t come back, but at least we’ve made it possible for them to come back in good standing. Don’t burn the bridges behind you. That’s all we’re saying.

You’ve spoken in the past about what is often referred to as the arms race, with regard to development of athletic facilities. That’s most frequently related to stadium improvements. But there are also these new, football-driven facilities that are built to attract recruits. What do you think of those?

Brand preaches caution for how much schools
spend to build or improve athletic facilities.

We’re in a position with some of our major Division I-A schools where we do need some facilities upgrades. Ohio State hadn’t upgraded since the ’30s. The bathrooms were terrible.

Fair enough. Those have to happen. But that’s not a $15 million football building with plasma TVs and a recruiting lounge.

Part of it is explained by what I was talking about [stadium age], but not the whole. I don’t like to use the term arms race because it’s a metaphor for war. But there is no question that there is some investment undertaken with the belief it is going to help in recruiting. I’m not sure it does. We do know that further investment in facilities and other means for an athletic program has no return on investment in terms of winning. We have good data on that.

You have data on that and you’ve released it. But it doesn’t seem to be resonating with the programs that are spending the money.

It has not resonated. It’s remarkable. People look at the data. It’s a well done study. They look at it and it’s as if they’re not paying attention to the data. They can’t take their eye off the exception. Intuition and background experience has led them in this direction.

So what do you think of what they’re doing?

Overinvestment in facilities is very dangerous to a university. It commits on a bonded indebtedness approach 20 to 30 years. Interest rates are very low right now, so you’re not going to be able to draw them down in the future. You’ve committed the athletic program to very long-term debt. What happens in the future over that long period of time when the revenues are no longer as strong as they are now? If the mission changes a little bit at the athletic department or you’re in a downturn, you still have the debt that you’ve committed the university to. What that really means is that you’re going to have to use money from the academic side of the house to support athletics.

And you’re not OK with that? I thought you were in favor of a university supporting athletics financially.

Inherently it’s not bad. But you want to minimize that, because as much as possible you want to invest in the core mission of the institution. Just like the business school wants to minimize the amount of money it draws from the central administration — and that’s what a good dean of business will do — similarly a good athletic director wants to minimize the amount that an institution has to make. You create some risk this way. It’s similar to the way you might spend a lot of money to put up a very expensive executive education building which you’ve bonded, and it turns out executive education isn’t what it used to be .... Now you’re stuck with a big building, and how are you going to pay for it? It draws money off from other parts of the university. You really have to be cautious about that.

We started off by discussing your 2006 agenda …

Yes, and I only gave you half of it. Here’s the other half. In addition to focusing on the academic mission of the university and the role intercollegiate athletics has within it, you also have to have a different perspective on the business plan of the university.

Brand sees stress on the amount of rights fees
that media partners can afford to pay.

I’ve come to understand that there is a lack of clarity about the business model of intercollegiate athletics. Many in the press, and the general public, and university community should know better. They have this image that commercialism is bad and that intercollegiate athletics and commercialism are anathema to each other. Just the opposite is true. You can’t conduct a successful intercollegiate athletics program if you don’t have a commercial aspect with respect to revenue generation. Of course, on the expenditure side, you operate as a not-for-profit and you are focusing on creating opportunities for athletic participation for a wide range of students. But, on the revenue side, it is incumbent upon the athletic program to generate as much revenue as it can while abiding by the values and mission of the institution in which it is embedded. That last part is very important.

So, it operates as a business, similar to …

That’s only part of it. Universities raise revenue through tuition pricing. Enrollment management is just a marketing and pricing strategy. They try to raise money from the feds, through the grants of contracts through state government. They sell services — they’re called rooms in dormitories. That’s OK. But, on the expenditure side, we’re not-for-profit. In the case of the university, our mission is to [provide] a comprehensive education. As an old philosophy professor, I understood we weren’t carrying our weight in the university in terms of student enrollment. But I also knew that we wouldn’t have a comprehensive university unless we had philosophy and classics in it. The fact of the matter is, there’s a massive redistribution of wealth that takes place within the university.

The same thing holds for intercollegiate athletics. You get as much revenue as you can. But then you have to support as many participation opportunities for women and men as you can. If we were a professional league, all that revenue would become profit to the owners or shareholders and we would only concentrate on those areas that generate revenue. What the NCAA requires in Division I is that you run 16 sports. Not two sports [that make money]. Sixteen sports. Because we want to increase opportunities for student athletes to take advantage of that special experience. It’s critically important to understand that on the expenditure side, we are following the mission of the university and we’re not-for-profits. So, when someone says intercollegiate athletics is a business, they don’t understand that while we generate revenue, we also create opportunities for students. That’s not what a business does. It’s more complicated than people understand.

It’s clear from that model that you lay out that you’re comfortable with some aspects of commercialism in collegiate athletics. But you have some schools out there — Michigan, for example — that will wave a flag over the fact that they don’t accept advertising in their football stadium because that’s too commercial for their taste. How do you resolve those two views?

I don’t think this model excludes that belief. On the revenue side, we still have to be guided by the principles and values of higher education. This isn’t anything goes. But even in that context, outside of some of the ADs and commissioners, few others really understand the business model. It’s remarkable how people in the university don’t get this business model. They only see half of it.

Surely, most faculty members understand that in order for the B-school to thrive and advance it might need a new building, and that to pay for it the new building might bear a corporate name or the name of a CEO. Why do they see that same dynamic, all of a sudden, as commercialism when it comes to athletics?

What you say is true and I don’t have a good explanation for it. You know, there are some in the university who believe that there shouldn’t be any commercial activity in the university as a whole. You shouldn’t name buildings. You shouldn’t do tech transfers. You shouldn’t be involved in economic development. That’s just not defensible in today’s world. It’s just not. But there are still some who believe it. And those who believe it carry it over into athletics. I don’t think everyone, including my dear old friends among the faculty, understand how universities work. There is this knee-jerk reaction. This is amateur sports. You shouldn’t have commercialism. Well, wait. You can’t run this without revenue generation any more than you can run a university without revenue generation.

What’s your response to those faculty members when they see the university cutting their budget on campus while increasing spending in athletics?

Over the last half dozen years, we’ve seen a rate of increase of athletic budgets that is three times the rate of increase of the general university budget. And that is not sustainable because the additional revenues coming in, for example, through media contracts, are not keeping up with that. The kind of growth with the networks that we saw in the mid ’90s, that generated the CBS relationship that we have, the networks can’t pay those media rights that they did in the past. There is a real stress on the system. I’m not sure the athletic programs themselves have come to understand that. In order to continue this rate of growth, you’re going to have to take additional money away from the rest of the university. And the rest of the university, and particularly public universities, are really feeling the financial pressure right now. So there’s going to be growing resistance to do that. We’re not in crisis. No one is facing bankruptcy. But the fact of the matter is that there are significant stresses on the system right now.

Do you not see room for revenue growth to keep up with that?

I think there’s room for significant growth in athletics over the next decade. But that growth can’t be as rapid as it is right now in almost every case.

What about the revenue that flows through this very organization, the NCAA, on its way to the schools? Depending on how you look at it, anywhere from 85 to 95 percent of your revenue comes from the men’s basketball tournament.

About 85 percent.

Is it a concern that so much comes from one place?

On one hand, it’s very good. It’s a great relationship and we see CBS as a terrific partner. The length of that contract is going to outlive me, so it’s all good. But the fact of the matter is that I have to look beyond that. We have to be able to continue to show value to our media partners, and we also have to think about how we’re going to diversify our revenue streams, because 10 years from now we won’t be in that same position.

One large chunk of revenue in college athletics — in fact, the largest — is I-A football. And you don’t see any of that. Is there any way to move the NCAA back into the business of televising I-A football? Is that even something the presidents have an interest in?

Not the presidents who now control that revenue stream. Some of the other presidents who don’t control it would like to see it redistributed, like we redistribute the basketball revenue. But I don’t see that in the cards. Those schools that are generating the revenue have set it up so that they can take advantage of that revenue through the BCS. That’s what they want and I suspect that they will keep it that way.

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