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Price of autonomy: ADs unsure what their new freedom will cost

A month into the era of autonomy, and athletic directors still are struggling with how much this new freedom will cost and how it will affect their future budgets.

Just as a boom in construction led to unprecedented spending on college facilities, many ADs believe autonomy could lead to a different type of arms race, one where schools one-up their neighbor with better long-term insurance, food choices and more coaches, in addition to facilities and escalating coaches’ salaries.

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SBJ Podcast:
College writer Michael Smith and Assistant Managing Editor Tom Stinson discuss autonomy among college sports, the uncertainty it has created and what comes next.

And with that additional spending will come even more pressure to generate revenue.

“It’s very hard to project,” said Purdue AD Morgan Burke, who is the current president of the Division I-A Athletic Directors Association. “We try to look out 10 years on our future budgets [at Purdue], and like any business, you estimate based on what’s out there. You make assumptions the best you can, but there’s still a lot of cloudiness.”

The NCAA’s board approved autonomy in August, largely granting the five major conferences (ACC, Big Ten, Big 12, Pac-12 and SEC) the ability to write their own rules. They sought autonomy to use more resources to benefit athletes. Among the proposals are paying athletes for the full cost of attendance, granting scholarships in perpetuity, long-term health care, and more freedom for athletes to seek counsel from agents and advisers.

Now ADs are left to figure out how much such measures would cost and how they’re going to pay for them. Even among the top 65 schools, annual budgets range from $50 million to $165 million, potentially creating a whole new set of haves and have-nots within the NCAA’s highest level.

The Division I-A Athletic Directors Association, one of the two major trade organizations for ADs, along with the National Association of Collegiate Directors of Athletics, meets this week in Dallas for its annual convention. Most of the ADs from the 65 schools in the five major conferences are expected to be there, among the 120 expected to attend. And it would make sense for them to talk with their peers about new measures that are expected to be implemented, like full cost of attendance.

But U.S. District Judge Claudia Wilken, who rendered the verdict in the Ed O’Bannon case, warned that schools cannot collaborate to set limits on the full cost of attendance, which is a measure to pay athletes anywhere from $2,000 to $5,000 a year over and above the scholarship. Given Wilken’s ruling, the Division I-A ADs removed the topic from the list of items to discuss.

Paying athletes the full cost will be voted on at the NCAA convention in January. The uncertainty about who will receive full cost and how much it will pay each athlete must be resolved. Will all scholarship athletes receive the payment? What about athletes on partial scholarships?

Schools have until Oct. 1 to submit any additional proposals to be considered at the convention.

“There is some angst because we have so many questions,” said Jim Phillips, the AD at Northwestern University and president of NACDA. “Are we going to be able to do this in an equitable way?”

What ADs do feel certain about is that full cost of attendance will pass. That will cost athletic departments $1 million a year or more, depending on how it’s implemented.

The ruling from the O’Bannon case last month also instructs schools to put a minimum of $5,000 a year in a trust for each of the football and men’s basketball athletes, representing payments for use of their name and likeness. Athletes could access that money when their eligibility expires.

Even though the NCAA is appealing the decision, many ADs are beginning to budget for a trust — roughly $500,000 a year — just to be prepared.

Earlier this year, the NCAA ended restrictions on how many meals a school can provide its athletes. ADs in the five major conferences say they are spending $500,000 to $1 million more per year on nutrition.

Arizona State AD Ray Anderson: “Will some schools lean toward extravagance? Sure. … It’s a competitive business.”
Photo by: AP IMAGES
Those three items — full cost of attendance, the trust, and additional meals — could cost $3 million to $5 million more a year in expenses as ADs plan future budgets.

“Our business may have to retrench as we consider how the model might shift,” Burke said.

“These [new expenses] won’t be insignificant,” said Arizona State AD Ray Anderson, who this year has hired two proven revenue generators from the NFL — David Cohen and Greg McElroy — to improve the Sun Devils’ money-making capabilities. “Will some schools lean toward extravagance? Sure. Everyone looks for an edge. It’s a competitive business.”

Most of these proposals, like nutrition and full cost of attendance, come with a significant price tag. Each school is essentially left to figure out costs on their own campus.

“Everybody is doing their own research on these things because we don’t know how much they’re going to cost,” Phillips said. “Everything is being broadly defined right now and we’re trying to get our arms around it.”

Phillips said autonomy presents at least a half-dozen areas where schools will have the opportunity to improve athlete benefits. In addition to full cost of attendance, scholarships in perpetuity, nutrition and full insurance coverage, Phillips pointed out the need for additional academic support. He even suggested that freshman ineligibility could be brought back, as a means to put the focus on academics over athletics.

“We’ve got to take a hard look at re-addressing the time commitment that’s required of our athletes,” Phillips said. “There’s a lot of momentum in that area and that’s led to discussions on freshman ineligibility. Forty years ago, freshmen were just students. Now, I don’t know what kind of momentum it might gather, but if we’re serious about not being the minor leagues and recalibrating the collegiate model, then that means higher education has to be at the center of it.”

With such financial disparity from school to school, even within conferences, autonomy probably won’t look the same on every campus. Some schools might opt to spend more on long-term health care, while others could look at additional coaches for certain sports. These are not legislative items as much as they are individual school decisions.

Utah Athletic Director Chris Hill says schools will be forced to make spending decisions.
Photo by: AP IMAGES
The arms race of the future could extend past facilities and coaches’ salaries to meals, long-term insurance, additional coaches and scholarships that are good for undergraduate and even graduate courses. Maryland, for example, already made a public commitment to offer scholarships that are guaranteed through graduation, instead of the old model where scholarships were renewable every year.

“There’s going to be an arms race — again,” said Utah AD Chris Hill. “Everybody’s going to look at this and say, ‘How can we get an advantage?’ That’s going to happen. … The way we look at it, we don’t necessarily have to be the best, but we’ve got to be in the game. No, we’re not Southern Cal. We’ve got to do what’s best for us. There are advantages Southern Cal has over us and there are advantages we have.”

With the freedom of autonomy will come choices.

“Are you going to serve lobster or chicken?” Hill said. “Do you want the gold-plated door knob? Schools will have to make decisions.”

And if spending does increase as expected, that will put even more emphasis on generating new revenue.

West Virginia AD Oliver Luck, speaking earlier this month on a Knight Commission panel, said athletic departments need to work harder to generate revenue from Olympic sports. Relying on football to produce the majority of athletic department revenue isn’t wise, he said.

Luck, formerly president of the MLS Houston Dynamo, said that if MLS can make money off soccer and other pro leagues can make money off volleyball, lacrosse and baseball, why can’t colleges likewise benefit financially.

“The other sports, outside of football and basketball, haven’t focused enough on revenue generation,” Luck said. “There’s a market in this country for high-level soccer and baseball.”

That, most likely, would require a change in seasons. Baseball might play deeper into the summer. Soccer might move out of its traditional fall season so it’s not going head-to-head against football.

Luck would like to see more games on weekends and fewer games on weeknights, when soccer and volleyball sometimes play on the same nights, competing for the same dollars.

“If you’re looking to maximize revenue, you’d play on weekends,” Luck said.

Whether autonomy leads to further shifts, such as new competitive seasons and a different approach to Olympic sports, remains to be seen. But it’s clear that this new freedom is spawning new ideas and a desire to re-examine old standards.

“We’ve got four primary forces that are all moving at different paces,” Burke said. “You’ve got the legal cases, you’ve got congressional hearings, you’ve got the new governance structure and all of this new freedom, and you’ve got a very cynical public. At the same time, we’ve got $2.7 billion in scholarships going to athletes across all divisions that we want to protect. … This is all leading to a very major transition.”

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