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CHALLENGE OF THE '90s - COST CONTAINMENT AND FINANCING OF INTERCOLLEGIATE ATHLETICS
(Tuesday, June 6, -8:30 a.m. -10:00 a.m.)

SAM JANKOVICH:

First of all, on behalf on this panel, I would like to thank each one of you for coming out this morning. It should be rather interesting as we go along to di~cuss the challenge of the 90s in cost containment and efficiency. Probably, what it should read is not the challenge of the 90s, but the opportunities that the 90s will present us if we really work together and try to work very hard as far as cost containment and cost efficiency is concerned. As each and everyone of you know in your own respective institutions, it is rather complex and it is a real challenge as far as funding intercollegiate athletics as many of our constituencies expect them to be funded today. Everybody in this room, whether you represent a Division I, II or III school, all have a different agenda and those people within your own divisions have a hidden agenda in itself because of your institution and the way the institution would like you to operate.

In Division I we have Division I-A, I-AA, I-AAA and you also have those schools who do not support big-time football. We have Division II and Division III and you'll be hearing from representatives from each one or those groups. If you were to take a look at Division I-A, those who support big-time football, those budgets will range anywhere from a high $15 million to a medium or $9 million to a low or about $4 million. Those who support basketball alone will have budgets from a range or $1.8 million to an average or about $800,000, and the bottom side will be about $400,000. Therefore, there is a great divergence and, hopefully, when reorganization and all or the cost containment issues are put together, we will have a much better idea or where we are headed.

When you take a look at each institution, they fund programs differently by institutional support for those who receive them, by student fees and then, also, how they handle scholarships. Is it fee waivers or the kind of support the institution allows you to have? As for employment, some are on a 50-50 split or an 80-20 split, depending upon their involvement within your programs. We all talk about it, but we're in the business because we love it and because we have made it our decision quite some time ago. Also, the challenges and pressures today are much greater than ever before. I believe that those of you who are directors of athletics and those of you who work very closely with athletic directors must have a much better understanding of the many complexities.

Athletic directors work with many different constituents. Trying to keep even half of them happy is a real challenge on a day-to-day basis. You work with the college presidents. You work with their administrative staff, the faculty, the students, the coaches, your support staff, the media and the people who support the program within the community. On a day-to-day basis, you make many different decisions, primarily in the financial areas. Whether you're going to increase the cost of tickets or put in priority seating oB make decisions on how you're going to reduce your programs, therefore, you do upset many of those people within the constituencies.

The easiest thing to do in this business is to say "yes," and the toughest thing to do is to say "no." You have college presidents in the country today who are saying, we want more, and we want more in all of these areas, whether it's academic integrity or whether it is dealing with many of the addictions that are out there today, or compliance and enforcement. But, we want you to have that budget and reduce it substantially, and make certain that we get the awareness throughout the entire country as far as intercollegiate athletics is concerned; which is going to benefit this community, but also, and more importantly, it is going to allow us to get the kind of exposure we need in order to go ahead and raise the moneyand attract the students we would like to have.

Then, you have those coaches who are here who put tremendous pressure on, because the more they win, the more they want. You're caught all of the time in a vise --between the administrative side, the coaches side and you then turn to your administrative staff and say, "we want you to do a better job." We want them to make more sacrifices and go out and raise more money and sell more tickets. It's much easier to increase the income, therefore, we don't have to say "no" to anybody as far as the expenditures are concerned.

I've been fortunate in some ways, to be at two different levels; one at Washington State, where the attitude was, survive, have fun, but also, remain in an outstanding conference. Therefore, the budget requirements are different. I think the perception that people have is totally wrong. You have the haves and the have-nots. The haves really do not care about the have-nots. That is erroneous itself, because it's very important that we all survive.

The pressure at the other end is much different than the pressure at the office end. You do have to compete for national championships and people expect that of you. Therefore, they expect you to be self-supporting, but playa very important role as far as the revenue stream at that university. If you take a look at most of our costs and as Jay Randolph said yesterday, "we do a very bad job of communicating." If you take a look at our costs, probably 50 to 60 percent of your budget, for the most-part, especially in

Division I-A deals with scholarship costs and salaries. Those are things that you cannot control. If you'rE going to be good at what you do and if you have talented people, you better pay them. If you want to have a good program, you better go out and get them. If you go out to get them, you're going to have to pay them good money.

In each of our programs, the scholarship costs go about 10 percent of the year. There is a much greater emphasis within our campuses today than ever before as far as academic integrity. Probably, ten yea ago, no one in this room had an academic coordinator, for the most part. Almost everybody in this room now has at least one, maybe three, five, or maybe seven. You're spending in excess of $250,000 to $300,000 just in academic support and dealing with the help and reading skills that are essential in that particular area.

Just a couple or years ago, the trend was set to have compliance enforcement officers on our individua] campuses. That does not come cheaply. But, for the integrity or sports, it is extremely important that we have it. There are many things that happen within our own schools as far as allocated costs, overhead costs and the mainstream or finances that we put through in that program that we do not control. When you sit dom to put your budget together, you're probably dealing with the exception or the things I've mentioned, with a four percent increase or your operating costs. Most institutions are dealing with a four to rive percent salary increase, as well. We can raise more money, we can sell more tickets, we're going to be getting more money out or television and now, we've all become involved with corporate sponsorships. Take a look at the bowl games. Everybody's riding so high, that the corporate sponsor is the solution to all or our problems. But, the turnover is so great, that as they turnover, their interests range in what they want to become involved with. Getting involved and staying deeply imbedded in that mentality is going to make it tougher down the road rive years from now.

When you look at our overall programs, we have to start making some very tough decisions. You have t( make certain that you address in your own programs what is really expected of you. If you're expected to w: national championships and realistically you can do it, you don't hire someone and then not give them the resources to accomplish this. At the other end, you have to realistically look at what level you should be competing in. When you're dealing with people from this point on, it's essential to say, "what must you have?" Then ask, "what would you like to have?" Probably, very seldom, are you going to meet the demands thi they would like to have. I don't think we can afford that type of mentality in the future.

We must do a much better job or explaining the roles to our administrators and to our coaches, as w~ By doing that, yes, intercollegiate athletics is big business. We shouldn't have to apologize because it big business. We do playa very important role as rar as society is concerned. There are young people getting an education today that would never receive an education ir it were not ror big-time sports. For those people who are not graduating, they are still better orr by being on that college campus today becal or whom they associate with in their lives.

Also, the presidents, the faculty and everyone else has to understand that winning is the way of life If they should leave, no matter what they go on to do, winning is still very important. You have to do it right way. No one was ever hired to say that you had to cheat to win. I think the mentality now has to st, The easiest way to increase your budget is to increase your income. You have to start saying that there is no more income to increase, but we will control expenditures and do a much better job in doing so.

I think the mentality in this room and throughout the entire country, when we talk about cost containment, is to say, "I can't do it. I can't reduce because of our given situation." If that mentality prevails, we all might get by two or three years from now. But, five or 10 years from now, we're not going do anyone a favor in this business because of what they're going to inherit. Yes, it is hard, but collectively, we're going to work very hard together to resolve many of the financial problems we have toda~ I believe you will enjoy this panel. They've worked very hard. I would like to turn to Diane Wendt from the University of Denver.

DIANE WENDT:

Thank you, Sam. Our panelists have been hard at work for many months organizing their thoughts and preparing comments for today's presentation. Their task has not been an easy one. These are challenging for college athletic administrators. Escalating program costs and limited financial resources compel us to successfully address the issues of cost containment and financing of intercollegiate athletics.

Before introducing our first speaker, I would like to introduce a special guest joining us at the da this morning. Representing the NCAA, please welcome Merrily Baker, assistant executive director. Merrily will be available for questions and answers relative to the topic this morning.

Our panelist will offer points of view representative of Division I, II and III institutions. Each panelist will speak for l5-minutes. When all the speakers have made their presentations we will open the floor for an exchange of questions and answers.

Our first speaker today is Cedric Dempsey, director of athletics at the University of Arizona. Before being named director of athletics in 1982 at the University of Arizona, Mr. Dempsey held the same title at the University of Houston, San Diego State University and the University of The Pacific. After receiving his BA and MA from Albion College in Michigan, he went on to earn his Ph.D from the University of Illinois. During this time, he coached a number of intercollegiate sports, taught classes and acted as a college administrator in numerous areas. Currently, Mr. Dempsey is a member of the NCAA Committee on Cost Containment and this past year, he acted as chair of the NCAA Division I Men's Basketball Committee. Please welcome, Mr. Cedric Dempsey.

CEDRIC DEMPSEY:

Thank you, Diane. After listening to that introduction, I began to believe what my friends have frequently said that I'm incapable of holding a job for very long. As Diane indicated, we have spent a great deal of time in thinking through what we might present today. I personally have changed the thrust of my comments at least three times in the last month. After returning from the first meeting of the NCAA Committee on Cost Containment last weekend, I decided to crystalize some thoughts for you. I attended a sub-committee of this group meeting this morning and now I'm totally confused again. But, I will try to focus in on a few comments to help stimulate some thought.

In order to understand where we are, we have to understand from where we have come. Those of you who have been around long enough will remember that in April of 1969, the NCAA authorized a study on the rising costs of intercollegiate athletics to be undertaken by a special committee. Mitchell Rayburn conducted a landmark study in intercollegiate athletics. He surveyed the memberships to measure the cost increases from 1960 to 1969. Another such survey was conducted in 1978 and updated again in 1982. Mr. Rayburn's next version of the update through 1986 will be made available to you rather soon. In April, 1975, the association conducted a special NCAA meeting on economy in intercollegiate athletics and this resulted in the special economy convention that same August. At the January, 1989 convention, the membership voted once again to establish a special committee on cost reduction. It makes me think of the song Linda Ronstadt made famous once again , I!What I s New?1!

As I previously mentioned, the present committee, chaired by Gene Corrigan, commissioner of the ACC, met for the first time last week. The main agenda was to discuss how to organize to meet the committee's charge, which is, to effectively reduce the expenses in intercollegiate athletics without upsetting the competitive balance. After two days of trying to determine what that charge was, we went on to our next agenda item. But, think of that carefully. To effectively reduce the expenses in intercollegiate athletics without upsetting the competitive balance. It was interesting this morning. We talked about the leveling of a playing field. We talked about grants-in-aid and all of the things we've referred to all the way back to 1969.

Cost reduction! We decided to change the name of the committee. We felt we wanted it changed from Special Committee on Cost Reduction to a Special Committee on Cost Effectiveness. It seems to me that cost reduction is not a compatible term to most of us in intercollegiate athletics. It has negative implications. Our mind-sets are geared toward winning, not losing. Thus, it seems to me that if we're ever able to agree upon solutions that would bring our revenues and expenditures into closer harmony, it must come from a positive atmosphere rather than from a feeling of failure. Therefore, let us think in terms of effectiveness rather than reduction.

In an effort to understand its mission, the committee has decided to address three broad questions while it attempts to create change. One, what are the trends impacting critical areas; two, what are the philosophical characteristics of each division in the association and what are our present program constructs and how might they be altered or changed; three, what are the myths about intercollegiate athletics with which we deal and what are the political realities of change? We must have made about four pages of our possible myths and tried to attack them. Each of you should think about that. If we cut back to 50, 60 or 70 grants-in-aid, it will change football. Is that a myth or a reality?

To begin understanding where we have been, where we are now and where we might go, five sub-committees were formed. These committees will explore the following areas; financial aid, recruiting, staffing problems and patterns, support services and competitive policies. Under these areas, although not limited to these areas, the committee will review the following topics; we will look at the number of grants-in-aid per sport. We will review need-based aid, which became very prominent to us with the Liken study at the last January convention. We will look at federal entitlements, the Fell Grant and are we still on target with the amount of dollars available to student-athletes through this Grant.

I was asked to chair a group regarding recruiting. I found it rather ironic as I left the cost reduction meeting, I ran into one of our assistant football coaches at the airport. I said, "where have you been?" He answered, "well, for the past three weeks, I've been in Florida." I said, "was it of value? We're looking at some recruiting legislation. Is it worthwhile?" He said, "the best thing that could happen would be to eliminate spring evaluation periods. I could get much more done in my office than I can on the road." I asked him how much he had spent in the last three weeks and he told me about $6,500, but, he quickly re-assured me that he also had not rented a car, he stayed with friends, so probably the $6,500 wasn't a sal estimate of what the total expenditure was. He also said, "let me assure you that we're not spending quite that much money, because when I looked at one of the staffs from a northern institution in Division I, they had flown in their entire staff two days before a spring Florida high school football game. Two days beforl they all went deep sea fishing. Second day, they played golf. And, on the third day there was a two-hour football game which they attended. Then, they all went back to their own recruiting evaluation areas." Recruiting Policies. Maybe we should take a good look at that area and what we're doing.

Staffing programs. We all began to address the number of coaches that we have on staffs. That's the way to reduce staff. When you look back to 1975, we did reduce the football staffs, but what have we done since that time? We've added one or two recruiting coordinators. We've added one or two strength coaches. We've added four or five academic people. We've added an administrative assistant to football to make sure that our travel plans are all made. Have we really reduced staff by cutting back strictly with football coaches?

Support services. We've seen a tremendous growth over the past few years related to academic athletic training, strength coaches, to those services being offered. Our committee will review where we are present: and where we might be headed in that direction. Competitive policies related to scouting, length of season, out of season practice, team travel, training tables, athletic dormitories, supplies and equipment, and publication printing will all be researched. After each committee has had an opportunity to do its research a fall meeting will be held to receive these reports to determine future recommendations and activity.

Three areas which I personally hope we're able to address would include providing a data base of financial information for the membership to use in making comparisons of their programs with like programs intercollegiate athletics. One of the discussions we had was, what are people doing to save money? If we an opportunity to share what each of us has done to save some dollars, it may be very educational and helpj to us as we try to deal with our own particular budgets and without having legislation. As an example, we away with our own marketing promotion staff at the University of Arizona. We went out and hired a professional organization to do our promotion of football. In the first year, we saved $100,000 and we feE we're much more effective in our expertise regarding marketing and promotion than when we had two or three people on our staff trying to accomplish the same thing.

What are some of the rest of you doing that might be helpful to all of us in reducing costs in our programs on a volunteer basis? It seems to me that we will need to address and provide a series of legislative proposals to address common expense problems. We are all looking for a way to deal with these problems.

I feel that we need to review the NCAA budget in order to determine if the revenues and expenditures generated by the association are best meeting the needs of the membership. OUr bureaucracy with the association has grown tremendously and that's not a negative. But, it's time that, as we look at the local institutional level in dealing with cuts and reductions, we should also look at our national association as whether there are expenses that are being levied from that association and those dollars might be better spent at the local institutional level.

In my remaining time I would like to have you consider alternative competitive constructs which mighl more cost effective and, yet, not destroy the fabric of intercollegiate athletics. I would like to throw three out to stimulate some thought; freshmen ineligibility for men's football and basketball. After studying the time-demand report conducted by the association, I'm more convinced of the unique problems thi these athletes face. Because of their high visibility, I'm convinced that these athletes, and possibly otl who fall into this category, could profit from a restricted practice program and no competition in their f year. The College Basketball Issues Committee has supported a 1.3 plus 1 competitive program. CDI has proposed that a fourth year of competition be granted if the student-athlete were within 24-units of graduation. Compared to our present grant-in-aid program at the University of Arizona, this would be a co: savings decision. In men's basketball we would save on an average of one grant per year, and on an averagl four grants per year in football. That amounts in our institution a savings of about $40,000. That might worth considering.

Number two, alternate playing seasons for men's and women's sports. As a major staff savings possibility, let's look at alternating playing seasons. For example, have the men's track and field season in the fall and the women's in the spring. If staffs were combined, it would project a savings of $25,000 to $35,000 without a loss in coaching coverage. Multiply that concept across the sports of tennis, golf, volleyball, soccer, swimming and diving, the savings would be rather significant.

Number three, combine men and women's competitive programs. Using tennis as an example, we can combi men and women's tennis by structuring three-men singles, three-women singles, plus two doubles and one mix e' doubles. Five grants would be saved. At the University of Arizona, we could save approximately $20,000 on part-time salaries in the two different sports, not to mention operational costs reductions.

There are, no doubt, downsides in each of these constructs and they are presented, not as a panacea for all of our problems. Instead, they are offered as food for thought to stimulate consideration for new models of competition. With the number of creative minds that exist in this organization, I would challenge us to become an active force to directing the future of intercollegiate athletics and not become re-acters to program restrictions levied by lesser qualified individuals or groups.

I thank you for your attention this morning. It's been a pleasure being with you.

DIANE WENDT:

Thank you, Ced. Our next speaker is Ron Stephenson, commissioner or the Big Sky Conference. Ron is only the fourth commissioner or this 25-year old conference. Much or his experience as an athletic administrator came from his work with member institutions. In 1965, he graduated from Idaho State University with a BS in business administration. He went on to earn his MBA in 1971 from the University or Idaho. That same year, he began as assistant athletic director at Boise State University. Currently, Ron serves on the NCAA Men's Committee on Committees and is president or the University Commissioners Association, where he also served as secretary-treasurer and vice president. Please welcome, Mr. Ron Stephenson.

RON STEPHENSON:

Thank you, Diane. First of all, let me say that as a commissioner, it's a lot easier to see solutions to problems that athletic directors have to deal with. When you don't have to deal with the reality of implementing those solutions, they're a lot easier to see. When Sam first asked me to represent Division I-AA, and keep in mind that my comments do represent the institutions in Division I-AA football, I indicated with some reluctance that I would. Now that the time has come to be here, it's obvious that the more prudent course of action would have been to find someone else, but that's behind us at this point.

In preparation for this assignment, I wrote to every men's athletic director and every president in Division I-AA football. I regret to inform you that, as athletic directors, you were much less responsive than were your presidents. Perhaps you've already reached the conclusion that the problem of financing Division I-AA football in general cannot be really resolved without the assistance of, not only university president, but boards of trustees and in some cases state legislatures as well.

I really believe that in the year 2000, when NACDA holds its 35th annual Convention, intercollegiate athletics will have taken on a much different look than we know it today. There's no question in my mind that Division I-AA football needs to take on a much different look than it has today. The information I received back from the athletic directors and the presidents who responded to my request for input, only reinforced my belief that without some new innovative ideas for cost containment and revenue generation, Division I-AA football is in serious financial trouble.

In defense of athletic directors who constantly battle the budget gap between income and expenses in revenue generation, particularly Division I-AA athletic directors who are faced with a situation where the vast majority of their budgets are made up in financial aid, so much of their increases on the expense side of the budget comes from financial aid and salaries. Most I-AA football budgets range between $800,000 and $1.5 million dollars. There may be some a little higher or a little lower, but a substantial percentage of that is composed of financial aid. It's difficult to continually ask an athletic director to balance a budget with no increase in institutional support when the institutional costs being passed on to that athletic director for increases in tuition, fees and room and board, in most cases, are exceeding the national rate of inflation.

Before exploring cost-containment possibilities, let's first take a look at some additional ways to increase revenue at Division I-!! institutions. For the most part, Division I-!! programs are funded by a combination of sources, including state appropriations, institutional and student fees support, gate receipts, as well as private and corporate contributions. I don't forsee, at least in our conference, the likelihood of much of an increase in state appropriations or in institutional support. There simply does not appear to be much public support for higher taxes to generate additional state support and it is difficult for university presidents to convince faculty members and boards of trustees that intercollegiate athletics should take on a higher priority in allocating institutional funds than should the academic programs of the institution.

With the increase of enrollment that is projected over the next few years, those institutions that receive some student fee support may experience some increase in revenue simply because they'll have some additional students. There's also a possibility of increasing student fees as your program grows and expands maybe at a rate to keep up with inflation. But, it's been my experience over the years, that increases in student fees generally tend to lag behind the rate of inflation. It's usually a stop-gap thing that's put into place five or six years after it should have been. That leaves gate receipts as well as private and corporate contributions as areas where athletic directors will have to look to increase income.

It is obvious that ticket prices cannot go up forever. In some cases, there is perhaps some flexil there, but in most cases, there's a limit to where you can go. It is imperative that athletic directors continue to explore new an innovative ways to create additional interest in the games and to increase attendance at events. We are going to find that marketing and promotion people are going to become as important to athletic directors as are good business managers and coaches.

Many institutions are heavily involved in fund raising programs. Almost every university has an athletic booster club whose primary function is to raise funds from outside the institution for the support the intercollegiate athletic program. This is an area which must be continually explored and looked at and is where a big part of the solution may be found. We find that local communities tend to be very competiti1 with other university communities. You'll see people rally to the support of an institution if the athletic program is threatened with the possibility of not remaining athletically competitive with sister institutiol

Finally, I feel that it is necessary to find a more equitable way of distributing funds from the men'l Division I basketball tournament. Cedric tells me that the next television contract for that tournament could be in excess of one-million dollars. It's imperative and in the best interests of intercollegiate athletics in general, that some new way of distributing funds is found.

The I-AA presidents and athletic directors I've heard from concentrated in five different areas. First, the overall costs of football scholarships must be reduced. This can be accomplished in one of two ways. Either the number of permissable grants must be reduced or financial aid must be based on individual need beyond tuition and fees. However, reduction in the number of permissible grants cannot be done just ~ Division I-AA. We must remember that all institutions in Division I-A, AA and in Division II are interconnected financially. Division I-A, with its two unstated subdivisions, those who make money and tho: who don't, rely on each other to survive. The upper Division I-A schools rely on wins from the lower I-As : some I-AAs. The lower I-As sell their home schedule away simply to generate enough money to operate for another year. The Division I-As and Division II schools are doing the same thing, only with fewer zeros on the numbers.

Due to the amount or interplay between the lower level or Division I-A and certain Division I-AA institutions, as well as interplay between Division II and Division I-AA, it is imperative that any rec be instituted across the board in all three divisions.

You can accomplish a reduction in financial aid and maintain the competitive balance. I would sugg, that a reduction in Division I-A football from 95 to 75 or 80 grants and in I-AA from 70 to 50 or 55 gran and in Division II from 40 to 25 or 30 grants would not negatively impact the overall high caliber of pIa that we enjoy in college football. Due to the smaller number of athletes receiving full grants-in-aid, additional students would be required to make an investment in their higher education. This would make t more compatible with their fellow students. It's my opinion that we would have a more serious student-at if he or she were paying a portion of their educational expenses. I'm convinced that research would show student-athletes who participate in equivalency sports earn higher grade-point averages that do those who participate in sports offering full grants-in-aid. Along with this reduction in football grants, legisla needs to look into reducing other sports as well.

I would also suggest that when the problems associated with implementing financial aid based on neec resolved, the adoption of legislation initiating financial aid based on need beyond tuition and fees woulc have a negative effect on college football. This might solve the problem for the student-athlete who rea] cannot afford a college education even with the full grant-in-aid by permitting him or her to receive the cost of attendance at his particular institution.

The number of football coaches needs to be reduced. I recall the uproar in 1975 from football coacl when we adopted coaching staff limitations. They claimed they would not be able to field quality teams m the excellence of college football would deteriorate. This simply did not happen. The interest in colle~ football on the part of the general public continues to grow and the game is as popular today as ever, in spite of smaller coaching staffs. I'm not sure we can justify seven full-time people whose only responsibility is to recruit and coach football players. Surely, with the abilities they must possess to coach such a complicated game as college football, those people are capable of accepting other assignment! that would benefit their institution while at the same time, reducing the direct cost associated with col: football.

Basketball coaching staffs can also be reduced. We need to look at placing coaching staff limitat in sports where none currently exist. Recruiting contact and evaluations periods need to be fUrther red In most cases, the recruiting maximums that we put in have become the minimums. I would suggest that a percent decrease in all off-campus recruiting periods and number of permissable contacts in all sports w such limits exist need to be implemented. Coaches screamed when limitations were imposed in those areas well and evidence would show that college football, again, has not been negatively effected.

The length of playing season and the number of permissible games in Division I-!! need to be reduc For Division I-!!, I would recommend a maximum of 10 games with play to begin no earlier than the second Saturday in September. This would substantially reduce pre-season training table expenses and would pre some schools from playing a third of their games before their students even arrive on campus. Exceptions could be made for the Division I-AA institution who schedules a Division I-A school for a substantial minimum guarantee that would off-set those additional costs.

These are some of the things I've been hearing from the membership. In conclusion, it's apparent that major new sources of revenue for Division I-AA football are, in general, not likely to develop. Therefore, it's imperative that in order for Division I-AA to survive to the year 2000 and beyond, major steps in cost containment must be implemented, not only in Division I-AA, but in Division I-A and Division II as well. We are really dependent upon each other. You need us and we need you. Thank you.

DIANE WENDT:

Thank you, Ron. Our next speaker is Dr. Louis Marciani, director of athletics at East Stroudsburg University. Dr. Marciani's educational background includes a BS in physical education from the University of Charleston, MS from the University of Bridgeport, and a degree from the University of Southern Mississippi.

As director of athletics at East Stroudsburg University and previously at Salisbury State University, he has written a number of books and articles detailing management in administration of athletic programs. Dr. Marciani has also been involved in a number of presentations and seminars including NACDA's Management Institute since 1975. Please welcome, Dr. Lou Marciani.

LOU MARCIANI:

Thank you, Diane. It's a privilege to be here and represent the concerns of Division II as it relates to cost containment. I think we can begin by taking a snapshot of Division II institutions in the United States by looking at the demographics of Division II, the philosophical principles and the budget model. The Division II NCAA schools are composed of 191 institutions. This represents over one-million students in higher education. Of the 191 institutions, 109 are public institutions which represent 59 percent of all schools in Division II. Seventy six are private institutions which represent 41 percent. Institutions in Division II sponsor 7.2 men's sports and 6.2 women's sports for a total average of 13.4 sports per institution.

Our philosophical principles in Division II call for us to provide a maximum amount of intercollegiate athletic programs for our participants, whether or not these students are recruited or financially assisted. We recognize the dual objectives in our athletic programs of serving both the campus and the general public which includes the community, the area and the state. We believe in permitting athletically related financial aid for our student-athletes, but on a more modest basis than that of Division I.

At East Stroudsburg University, for example, our budget is 1.1 million dollars. Our institution is housed in the Pennsylvania State Athletic Conference and we have 24 sports. On our income budget, the university general fund supports approximately 50 to 65 percent. The next area of support is from student government fees which represent roughly 15 to 20 percent of our budget. The remaining 15 to 20 percent is represented from sources which include fund raising, marketing, promotions, gate receipts, concessions, membership fees and special events.

The largest expenditures in Division II are salaries and benefits which account for approximately 50 to 65 percent of our total expenditures. The general operating dollars represent roughly 20 to 25 percent and that includes our normal operating dollars ranging from transportation, food, travel, equipment, etc. Grants-in-aid tend to be 12 percent of our budget in total expenditures. So, that's an overview of our demographics of Division II.

What is the challenge affecting Division II as it relates to cost containment? The major challenge for all of us in Division II in the gos is to continue to provide a broad-based program for our students and to support the movement toward priority in women's sports. These philosophical objectives creates a financial dilemma for us because we're trying to maintain our balance and yet, provide a broad-based program.

With this challenge, where are our solutions? We should look at our unilateral solutions, creative solutions, and look at our political climate on our campuses. There are several unilateral solutions to our problem and these solutions aren't being accepted very well among our colleagues because it impacts fair competitiveness. We can, certainly, reduce staff on our own. We can all provide fewer grants-in-aid. We can reduce recruiting opportunities or highlight certain sports for the sake of other sports.

But, these aforementioned solutions do not work well because our institutions will not put themselves at a disadvantage with their competitors. The only remaining solution, without becoming disadvantaged, is to discontinue sports teams at our universities. For a personal experience, this a the worst solution especially if you believe in the philosophical principles of Division II.

Can we work out an equitable solution in order to balance our budgets in the 90s? I feel that with a little creativeness, we can not only balance our budgets, but meet the needs of our student-athletes and maintain the principles of Division II. There's no doubt that the most difficult aspect of cost containment involves financial aid. As we look at the scholarships, the cost of maintaining the full complement of grants-in-aid in the full spectrum of sports for men and women is simply prohibited for most of us in Division II. The first solution is to award financial assistance to our student-athletes in all sports in Division by providing tuition, fees and grants without restrictions relative to financial need, with any additional awards, up to full cost, limited by financial need. This sets a solution, highlights our philosophy and provides us the opportunity to provide broad-based opportunities for the largest number of students and enhance the competitive equity instead of higher level of funding for a few sports.

In addition to tuition plus need concept, it is important that we take a critical look at the intern! economics within our departments. It is important that we look at recruiting, contests opportunities, efficient use of existing funds, facilities and staff. We should be in favor of limited recruiting, contac and evaluation periods. This should help us in stretching out dollars by reducing cost travel and other related expenses. The number of paid visits made by perspective student-athletes should be limited to thrE

In addition, in order to maintain broad-based participation, it would be better for us to offer more sports with realistic numbers of contest opportunities. Total number of contests should be reduced, thus, cutting travel costs as well as other related expenses.

When reviewing personnel practices, facilities and office management with existing operating dollars would like to suggest a few cost-cutting ideas. Are we fully computerized? Have we all installed a voice-message phone system? Are staff covering maximum functions? Do we pool expenditures with other conference institutions? For example, insurance, equipment and lodging are just a few ideas of what we a; do with our sister institutions in our conferences.

I have just presented a few ideas relative to expenditure cutting, but I still think there is a lit room in the revenue side of the house. I would like to present a few strategies for building a additional sources of income. Attempts should be made to develop an organizational structure that would provide the possibility of raising external funds. The best suggestion is to set up a joint development program with universityand college advancement office to maximize grants-in-aid and capital improvements.

A joint marketing plan should be developed on our campuses that would result in a maximum effort to attract external funds for several program sponsorships as well as increase athletic visibility for us thr cable television, radio and advertising.

We must continue to find innovative ways to increase gate receipts in Division II. The final recommendation is very important. At many Division II institutions, the success or failure of our adequat financing depends to a large degree on the political climate at your campus. A political network should t established or maintained in order to create athletic support from on-campus as well as off-campus groups.

Permit me to offer a few suggestions; activating your athletic committee by involving them in your program; setting up an honorary faculty coaches for each sport, thus, creating a liaison between the facu and your athletic programs. Activate your varsity captain's club for advisory purposes and information. up a university college advisory committee that will include faculty, staff and students. Look toward yol community for support by setting up a marketing committee that will include corporations, small businesse etc. Have representation on your alumni board. Provide some clinics for your faculty children, etc. Th moves will certainly provide a network necessary for you to maintain your present budgets as well as supp you will need for whatever little growth we can get on the income side of our house.

Division II is resourceful. We know how to stretch the dollar and we're going to continue to stretch the dollar because what we want most is to provide a broad-based participation for as many athlet we can and to maintain budgets. We must be creative and we must work together in a commitment to provide best possible participation that we can for our Division II athletes. Thank you very much for this opportunity.

DIANE WENDT:

Thank you, Lou. Our final speaker is Jane Betts, associate athletic director for finance at the Massachusetts Institute of Technology. Before going to MIT, Jane taught in the Perry Township Schools in Indianapolis. She then became the head women's gymnastics and tennis coach at Valparaiso University, as well as assistant professor of physical education. She received her bachelor's degree from Franklin Coll in Indiana and her master's from the University of Southern Mississippi. At MIT, Jane serves on the Comm on Financial Aid and Admissions, the Administration Committee, ROTC Committee and Faculty Club Committee. has also served as president and treasurer of the Massachusetts Association of Intercollegiate Athletics

Women and on the board of directors of Collegiate Council of Women Athletic Administrators. Please welco Ms. Jane Betts.

JANE BETTS:

Thank you, Diane. When I hear my colleagues from Division I-A, I-AA and Division II talk about the challenges of cost containment and I think about the challenges of cost containment in Division III, I feE like a cute little friend of mine. This little friend is the alien from the planet, Division III.

The Foundation for Cost Containment in Athletics is a budget officer who has analytical skills, who is tough, but fair and also patient. It is very important for the budget officer to have the total backing of the higher ranking administrators in the department and/or institution. When the budget officer says, "no," to financial requests, it is not unusual for the person making the request to go to the next level with the same request, hoping to get the budget officer's decision overruled. At MIT, I am the budget officer and I try my best to live up to the qualities that I have described. I do have the solid backing of our athletic director. But, still, let me assure you, that some days it is much easier than others. At many Division III institutions, of course, the budget officer is also the athletic director.

Today, I'm going to explain how we deal with cost containment at HIT. In July of 1982, HIT announced that the Institute was facing a two-million dollar deficit for the fiscal year just ending. That, for us, was the beginning of a serious budget squeeze and we have been dealing with cost containment ever since.

As one begins to develop a strategy for cost containment in a Division III athletic program, it is important to reaffirm the goals and objectives of the overall program. The logical place to begin is with the fundamental mission of the athletic department. Our HIT athletic department mission statement is, "to provide an adaptive, high-quality, student-oriented physical education, recreation and athletic program that emphasizes participation, competition, confidence and leadership to enhance the HIT human environment for the entire HIT community."

Because our programs are driven primarily by the rules and regulations of the NCAA, it is also important to review the philosophy of Division III, which I have paraphrased as follows: "Colleges and universities in Division III place the highest priority on the overall quality of the educational experience, seeking to integrate athletics and academics and student-athletes with students not involved in athletics. We concentrate on participants, rather than spectators, and the college community rather than the general public's entertainment needs. Athletic programs in Division III encourage participation by maximizing the number and variety of athletic opportunities in varsity, club and intramural sports."

The programs in Division III are financed through the same general procedures as other departments within the institution. Once in a mode of serious cost containment, the challenge to the athletics administrators in Division III programs becomes one of maintaining broad-based programs with their ever- increasing costs on either reduced or flat budgets that have been allocated for the central administration of the institution.

The demographics of HIT and the athletic department include a student body of 9,500; 4,325 undergraduates and 5,175 graduate students, 37 varsity sports and 34 sports clubs. Annually, we count, plus or minus, 7,400 participation units in our required physical education programs and 10,500 participation units in our intramural program. Counting part-time coaches and instructors, maintenance and service personnel and clerical support, as well as our full-time staff, our department head count for 1989 is 160 people. If you have read that the cost of attending HIT is around $23,000 annually, or that the HIT endowment is among the top ten in the nation, you might assume that we have plenty of money to run our athletic program. Unfortunately, that is not true.

The total operating budget for the athletic department is slightly over three million dollars; 85.3 percent of the budget is dedicated to the salaries and benefits of our 160 employees. If we remove the salaries, our actual budget for annual athletics operation is $449,000. The ten accounts that make up this total are the accounts that we monitor for cost-containment purposes. It is necessary to have a carefully laid-out plan if cost containment is going to be successful without being damaging to the total program and morale.

The first step in the plan is to gain consensus among the members of the staff that the cost containment effort is essential and that it will require full cooperation and commitment from everyone. Once established, this attitude must continue. In our department we continually keep our staff apprised of our work with constant reminders that we are working in a "serious" atmosphere, but not one of doom and gloom.

When I became the budget officer two years ago, I began to look at our operating accounts by categories in order to establish patterns for spending that were consistent with our objectives to provide high quality programs that emphasize participation. I also looked for better ways to get the most from our budget dollars.

Our coaches consult regularly with the appropriate administrators who are monitoring each facet of the intercollegiate program for cost effectiveness. The assistant athletic director for intercollegiate is dealing with schedule making and the assignment of officials. The equipment manager is dealing with equipment and uniform purchases and replacements and I am managing transportation, food allowance and lodging. The number of administrators involved here is directly related to the number of sports involved. Smaller programs require fewer administrators, but the need for consultation with coaches in all areas does not change.

At HIT, we do not budget a separate amount of money for each sport as many institutions do. For purposes of analysis, our intercollegiate accounts can be lumped together in a pool that includes everything that is necessary to put the teams on the field or court in the regular season; expendable equipment, uniforms, officials, transportation, food allowance and lodging. These accounts constitute 65.8 percent oj our operating budget. I do track the spending by sport and I review the spending with each coach at the conclusion of his or her season. It is our assumption that we spend less by not identifying a line item f( each sport because no coach knows exactly how much money there is to be spent and, therefore, there is no compulsion to spend all that is available. When using this method, it is extremely important to be fair w maintain equity so that no person feels that his or her program has been disadvantaged.

When checking on this method, I convert the actual dollar cost of each sport into percentages of the total dollars available for our intercollegiate program. These data are shown in exhibit A. The exhibit demonstrates several things. Programs with large numbers of participants whose schedule requires several overnight trips in order to provide quality experiences in that sport, receive the larger percentages of ti money. For example; the heavyweight crew program has a very long EARC league tradition in competing in regattas that require overnight travel. To change this schedule would be perceived as reducing the qualit the heavyweight crew program. On the other hand, the women's crew has a similar number of regattas, but o one overnight trip. Their schedule includes opponents with whom they are competitive and the quality of t program is equal to that of the heavyweight crew, but the cost is less.

The entire ski program for men and women is conducted exclusively in the mountains of New Hampshire Vermont. The entire season is an overnight experience and the team has the exclusive use of a rental van six weeks. Note that the percentage of total budget consumed by each team represents a rather flat curve. This indicates to me that we are stretching our dollars out reasonably well over the entire program. The in exhibit A is for 1987/88 and it will be compared with the data from 1988/89 at this year's end.

Sports programs may rearrange themselves in order of spending because of home and away scheduling patterns or unique needs being met to maintain our objective of quality programs. But, the shape of the budget curves should remain very similar year in and year out.

As a private institution, we are not required to solicit bids for materials and services, nor are we required to award sales to the lowest bidders. We have learned, however, that it is very much worthwhile 1 bid certain things such as sports medicine supplies and certain equipment items for which vendors are very competitive. For the first time this year, we accepted bids for our bus transportation after having used 1 same bus company for eight years. We were shocked, as was our faithful old company, when a competing coml in Boston came in five thousand dollars less for our bus needs in 1988/89. Besides being less costly, the company proved to be immeasurably more efficient in the organization and administration of its transportation.

Establishing policies guaranteeing equity and fairness over the total intercollegiate program is a VI important part of the plan. Take food allowance, for example. Everyone from the smallest gymnast to the heavyweight crew team member is allowed $5.00 per meal at HIT. At one point in our program, a coach persul a business manager to allow his team to fly to a particular contest location rather than drive. In return the coach traded the meal money for the entire season. That decision didn't affect the bottom line of the budget, but it diminished the quality of the team's overall athletic experience by not feeding them on the road trips. It is no longer possible to swap meal money for a more expensive mode of transportation or mW any other deals that deviate from our plan to be equitable and fair to all teams.

Purchasing of uniforms is organized into a four-year cycle so that any athlete who participates in a sport for four years will be guaranteed of wearing a brand new uniform one year in his career. Student accounts are built by our equipment manager when students do not return gear by a designated deadline.

Our team schedules are always under review and we have removed several nice, but truly unnecessary expensive contests. These decisions were made at the consultation and with full agreement of the coach involved. Essentially, we have removed contests that require staying overnight when the contest could be eliminated without weakening the schedule or could be replaced with a comparable opponent closer to home. We realize that there is value and importance in some special trips, and such trips might enhance the competitive experience for a particular intercollegiate program. We established a special trip policy. Time does not permit me to discuss that policy with you, but a copy of the policy is in the handout mater The policy recognizes our cost containment mode of operation and serves as a checking mechanism for schedl that is consistent with our mission to provide quality experiences for our students.

It seems to me that in Division III, the real cost containment is in the hands of the institutions and not the NCAA. Since the Division III members have avoided legislating requirements for spending such as financial aid, paid visits to campuses, etc., there was very little to take away through changes in Divisio~ III regulations. However, one of the ways that the NCAA has been very helpful to members of Division III is the establishment of the Block Grant Funding Program. The Block Grant covers the transportation costs for national championships in NCAA sponsored sports. Although, there are some unexpected costs involved when a team makes the national championship, it is not nearly as detrimental to the budget as when the institutions bore the entire cost of attending.

At MIT, we have created a special non-operating account with income generated from renting our facilities to carefully selected groups from outside the HIT community. This income has helped us manage the unbudgeted costs associated with national championship participation. Having this fund has helped develop a very positive administrative attitude towards team qualifying for the NCAA championships. Previously, we almost dreaded seeing a coach come to the office at the end of the season, all aglow, because someone had qualified for the NCAAs. The coach was delighted about the qualification and the budget officer was depressed over the affect that the unplanned expense would have on the operating budget.

On the pie charge (exhibit B) you will notice that our office account assumes 12.6 percent of our budget, excluding salaries. The account includes our telephone charges, postage charges, supplies, service contracts for machines and computers, copying costs and the expenses of the sports information office. I find this account the most difficult to control without risking being perceived as being picky and a real pain in the neck. We don't really want to restrict coach's phone calls or their correspondence. The best we can do here is to encourage colleagues to be prudent and responsible, particularly when using the phone.

Our athletic association account represents eight percent of our operating budget. It includes our conference dues, athletic board meeting expenses, professional memberships, staff travel to conventions and professional meetings, awards, staff functions and position searches. There is little room to tighten in this category. 10.9 percent of the budget is allocated to the day-to-day operations of some specific facilities not maintained by our physical plant. The materials and services allocation for our sports clubs is 1.1 percent of the budget. The physical education program is 1.3 percent and the intramural program is .2. This may seem low, but it's really the people who operate in these programs who make these programs successful. Physical education, intramurals and clubs are probably the most cost-effective things of all that we do.

Unfortunately, I think that coaches measure administrative support in terms of dollars. Having administrative support programs by showing enthusiastic interest, attending contests, having dialogue, eta., is nice, but coaches want their requests for bucks cheerfully accepted even after they have consented to operating in a cost containment mode.

Financial creep is like a cancer and it has to be treated constantly. The athletics administrator whose job it is to treat the cancer and tighten the screws on the budget will never be elected man or woman of the year by his or her colleagues. Yet, this person has a responsibility that will become even more important in intercollegiate athletics year-by-year.

Thank you.

SAM JANKOVICH:

Are there any questions? I would to thank each and everyone of you ever so much and I believe that if you listened for the last hour and one-half, it's revealing and the divergence is great. I think that what we need is a much better understanding of the roles and the complexity of the different divisions that we work with because the differences are tremendous and we all have different challenges or opportunities. When you look around the room you see many different individuals. You see people ready to wind-down their careers and they've had a tremendous impact. Then, you see many others who have made dreams and have expectations of the future and the role they will play in competitive sports. I believe that all of us share a commitment to make certain that we do our jobs better, we leave it better, and we keep something alive that's very important to this society and to the many young people who hope to compete for many years to come.

If we really do not deal with the issues at stake today, we're going to penalize this industry for many years to come. We will have to work together to help solve the problems and stop the bleeding. Anytime you're in a role of recovery, the pain is tremendous and the hurt is great. But, once you do recover, you recover and you're very healthy. I believe that that's the point we're at today. If we're really going to accomplish the mission of keeping this industry alive.

We must have a better understanding, we must have more trust and work with each other in order to do it right. I encourage all of you to cooperate. But, most important of all, we can accomplish this task by working together. Thank you very much.