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All NACDA Members
Restructuring -- Reinventing the Wheel
(Monday, June 6 --9:00-10:00 a.m.)

Gene Smith:

It was a pleasure having Dick Schultz with us here this morning. Thank you all for coming. When we met in February, one of the things we wanted to provide to our membership was an opportunity to be a part of the decision-making processes that are going on in our industry .Dick hit it appropriately. We are in the face of significant changes at this point in time. As you look through your program, you'll see that we tried to put together opportunities to discuss the issues facing us today. It's also a great opportunity to have our past leadership of the NCAA and our current leadership of the NCAA with us.

Many of you know, that I just made the transition to Iowa State University. It's a great institution. However, it's a geographical shock as well as a cultural shock, but it's a great institution. I'm learning a lot about leadership at this point in time. The first thing I did was sit down with all of our staff of 110 employees to assess their talents and skills. I put them into an organizational structure to allow our team to move forward in the face of all the changes that I'm going to bring about. After I'd done that, I was sitting at my desk, drawing everybody in those little boxes on an organizational chart and the phone rang. After about nine or 10 times of answering the phone, I got a little concerned. I went out to see where my secretary was. She was sitting at her desk typing. I asked her, "What's wrong? Why haven't you been answering the phone?" She said, "What for? Nine times out of 10, it's for you." I drew this big box at the top and put in her name as the true leader of our department.

This is an opportunity for us today. This will be a little different than what we've done in the past. We need your interaction here. As Dick said, restructuring is a significant issue that we will face over this coming year. Let me read to you a brief memo that was sent out by the Presidents' Commission in May and this was after we had met and decided that this would be a major topic. This memo went to a lot of you. It stated relative to the NCAA membership restructuring, prior to the 1994 NCAA Convention, the NCAA Presidents' Commission and the NCAA Council discussed the associations' membership's apparent interests in considering alternative membership structures. Such interest had been noted by the special NCAA Committee to Review Financial Conditions in Intercollegiate Athletics in it's 1993 report. Accordingly, a resolution was sponsored for consideration at the 1994 Convention. The NCAA Joint Policy Board solicited suggestions from the membership concerning the topic. The Joint Policy Board originally established March 31, of this year, as the deadline for submission of ideas and concerns. However, after the membership overwhelmingly adopted the resolution and some groups expressed concerns about whether they had time to fully develop concepts for submission, the Joint Policy Board reviewed the matter. In February, the Board decided to extend the deadline to August 31. This is an opportunity for us to be a part of the restructuring decision-making process. That's why we've invited our leadership here so that we can interact and ask questions and discuss what this really means to us. What does it mean to us as marketing directors, as development directors, as senior women administrators and as athletic directors? I encourage you to take advantage of this opportunity while our leadership is here. Be a part of the decision-making process.

I had the opportunity to meet Cedric Dempsey some time ago. I feel very confident that we have leadership in the NCAA office that will take us to the 21 st century and develop an NCAA office that is representative of what we need to face the issues in front ofus. I won't go through his biography since we've all read it. I would like to introduce Steve Morgan, who is the NCAA group executive director and who is here as well to help us discuss this issue.

I've asked Cedric to go over restructuring for the next 15 minutes. We can ask him questions later.

Cedric Dempsey:

Thanks, Gene. This was the year I was to have Gene's job. It is a pleasure to be back with you and to be with my peers to discuss the issue of restructuring. Dick made comments about it earlier and I would like to expand and give further background on the issue. As Gene indicated, we will leave some time for questions. We will have breakout sessions of the three divisions and I hope to have the opportunity to visit each of the divisions for more in-depth questions.

I would like to limit my comments to a general overview of each of the three divisions and some perspectives to the challenges that each division has. It's important for us, first, to go back and look at the background of restructuring within this association. It is not new. We have been, since my involvement with the association going all the way back into the 7Os, we have spent time looking at restructuring. At certain periods, it has been more intense than at other periods. If you look at one of the first landmarks of restructuring of the association, you would go back to 1973. Ironically, that was the year after gender equity became law.

In 1973, we moved from College Division, University Division to the basic three divisions we have today. In 1974, we moved from that position to where each individual division had the opportunity to vote among its own membership. In 1978, the subdivisions of Division I were formed. So, we're not in anything that's new before us today. Issues have changed, but we need to look at that as well. In 1985, we saw a greater opportunity for Division I-A, in particular, and Division I to have its ability to control its own destiny to the legislative process. Through 1985 to 1991, there was a series of pieces of legislation that increased that autonomy within Division I.

Yet, during that increased autonomy, there has still been consistent concerns over, particularly in Division I-A, it's ability to control its own destiny. It's important to know that, basically, the legislative framework is there for Division I-A to control its own destiny. But, there's still some missing ingredients that leave that uneasiness that we will touch upon it just a moment.

At NACDA last year, I recall attending a session at this time on sports federation. For about two years, that seemed to be the direction that we were headed and developing federated concepts by sport. Last summer, I began to see an uneasiness about the sports federation concept and that we should look at moving toward institutional federation. It was at that time, after the NACDA meeting, I attended a Division I-A meeting earlier in the fall in which the I-A athletic directors began talking about and proposed a resolution to the Presidents' Commission that dealt with federation by institution. At the Presidents' Commission meeting in the fall, they re-Iooked at the direction that was being taken in terms of sports federation and also the interest in looking at federation by institution and decided to have the joint policy board look at the idea of selecting and collecting information related to federation by institution or other models that the membership might be interested in reviewing.

In December, the College Commissioners Association presented a plan at their convention in January that, in some ways, created more interest than any other at the convention and that was the whole concept of changing the whole structure of the association. It was out of that we began to see some response to that particular model. It was unfortunate with that model that most of the reaction was to the model rather than looking at other alternatives. During the period of time between January and February, the membership asked the Joint Policy Board if they would extend the March 31 deadline which would enable many conferences and associations through this period of time to review a particular model, new models or the present model and how we could streamline it and have more opportunities to explore those concepts. The Joint Policy Board then moved forward and set a new deadline of August 31. Some people first thought that was an attempt to delay the thought on restructuring, but it was a response to the membership who wanted more opportunity to study in depth different concepts related to restructuring. So, that is the period we are presently in.

I have been somewhat surprised that we have not received more information back from the membership at this time. We've had a lot of different small issues related to refining the present structure, but we've really not had any major other model of organization presented since the CCA model. We do expect that after meetings such as this one and the various conference meetings that will take place and have been taking place, we will begin receiving a greater number of suggestions for the restructuring committee that will be formed this month to ponder and make recommendations back to the Joint Policy Board which would go forth from there to the commission and also to the council. So, that is the posture of where we are at this point in time.

Let me make some comments, ifI may, that might help us identify some of the issues that, as you have your breakout sessions this morning, that you'll want to keep in mind. Some areas are much further ahead, some divisions are further ahead than others. The general issue is one of governance. There's no question about that. The one issue that the CCA brought forward to the commission to ponder and that is the concept. On one hand, we have truly had a democratic procedure of governance within the NCAA. We're probably the most democratic organization in this country. One school, one vote; everyone has an equal opportunity to express themselves in developing a legislation within this organization. The CCA shook the membership with a different concept. I think that was healthy for us to look at and that was the forum of a representative form of government in a sense that we would move away from one vote per institution to a structure that would be a representative form of governance. Some of the issues related to that is that there would be a final board of trustees composed of CEOs who would have final authority within that structure. Tied in with that, is that there would be sub-groups ofboards that would have opportunities to present legislation and opportunities to present models of concepts to that governing board ofCEOs. I think most of you have read about this, so I won't go into any great depth at this time. But, it is certainly at the root of some of the problems and issues related to Division I-A.

Dick pointed out that I-A is probably the area that is most concerned about restructuring. That is true. I do feel that the other divisions within the association have equal problems and equal concerns related to their own competitiveness within their present structure. We have encouraged each group to be proactive and to look at what best fits their needs to provide the best competitive environment for their institutions.

Some of the issues related to Division I concerns about restructuring --one, deals with revenue sharing. That seems to have determined most of the concerns that we've had since I've been involved in intercollegiate athletics. There's been strong concerns as Division I-A institutions have found it more difficult to fund their programs. They want to keep more of the monies that they're generating. That is the basic issue related to the area of restructuring --the revenue sharing formulas that we presently have and the problems that are existing in Division I-A. Seventy percent of those schools are, in a sense, in deficit. I don't know how you analyze your budgets, but most schools are not totally self-sufficient.

On one hand, we talk about reform which has been very helpful for the association, but on the other hand, we deal with the problem of, in Division I, we say the institution should be as self-sufficient in intercollegiate athletics as possible. If you go back to where the problem started, the problems we have today go back to the time when institutions said we could no longer fund intercollegiate athletics in Division I at the levels they're being funded.

When I first started in this busme", we presented nur inte,onllegiate atbletios expenditure budgct tn the institutiun ,"d the m,titutiun oolleored all of the revenues that oame m The re,ponsibility of 'be athletio admmistrato, at that time w., to oontrol the expenditures As we saw ,be potential of the revenue stream oommg through athletios, the shift of that beg," to shift to trymg to be self-sufficient I felt, from a membe,ship st,"dpomt, for us to be lookmg at a Division I-A ohampionsbip That is part of our re,ponsibility of Iookmg for new ,evenue '!reams for the assooiation The oommittee h., deoided, at this porn" that it still b., m,"y umesolved que,tions relared to that area that goe, beyond revenue that need to be answered before '"Y further exammation of the football obampionship might be pu"ued But, ,evenue ,"d ,evenue d"tribution h., created most of the problems we faoe today.' itre!ates to ,es!tuotu,mg m mteroollegiate athletios

Another reason for restructuring that we've seen over the years and is still upon us is the conflict between the broad- based programs and limited-based programs. Again, it's Division I-A in most sense and the other divisions and sub-divisions within the association. Most of the time, there is a great feeling that the philosophy between those broad-based programs and where they have full funding throughout their programs is in conflict with the limited programs and they don't have basically the same philosophies to deal with. So, broad-based versus limited-based programs is another part of the restructuring issue that certainly needs to be examined.

Another area that has created the present interest in restructuring is the area of cost containment. In the last six years, we've had two major conventions that have dealt with cost reduction. Many schools, particularly that 30 percent of the schools that are able to afford programs, resent the fact that other institutions place limitations upon them. They feel they should have the opportunity to control their own destinies in terms of the direction of their sports. So, cost containment has helped ignite the interest in restructuring today.

The other issue that has been before us is that most of the legislation that we have related to restructuring has been dealing with the level playing field, trying to create an environment where everyone has an equal opportunity and an environment where people do not have equal opportunities. This has created a number of issues within the area of restructuring that needs to be continually dealt with.

I have felt, for a time in the last two or three years, that there has been a shift of the underlying philosophy of the association that no longer can we expect to, through legislation, maintain a level playing field. We must find a different kind of approach to satisfying the competitive needs within our philosophy.

To review once again, and to think about, in your sessions, is the impact of the revenue sharing issues upon the divisional structure, the broad-based programs versus limited-funded programs, the cost containment issues and how that has brought about an unrest within the association and the level playing field philosophy. We frequently talk about needing to reduce the size of the manual. The manual is the size it is because of two things --the level playing field philosophy and the lack of trust of each other. If we could gain trust and not worry about the level playing field, we would have a manual of about 100 pages.

Division III is probably farther along in it's review of restructuring than any other division within the association. They took on a very proactive view starting prior to the convention in looking at the issues facing Division III. As I mentioned to you, their issues are as important and complex to them as the issues that we just talked about in Division I. Number one in Division III deals with size of institutions. Division III is the largest division within this association and growing. It has institutions less than 1,000 and it has institutions with more than 30,000 in it. So, the size of the institutions and the size of the division itself is a basic problem within Division III at this point in time. It is something that they are addressing, tied in with a number of other areas dealing with philosophy. What we have seen is a migration ofNAIA schools in Division III that have brought a different philosophy. As we've seen institutions within Division III grow, we've seen an interesting balance of public institutions versus private institutions. It has created some philosophical conflicts for what they're trying to accomplish. Therefore, they first must identify a basic philosophy in Division III or philosophies where there might be sub-divisions within that organization itself.

Some of those philosophical disagreements are dealing with grant-in-aids, not much different from Division I, but from a different perspective --whether there should be merit versus non-merit type grant-in-aids. That has caused a different philosophy and a conflict within that group. Another one is championships. There are a number of schools in Division III who would just as soon either not have postseason play or contain postseason competition in Division III to regional competition and eliminate the national championship program that's in Division III. It may be that in Division III we'll have two sub-sets of divisions, in which one would be more on a regional concept and one on the national concept. It is certainly being looked into at the present time.

Now, there's the length of season. Has it grown too long? In Division III, there are a number of schools, again, who would like to shorten the seasons of competition. Another one is related to recruiting. Division Ill's problems are different than Division I, but at the same time, have some uniqueness to it. I spoke at a Division III conference meeting and one institution told me they already had 65 commitments in football through Division III. Now, that's very important to that institution because when you get less than 1,000, you get 65 opportunities of people coming through normal channels of admission, it does certainly provide some economic stability to the institution as well. Many institutions at that level use their competitive programs to attract students to their institution.

I want to comment a moment on the NAIA issue that I mentioned earlier. We are seeing a migration of institutions from NAIA into Divisions II and III. It is a concern, certainly, for that organization and I, think it is a concern for our organization to deal with. There are now, as I understand, in the last five years, we've had about 100 schools out of the NAIA migrate into the NCAA. Why? Because we pay for championships. It provides an economic opportunity for them when they are also struggling financially. It also gets at their base root of whether or not that organization can remain healthy in a viable organization for its membership. If it cannot, then this association of the NCAA is faced with a different problem of what to do with 300 plus institutions that might like to come into Divisions II and III of this association. It presents problems for those divisions, but it also presents problems for Division I, which gets back to the revenue sharing problem that we're dealing with. So, the NAIA issue is one of concern to the association and it is something you need to talk about. Even though we've had a provisional three-year membership category that was passed last January, we are still seeing an interest by a number of conferences and institutions within the NAIA wanting membership within this association of the NCAA.

Division II, at this point, is still dealing with the governance issue and are faced with some of the same problems that I mentioned in Division III. They are seeing a number of schools from the NAIA seeking membership in Division II and they've been quite successful as they moved into Division II. The other concern in Division II are the number of schools in Division I that are downsizing their programs and, yet, because of where they've been, they're still able to have more resources and to be more competitive than the former in existing Division II areas. They certainly have a governance problem. They also have the changing institutional settings that we've talked about to give them a lot of room to be proactive in discussing what the future of their organization might be.

These are some of the issues that we have in front of us. I think they're challenges for us, but they're not issues that we cannot resolve. They are issues that each division needs to be aware of and know what the other divisions are facing. It is not, as I say, just a Division I problem. That is what an acute problem it is because there has been, over the years, a threat by Division I-A institutions to withdraw from the NCAA and develop its own association. I still do not believe that is in the best interest of intercollegiate athletics in this country .I do believe that we can meet the challenges that are talked about. If we are creative in doing so, think we can look forward to a healthy future for intercollegiate athletics.

I do want to take this opportunity to express my appreciation for being with you and we will be available for any questions you might have either in this session or when we have the breakout sessions. Thank you very much for this opportunity .

Gene Smith:

We have a little time before we go to the breakout session. Let's take this opportunity to answer some questions.

Dennis Collins:

Dennis Collins, North Coast Athletic Conference. I'd like to ask Cad two questions about the Division I commissioner's plan. Has that been revised at all, or is that in the same state? The second part of the question pertains to the governance structure. While provisions were made in the document for Divisions II and III championships, there was no mention about governance structure. Do they assume we'd make up our own structure to rule our own divisions?

Cedric Dempsey:

We have not received any refinement of the original plan from the CCA. The second question, as I understood, more in talking to members of the Division I CCA, they did not attempt to try to define Divisions II and III. They wanted them to deal with those issues themselves and try to come back. The major challenge we have before us is, and what the Restructuring Committee will have, is as each group looks as to what the best answer is to their issues, how do we put that all together or do we federate to a greater extent. This is certainly one of the areas of interest within the association.

Gene Smith:

I would like to thank Cedric for coming and thank Steve for coming. We have quite a bit of time between now and our breakout sessions. Let me encourage all of you to go through the exhibits. Drop off your business cards. Please take advantage of this time. Thank you.