Athletic Department combats financial crisis
By Zack Lloyd, Staff Writer
May 25, 2007 | 5:11 p.m.
The Ohio University Athletic Department is in trouble.
In late January, Athletic Director Kirby Hocutt revealed that his department was operating with a budget deficit exceeding $4 million. Four cut sports and four months later, the immediate future of the athletic department looks equally bleak. For the 2007 fiscal year, the department is projecting a $1.7 million deficit.
“Obviously it’s been well documented over the course of the last few months that our athletic department is in a state of financial strain,” Hocutt said. “It’s a situation that is going to take some time to solve and it’s a situation that has forced us to make extremely difficult decisions.”
In an effort to ensure that the long-term future of the athletic department is not so hopeless, a new position was added to the department in December of 2005. Rob Andrey, who has been involved with collegiate athletics for 18 years, assumed the title of Associate Athletic Director for Business and Internal Relations with the goal of reversing the current budget deficit that the department currently holds.
Andrey said that if everything goes as planned by the fiscal year 2011, the Ohio University Athletic Department may be operating at equilibrium for the first time in many years.
“We did a projection out to fiscal year 2010,” Andrey said. “The projections out to 2010 include a 3 percent increase in funding support from the institution, a 3 percent increase in all of our expenses and a 6 percent increase in all of our revenue streams. If those three things happen, even in 2010, we would be operating at a $222,000 deficit. We haven’t put FY 2011 numbers on paper yet, but we will be projecting at least a break even in 2011.”
While the long-term future situation of the athletic department seems optimistic, Hocutt said it is contingent on two things.
“We’re working and focusing each and every day to identify and implement the appropriate controls in ways to reduce our expenditures while just as importantly focusing on ways to maximize our revenue streams,” Hocutt said.
How to increase funding
For the 2007-08 school year, a new committee was created to give Ohio University students more discretion as to how the general fee portion of tuition would be allocated.
Full-time students taking 16 or more credit hours paid $531 in general fees for fall quarter and $591 in general fees for the winter, spring and summer quarters. The newly formed committee is responsible for hearing appeals from every organization and group lobbying to receive a portion of those funds.
The Students General Fee Advisory Committee (SFGAC) is made up of an eclectic group of nine students including undergraduate students, graduate students and members of the Student Senate. One such member is Student Senate Treasurer Molly McKenney.
“Our role is to interview all areas that get general fee funds,” McKenney said. “This varies from athletics to student activities. We are going to submit recommendations of where we think we could have cuts or where we think areas need more funding.”
The SFGAC submits its recommendation to the Budget Planning Council, which then submits its own recommendation to President Roderick McDavis who has the final say on the allocation of the general fee funds. McKenney said that specific criteria the committee looks at before making a decision include accessibility to all students, budget justifications, pursuit of other funding and collaboration between departments and student organizations.
This year there were twenty different athletic and student activity groups making presentations before the SGFAC requesting an increase in funding, one of which was the Ohio University Athletic Department, proposing an increase of over $425,000 to improve the quality of life of student athletes across the board.
Unfortunately for Andrey, Hocutt and the rest of the athletic department, when the SGFAC made their recommendation to the Budget Planning Council, the committee recommended a budget reduction of $500,000 rather than an increase in funding.
Andrey said the athletic department’s proposal of an increase of over $425,000 in funding would have helped improve the subpar quality of life among the student athletes of the equivalency sports. Ohio’s athletic programs are divided into head-count sports, which have specific full-scholarship qualifications, and equivalency sports, which can give out full or partial scholarships but cannot exceed the dollar value of allotted scholarships for each specific sport.
Ohio University’s equivalency sports include field hockey, golf, soccer, softball, swimming and diving and track and field for women and baseball, golf, cross country and wrestling for the men. Andrey said that these sports are among the bottom half of the Mid-American Conference in terms of funding.
“We have student-athlete welfare and quality student-athlete experience problems across the board,” Andrey said. “We don’t want our programs putting four or five kids in a room when there are only two beds. We don’t want our sports traveling in a twelve-passenger van that’s completely loaded with ten student athletes, a trainer and a coach plus 500 pounds worth of luggage and where we’re putting our student athletes in jeopardy of rolling over or getting in an accident or not being as safe as they can be when they travel to their competitions.”
Even though there was much student dissatisfaction at the decision to cut sports, Andrey said that he did not think there was any animosity on the part of the student members of the SGFAC.
“We understand that the students have very strong opinions,” Andrey said. “We also understand that the students of this institution are very well educated and what we tried to do was articulate to them the situation that we have at hand in our department, the situation that our student athletes are currently experiencing. And we want to make it better.”
McKenney also said that the students put their strong feelings about the cut sports on the shelf when making a decision regarding increased funding to the athletic department.
“We have a breakdown of their budget for the last couple of years, so we’re looking at that,” McKenney said. “We’re looking more at their expenses that they’ve had the last couple of years, the income that they generated the last couple of years and their plan for the future more than the cut sports.”
Hocutt expressed his concern over the SGFAC’s decision but remains hopeful that the Budget Planning Council may overrule the reccomendation.
In the event that the budget reduction from the student general fees fund is ultimately upheld Hocutt said he believes the Department of University Finance, which makes the final decisions regarding the athletic department’s yearly budget, understands the department’s current deficit and will act accordingly.
Addition by subtraction
While the effects of the athletic department’s current deficit were seen most vividly with the decision to cut sports in late January, the cause of the deficit stretches back much further. Hocutt said one cause of the enormous deficit may reach back to over a decade ago.
Hocutt said the earliest cause of the deficit occurred with the addition of three sports in the mid 1990s as part of the 1995 plan for Title IX compliance- women's golf in 1996, women's soccer in 1997, and women's lacrosse in 1998.
The sports were added based on an unsuccessful funding plan dependent on private fundraising and corporate marketing dollars.
“That was really the start of our financial position,” Hocutt said. “What resulted from there was we started taking away from other programs to fund new programs and that was a cycle that unfortunately was never corrected. Over the course of a 10- or 12-year period it just compounded to the point that it was going to implode if significant changes were not made.”
Another cause of the financial crisis occurred much more recently.
The Ohio University Athletic Department was scheduled to receive a $500,000 increase in funding each year in 2005, 2006 and 2007 to help cover personnel and operating expenditures.
However, much of the promised $1.5 million over the three-year span was not received. As a result, instead of decreasing, the athletic department’s budget deficit grew even larger.
Andrey said that in 2005 the Ohio Athletic Department received the $500,000, but also received a cut of $48,000. In 2006, the department again received the $500,000 but received a cut of $200,000. In 2007, not only did the athletic department not receive the promised $500,000, but the funding to the athletic department was cut by $241,000.
“Over the three years instead of the $1.5 million, we’ve only received roughly $510,000,” Andrey said.
He also stated that the increasing budget deficit emerged because the athletic department operated as if they were going to receive the full $1.5 million increase.
“I would say a majority of the funding was based on salary commitments and contractual obligations to coaches and staff across the board,” Andrey said. “I’m not just saying football or men’s basketball or women’s volleyball. We have upgraded. We’ve gone from a graduate assistant to a full-time assistant coach in four or five of our equivalency sports.”
Upgrades across the board would not have posed much of a financial problem had the athletic department received the proper funding. As it was, the department had to allocate most of the increased funding to pay for the salaries and benefits from the contractual obligations they had made to upgrade at the aforementioned positions.
“We’ve had to go ahead and sacrifice the operational expenditures to make sure we could take care of all the salaries and contractual obligations that we have,” Andrey said. “That’s really been the biggest factor of why we’ve operated in a deficit.”
Because of the debt accrued from commitments to contractual obligations, the Ohio Athletic Department has had to take measures to decrease expenditures and increase funding in an effort to reduce the budget deficit.
How to decrease expenditures
In late January, when Hocutt announced elimination of men’s swimming, men’s indoor and outdoor track and field and women’s lacrosse in order to combat the budget deficit, it was a very unpopular decision, especially among students. Many students contended that not all options were explored and that the cuts were unnecessary.
Andrey said, however, that the athletic department examined all options within the current budget to maintain athletic programs that would be competitive, academically successful and financially responsible and defended the decision to cut sports, not as the best solution, but as the only solution.
“Personally, I don’t believe that eliminating sports is ever the right solution,” said Andrey. “I think we evaluated every option possible. Is eliminating sports the best one? No. Unfortunately in this instance, though, in the situation that we were in from a financial and a Title IX standpoint, I think it was the only one we could logically take part in.”
Even though the sports will become extinct after this school year, Andrey said the effects of the cuts will be seen gradually over the next few years as the affected athlete’s scholarships expire.
“We are honoring those scholarships and if those student athletes do decide to stay we would still be incurring the cost,” Andrey said. “We want those student athletes to finish their careers here but we certainly understand that, being competitive student athletes, if they want to pursue their academic and athletic careers elsewhere we can’t do anything but support them. That phase out of scholarships is part of the reason why the costs aren’t going away immediately.”
The phasing out of student-athlete scholarships is the main reason for the continued projected decrease of the department’s deficit over the next four years. In 2011, if the department experiences a year where they break even or operate with a profit as they are projecting, Andrey said the primary reason will be because of the money saved from the cut sports.
In the direct aftermath of the sports cuts, many students, alumni and faculty spoke out against the decision through editorials in newspapers, artwork on the graffiti wall and public protest. One of the central concerns of these individuals was that the money saved by the cut sports would be poured into higher profile sports such as football and men’s and women’s basketball.
Andrey made it very clear that the funds saved from cutting sports are going toward decreasing the department’s debt, not toward improving other sports.
“That’s been a misperception out there, that we’re taking the projected $680,000 that we would save and that we are going to use it elsewhere,” Andrey said. “If we could reallocate the funds, we wouldn’t be eliminating the sports. We would be using them to keep those programs.”
Both Andrey and Hocutt said that the elimination of sports is only one component of the plan to decrease and ultimately eliminate the athletic department’s budget deficit. Another critical element toward meeting that goal is increasing funding for the department.
Case closed?
In a perfect world, by the year 2011 the athletic department will no longer be experiencing years where their expenditures exceed their means and the Ohio University student athletes will enjoy the benefits of being part of adequately funded athletic programs.
Cutting the four sports was the first step in that direction. Unfortunately, decreasing expenditures is often easier than increasing funding. Without finding new sources of income, it may take much longer for the athletic department to operate at least at a break-even point. At a college the size of Ohio University often the opportunities to increase funding are few and far between because of the large number of organizations and activity groups.
When it comes to the Ohio University Athletic Department’s campaign to raise funds, perhaps Student Senate Treasurer Molly McKenney best summed up their dilemma.
“It’s tough because there’s not a lot of money to go around.”