Good morning, and thanks for spending part of your day with Extra Points.
I’m thrilled to see so many new readers this morning. I suspect several of your found Extra Points after reading our little blurb in Axios last week. Welcome! I hope you enjoy being a part of our community. I just have two quick housekeeping notes before today’s newsletter
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Second, our first Community Interview published on Friday, as we chatted with Ted Gumbart, commissioner of the ASUN. This Thursday, we’ll have the privilege of chatting with Katie Davis, a CPA at James Moore, and an expert on college athletics finances. If you have a question for Katie, drop me an email, or ping the #ExtraPoints room on Discord. We’ve gotten some very good questions so far!
If you’re interested in being featured in a future community interview, please fill out this form. I’ve been blown away by the responses so far, from academics, college athletic administrators, former-athletes, fans, and others who share interesting expertise. I’m excited to share more of their voices with all of you.
Anyway, I think it’s great that we’ll have a chance to hear from a real expert in athletic finance, because if there’s one thing I’ve learned since doing this newsletter, it’s that the figures that make the headlines or the tweets don’t always tell the whole story.
Let’s take Clemson, for example.
Last week, I heard that Clemson was dropping their men’s track and cross country programs. That, by itself, isn’t too shocking. Dozens of D-1 schools across the country are discontinuing programs, including multiple P5 institutions.
But then I saw a tweet that certainly seemed to infer that Clemson getting rid of a sport because they didn’t have enough money. I reacted the same way a lot of y’all did.
Financial challenges due to the pandemic, huh? That seemed like a lousy excuse!
After all, I had a copy of Clemson’s 2019FY financial report to the NCAA, sometimes referred to as their FRS report. They reported more than $130 million in athletic revenues. They pay Dabo Sweeney over $8 million a year. Their football facility has every imaginable amenity allowed. Clemson isn’t South Carolina Upstate. By every objective metric, they have plenty of money.
And according to that same financial report, the men’s track program wasn’t exactly a financial black hole. The 2019 FRS report showed men’s track earned $585,532 in “contributions”, and another $135,000 in “Royalties, Licensing, Marketing.” All in all, the entire program posted $1,304,023 in stated revenues. Sure, that wasn’t enough to turn a “profit” (Clemson also reported $2,251,751 in expenses), but that’s a drop in the bucket for such a large athletic department.
And hey, if you’re going to claim that dropping a sport would save the department north of $2 million, as Clemson did, then surely they’d need to account for those revenues as well, right? Something wasn’t adding up.
So I called Clemson. And it turns out that report doesn’t tell the whole story.
For one, most of those revenues aren’t really revenues
This excellent story here at Sportico breaks down why, and that explanation lines up with what Clemson told me. When I read that Clemson men’s track earned over $500K in contributions, I assumed that meant “cash donated from alumni and supporters.” What it really refers to is the money that IPTAY, Clemson’s independent booster club, pays in scholarship support. It’s essentially a pass-through. If there’s no track team, that money doesn’t go away, it just gets used somewhere else.
This isn’t Clemson being shady with the numbers, by the way. NCAA rules require the school to report contributions from IPTAY, or a similar organization, as revenue.
Same thing with the sponsorship money While the details are still being worked out with Nike, the $135K isn’t straight cash, but in equipment, resources that can also be reallocated throughout the department.
When you strip away accounting pass-throughs and internal money transfers, Clemson men’s track actually generates about $165,000 for the athletic department, the same number Sportico came up with. That money includes the distribution the NCAA sends for every sport a school sponsors, money earned from parking, concessions, and a few odds and ends.
Perhaps conspicuously absent on the revenue side? Any money from endowments. Clemson confirmed to me that there are no endowed scholarships or restricted athletic endowment money tied to the track program. Many other track programs across the country do have restricted endowment money tied up to the program. It’s one of the sources of controversy at William & Mary, for example.
But what about all that tuition money?
For sports like track, this is easily the biggest source of revenue for the institution, and it won’t show up anywhere on an FRS report or NCAA filing.
Unlike football and basketball, track isn’t a headcount sport. Very few members of the Clemson men’s track team are on a full scholarship. Dozens, in fact, are actual walk-ons. And those folks pay tuition.
For many schools, sports programs are actually enrollment drivers. If you drop a sport like track, and the majority of the athletes decide to transfer out, and the school doesn’t replace those athletes with other students, then the school loses out on hundreds of thousands of dollars of tuition. That’s not an especially rate scenario either. Enrollment challenges may impact an actual majority of D-I institutions.
At Clemson? That’s unlikely to be the case. A Clemson spokesperson told me that enrollment at the school has increased by the thousands over the decade and that the school expects to be able to replace any students who decide to transfer because a sport was canceled.
Clemson is unlikely to realize much of the cost-savings of dropping track in the short term, since the school plans to honor all scholarships and coaching contracts until they expire. But after my conversation with the school and studying the math a little more closely, I do think it is likely that they’ll save some money over the long term.
Could Clemson *afford* to keep track? Yes. But is it defensible to drop the sport anyway?
Many folks close to Clemson get a little touchy about their budget priorities. The school unquestionably seeks to compete at the highest level in college football, and over the last decade, absolutely has. But Clemson doesn’t have the resources of many of the other giants in college football, like Ohio State, Alabama, Florida and LSU. Clemson doesn’t have a 45,000 student body. It isn’t a massive state flagship in the capital city. It hasn’t been college football royalty for a hundred years. The Tigers are closer to new money than old money.
Old money, new money…however you want to call it, Clemson still has a lot of money. $135 million a year in revenues is still in the top 25 in all of college athletics. If they really wanted to, they could dig under some couch cushions and find enough money to keep the track program going, especially if they put out an aggressive call to alumni to help self-fund the program, something the school tells me they did not do.
So the issue here isn’t that Clemson can’t afford to sponsor track. And to their credit, in all of their public correspondence, Clemson hasn’t made that claim. The issue here, really, is that Clemson doesn’t want to sponsor track anymore, or at least, that Clemson feels that it can deploy the resources needed to support track to a better location, elsewhere in the athletic department.
Is that wrong? I don’t think that’s a question you can easily answer with a spreadsheet. I think it comes down to values.
A Clemson fan might argue that at the end of the day, the only thing Clemson fans really want is an elite college football team. That’s what their prospective students want. That’s what their donors want. That’s how they want to market their university. And that by focusing on that, they’ll have the best relationship with their stakeholders. If that is far and away your top priority, there’s an argument that your athletic department is best served by sponsoring a smaller number of programs, and really focusing all of your energies on one or two things.
On some level, I think many southern schools have reached a similar calculus. The SEC only sponsors 20 sports, after all. The Big 12 sponsors 21. The Big Ten and Pac-12? They both sponsor over 26. I don’t think that’s a coincidence.
Other schools have a real culture supporting broad-based athletic sponsorship and achievement. Across the Pac-12, for example, there is real fan and donor support for Olympic sports sponsorship and excellence. At my alma mater, Ohio State, it is a legitimate source of pride for the department to sponsor a gazillion sports. That’s true at places like Virginia and Michigan as well.
Other schools need to sponsor broad athletic programs to reach key department goals. Maybe you sponsor sports to grow enrollment. Maybe you sponsor particular sports to help you better recruit a particular demographic of students. Maybe you sponsor particular sports as a way of promoting religious faith or values, or to appease a particular set of donors, or any number of other reasons.
Is one approach always better than another? Is one approach inherently more righteous than another?
I don’t think so. I just think schools ought to be honest about it.
D-I is a really diverse group of schools. These institutions come in different sizes, different geographies, serve different students and different communities. This can make some kinds of policymaking very difficult, but on the whole, I think it’s a net positive in higher education.
If Clemson’s community doesn’t want, and isn’t willing to support, an especially broad-based athletic department, and they chose to invest their money into an improved athlete experience for a smaller number of sports, I don’t think that’s automatically a bad thing. If they take 100% of the savings from cutting track and spend it on, say, remodeling a putt-putt course for the football team? I think that’d be pretty lousy. If they spent it on say, resources to help their women’s programs better monetize their own NIL? Or to improve mental health counseling? I think that’s fine.
At the end of the day, I only really ask for schools to be honest with themselves, and their constituents, about the kind of athletic department they want to be. If they don’t want to sponsor 24 sports anymore? Fine. Then make that argument, don’t hide behind COVID when you have a $50 million a year TV contract. If you think sponsoring 26 sports is a core part of the university identity? That’s fine too. Just be prepared to argue why that is, and for what resources you’ll need to support it.
But if you cry poverty, when you aren’t actually poor?
Don’t be surprised when folks don’t believe you.
Because they shouldn’t.
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