MLive Article - Wolverine football carries ever-growing University of Michigan athletic department
Good MLive article on how much of a role football plays supporting university of Michigan athletcs, hardly a surprise, but interesting details of pricing, where revenue comes from and how it is utilized.
http://www.mlive.com/news/ann-arbor/index.ssf/2014/03/wolverine_footbal…
It's no secret that football is the real money maker in University of Michigan athletics.
But exactly how much revenue do the roughly 100 students and 20 coaches and staff in the program bring in?
$82 million.
Football accounted for at least 57 percent of athletic department revenues in 2012-13, which totaled $144 million, according to Michigan budget documents provided to the Board of Regents.
The storied program and its larger-than-life venue are what solidifies Michigan's place among the most profitable enterprises in college sports. Football cost about $23 million to operate in 2012-13, meaning it fed more than $58 million into Michigan's other 30 varsity teams.
The $82 million haul doesn't count indirect revenues, such as sponsorships, licensing and advertising agreements — which totaled $22.5 million that year — primarily made attractive by the football and basketball programs.
And DB could be set for years
March 18th, 2014 at 11:11 AM ^
But we spend too much on football coaches! Oh, the immorality of it all.
Nope, Kentucky opened a new dorm for basketball kids 1-2 years ago. Had something like 10 foot ceilings, long beds so their leg's dont hang off and a personal chef.
March 18th, 2014 at 10:20 AM ^
Yes, but they're required to allow non-athletes to live there; 51% of the dorm has to be non-athletes or it does in fact become impermissible. So a couple lucky UK students get to live there and UK gets a recruiting tool anyway; it's a wonderful little loophole in the rules, except it's sort of a massive, Grand Canyon loophole because it's the same one by which the NCAA justified letting UNC offer phony classes.
March 18th, 2014 at 10:24 AM ^
It was surprising to me that Kim Arico is making more than Red Berenson. I'd speculate that Red has pushed for more money for staff and facilities.
Regardless, good article. Especially insulting that Dave Brandon just assumes that Michigan Stadium will always be full. sigh
March 18th, 2014 at 11:22 AM ^
I don't think it's that unusual for the women's basketball coach at a school to be paid more than the school's hockey coach. I'm fairly certain the same holds true at both MSU, OSU, and Notre Dame as well. Whether they should be is another issue, obviously.
Also, Barnes Arico is not the highest-paid women's hoops coach in the Big Ten. I'd guess she's probably around 3rd, 4th, or 5th among current coaches, but note that she certainly also makes less than the Maryland and Rutgers coaches entering the conference next year. So, where does Berenson sit among Big Ten coaches in terms of salary? I think rather than comparing Barnes Arico's and Berenson's salaries in isolation, you need to consider where they stand in relation to what the top coaches in their respective sports are being paid.
And there's also the fact that Brandon needed to offer her a certain level of compensation to lure her away from St. John's.
Why wouldn't he assume that? It pretty much always has been.
I swear the rifle team and bass fishing team were the backbones of the athletic department.
I am personally priced out of the market. I can't afford (translation: won't spend) the kind of money it takes to go to lots of games.
Having said that, I don't completely blame Dave Brandon. When I look at pro sports (and I consider Michigan Football and Basketball basically a "pro sport," say what you will) the ticket prices and facilities are in the same league as Michigan. There are a number of things in the article which make sense to me:
- We fell behind in facilities. Looking at pro sport facilities, and at top 10 facilities and programs (i.e., Ohio State, Alabama, Florida, USC, Texas, Florida State, Georgia etc. in football, Duke, North Carolina, Michigan State, etc. in basketball,) our facilities were pretty sorry 15 - 20 years ago.
- We didn't increase ticket prices regularly. If Michigan went 6 years without a price increase, I can see why people would complain. And I can see why Brandon would increase the price now.
- We didn't keep pace with the ticket prices charged by other Big time programs. It can't be that hard for Brandon to find out what other programs charge for tickets. It makes sense to me that Brandon would average out the Big 10 ticket cost, and want to be above the average.
- We didn't keep pace with assistant coach salaries (especially in Football.) I'm thrilled with Mattison and Nussmeier, but they wouldn't be at Michigan without a substantial salary.
- Demand is still there. This is the bubble that may burst. But it makes a lot of sense to me to whittle down the waiting list. I remember when the waiting list for Football tickets was so big that you had no hope of ever getting decent seats. Honestly, as long as demand slightly exceeds supply, I can understand what Brandon has done.
The personal affect on me (I don't go to games) isn't one I'm happy with. On the other hand, I'm ok with it. I live in Chicago, and I don't go to Bears and Blackhawks games either. I don't begrudge those who do, but it isn't enough of a priority for me to spend $500 - $1000 to take my family to a single game.
March 18th, 2014 at 10:14 AM ^
Why do costs keep going up? Why does the Athletic Department budget continut to rise at rates that can't possibly be explained away as inflation, or necessary capital improvements? What are you doing, this year, in connection with other Big Ten AD's and other national AD's, to seriously hold down the costs of collegiate athletics? Your mentor, Bo Schembechler warned about all of these effects -- namely, collegiate football becoming a massive money-making engine to fund other collegiate sports -- when the 1970's changes to Title IX were being considered; Bo was right, wasn't he?
March 18th, 2014 at 10:17 AM ^
March 18th, 2014 at 10:34 AM ^
http://support.mgoblue.com/our-vision/the-need/
What you see, from the Revenue side, is that ticket buyers, but especially PSD-payers, have become the financial backbone of the Department. Remember that most of those patrons purchase season tickets to no other professional athletic team sports.* Michigan athletics' financial supporters clearly want a product differentiated from professional athletics.
Licensing (apparel, etc.) is a shockingly low portion of department revenues. TV contracts also seem to be a shockingly low part of the department's revenues.
Department salaries and benefits (surprising!), as well as team expenses (not at all surprising) account for about half of total expenses.
The most surprising number on the entire page is that athletic scholarships account for only 14% of expenses. That amazes me; when we have so many grants-in-aid calculated at Michigan's mind-numbing out-of-state tuition rates. I've never thought to ask for an up to date number for the total number of scholarship athletes at Michigan. A number was floating around a couple of years ago, and it did demonstrate how many non-scholarship athletes we have (a lot).
I have sometimes wondered if the numbers published at MGoBlue.com were juiced so as to impress upon the donors who read that page, just how critical they are to the program. It is hard to imagine that we don't get more from, say, worldwide marketing/licensing. Or more from tv contracts.
I don't question the basic premise of the MLive article. Yes, football is the cash cow. Yes, the total numbers for the Athletic Department are eye-watering. Yes, the vast majority of intercollegiate sports are money-losers which all rely on money from football.
*From recent survey results; "Among these respondents, 51 percent have had season tickets for 20 years or more, and over 77 percent attend nearly every home game. Close to half of respondents travel at least 50 miles one-way to attend games, and 78 percent say they do not have season tickets to any other athletic events, collegiate or professional."
March 18th, 2014 at 11:09 AM ^
"Our ticket prices for football are still well below many of our benchmark competitors."
Let's set aside any technical disputes over that claim. The fact is, our ticket prices may be below some of our benchmark competitors. But our ticket prices are well above many of our benchmark competitors, and way beyond all of our lesser competitors. And ticket prices are the least of my concerns; the PSD racket is my real concern.
The real question is not whether Michigan's ticket prices and seat licenses are comparable with Ohio State. No; the real question is why Michigan's, and Ohio State's, and Georgia's, and Alabma's, and Tennessee's, and Penn State's and Michigan State's and Wisconsin's football ticket prices and seat licenses are all as high as they are. Those football patrons are all paying for something other than collegiate football, probably involuntarily.
March 18th, 2014 at 11:18 AM ^
Some of the schools in your list, Tennessee and Wisconsin, are not in the same position as Michigan. Tennessee athletics have been a major problem the last few years. Funny what several years in a row of a really bad team does for your revenue stream.
Here's a year-old article that discusses the Vols' problems:
http://www.sbnation.com/college-football/2013/1/28/3925296/tennessee-fo…
Wisconsin's revenues from football don't come close to what Michigan generates. We routinely have 30-35,000more people at every game and I believe our ticket prices are considerably higher.
The big concern I would have if I were DB is just how long people will accept average or mediocre performances. The Tennessee model would have me tossing and turning. They had a very avid fan base which eventually turned its back on the program. I'm not sure why our fans are any different.
March 18th, 2014 at 11:35 AM ^
I get your point, but the effects of competitive success is a very large part of what bothers me. Brandon might well be thinking; We have to win on the football field. We have to win, and win championships. We have to win double-digits every year. Because if we don't, it compromises our main revenue stream. We absolutely have to pay whatever it takes, no matter how much, to preserve a winning football program.
Thereby, everything depends on football and football revenue. A $10 million coach who wins eleven games is a bargain, comapared to a $3 million coach who wins six or seven games. And that calculation stretches through the entire program. A $75 million facility that helps you recruit four- and five-stars is worth it, compared to a $20 million facility that helps you recruit three-stars. Do the amortization.
There is no incentive to cut costs anywhere. That may be too harsh; too much of an overstatement. Here's a better truism: When you keep throwing money at a problem, it never gets any cheaper. And you wonder why your tutition costs keep going up? Multiply this issue times the entire University of Michigan and the entire U.S. collegiate system.
There's another issue with Brandon and that is the business of hiring more marketing and development professionals, to maximize more revenue opportunities. At one level, this doesn't bother me. I'd like there to be many, many more Walmart Wolverines if they help pay the bills on South State Street. If a $225,000/year development officer nets us another $4 million in stray revenue, it would be a bargain. Anything to remove the pressure from the PSD's and ticket prices that I pay. But a look at the numbers seem to indicate that nothing is growing in cost so fast as Athletic Department salaries, and the burden on PSD's and ticket prices to support the whole thing.
March 18th, 2014 at 12:02 PM ^
but our women's basketball program hasn't been on par with MSU or OSU, let alone ND. And more to my point, none of those schools have hockey programs on par with Michigan--let alone a legendary coach like Berenson. I get that the market controls--but this just seems askew.
I get your point, but there's a very large gap between what Barnes Arico is making and what the Notre Dame and OSU coaches are making (I couldn't quickly find what Merchant's total compensation is at MSU, but it has to be at least somewhat higher than Barnes Arico's). The article has Barnes Arico's salary at $480,000. Muffet McGraw made nearly $1 million at Notre Dame back in 2010; OSU hired a new WBB coach a year ago at a starting salary of $850,000. How do those numbers compare to what their hockey coaches are making?
Would Minnesota be a better example? Their head coach, Pam Borton, got off to a good start there, but the team has been thoroughly mediocre for the last several years—not making the NCAA tourney for five-straight years. Borton's compensation is about the same as Barnes Arico's. From what I could gather, the Minnesota hockey coach makes about $300,000, much less than Berenson.
Again, my point was that Barnes Arico's salary relative to her peers is not out of line. I can't say exactly where her compensation ranks in the conference, but it's definitely not at the top. The OSU, Nebraska, Iowa, and PSU coaches all make more than her. So where does Berenson's salary rank among Big Ten coaches? It should be at the top. Is it?
And to your point about the Michigan WBB program not being on par with ND, OSU, and MSU. She was hired just two years. Her initial contract had nothing to do with the historic success (or lack thereof) of the program. She was hired to elevate the program to the next level, with her salary based on her previous success elsewhere.
March 19th, 2014 at 12:57 PM ^
Women's Basketball State keeps a list of annual expenditures here: http://www.wbbstate.com/info/teams-hoopsbudget
If we project salaries for coaches and support staff, recruiting budget, cost of scholarships, etc., Michigan's pretty far down the list in the B1G. Who knows if all of the schools are reporting the same way.
Iowa, with the B1G's most tenured coach in Lisa Bluder, is at the top at $3,932,286.
Michigan's 8th at $2,898,815
Minnesota's last at $2,525,258