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|Articles - September 2010|
|Friday, August 20, 2010|
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The biggest exception to all of this bleeding of red ink can be football, which generates about two-thirds of the revenues of college sports along with a hard-to-measure blast of marketing hype that boosts everything from beer sales to ticket scalping (which is legal in Oregon) to university admissions.
Still, even with revenues from football, if these sports programs were real businesses, many of them would have been forced into bankruptcy by a steep drop-off in sponsorships and donations during the recession. Practically every program operates at a loss, with the exception of Oregon’s largest and most complex amateur sports business, the Oregon Ducks.
The Ducks have received more than $200 million in donations from Nike founder Phil Knight. As a result, UO is one of just 20 or so Division I schools running “self-supporting” sports programs, operating without subsidies from the state or the university. In 2008 the university’s athletic department earned $17.4 million from ticket sales, $10.6 million from the governing body of the NCAA and the PAC 10 Conference, and $2.7 million for TV, radio and Internet rights. But the largest revenue category for sports was donations, which totaled $18.3 million of the department’s $60 million budget that year.
On the expense side, UO athletics spent $7.6 million on coaches, $6.9 million on athletic scholarships, $4.5 million on travel, $3.7 million on game days, $2.9 million on fund-raising and marketing and $1.1 million on recruiting. All of those expenses continued to grow during the recession.
In addition, the Ducks have taken on millions of dollars in new debt to pay for their basketball stadium, for which they will have to pay $15 million this season and $18 million per year starting in 2011-2012.
In spite of the escalating costs, the UO sports program breaks even, due to the largesse of Knight and other donors and strong ticket sales, especially in football. UO’s track program is legendary and its basketball team is on the cusp of becoming a national contender. But most importantly from a business perspective, the football team has sold out 68 consecutive home games and last year made it to the Rose Bowl.
For all that success, the Ducks have been hounded by embarrassing antics by players on and off the turf and questionable deals by administrators. Following a season-opening loss to Boise State a year ago, star running back LeGarrette Blount punched an opponent in the face on national TV. Star quarterback Jeremiah Masoli damaged the Duck brand further by pleading guilty to burglary and pot possession. Punctuating those debacles was the $3.2 million golden parachute paid to departing athletic director Mike Bellotti.
In recruiting a replacement for Bellotti, university president Richard Lariviere made it abundantly clear that the institution would follow standard academic procedures. “The AD search was a straight-up process with a very carefully composed committee representing students, athletics, faculty, coaches and administrators,” he says. “It was a textbook search.”
Ultimately Lariviere chose Rob Mullens, a straight-laced, soft-spoken man from West Virginia who worked in accounting for Ernst & Young prior to joining, in order, the universities of Miami, Maryland and Kentucky, where he served as associate director of a $79 million program that grew by 70% over his eight-year tenure.
“Rob had experience with a high-visibility athletics program that is the object of intense scrutiny,” says Lariviere. “He also had great business credentials, which is very important for the athletics program at this stage of its evolution.”
A Eugene Register-Guard editorial called Mullens “an inspired hire” for “an athletic department that for too long operated with disturbing independence from the school’s administration and an absence of public accountability.”
At the press conference announcing the hire, Mullens told reporters, “Sound fiscal integrity is a very important component of college athletics and I’ve been very fortunate to work for a self-supporting program.”
As for the donors who enable UO to be “self-supporting,” Mullens said he had not spoken with Phil Knight prior to getting the job. He spoke with Knight by phone for the first time the morning the announcement went out that he had been hired. So much for the misconception that boosters had co-opted control of the department.
Asked about expectations regarding Knight and Nike, Mullens said emphatically and then later repeated, “Nike is the strongest brand in sports.”
It’s certainly the most ubiquitous brand in sports. If the critics are correct and the industry of college athletics is an out-of-control arms race, then Nike is the biggest defense contractor of all. But some critics are giving up in frustration after concluding there is no stopping the college sports money train. UO English professor James W. Earl campaigned energetically against the overblown hype of college athletics throughout the 1990s and early 2000s but he says he “gave up that Quixotic campaign several years ago… when the new UO arena was approved, which is to say, when sanity flew out the window.”
UO’s new $200 million basketball stadium, scheduled to open in early 2011, will be the most expensive college basketball arena in the nation by the time it is completed. The Oregonian has reported that the new academic center for athletes will cost an additional $41.7 million.
“With the new arena coming online and additional expenses of hiring personnel, we’ve got a couple of tight years coming up,” says Lariviere. “I don’t think we’ll be in any financial trouble but we’re going to have to manage our pennies carefully. But we should probably manage our pennies carefully in any year.”
Friday, December 12, 2014
BY LINDA BAKER
Studying ground-running birds, a group that ranks among nature's speediest and most agile bipedal runners, to build a faster robot.
Friday, October 24, 2014
How does your workplace stack up against competitors? How can you improve workplace practices to help recruit and retain employees? Find out by taking our 100 Best Companies to Work for in Oregon survey!
Tuesday, December 02, 2014
BY LINDA BAKER
A conversation with attorney Erich Merrill about the latest way to raise money from large groups of people.
Thursday, December 11, 2014
There’s a fascinating article in the December issue of the Harvard Business Review about a profound power shift taking place in business and society. It’s a long read, but the gist revolves around the tension between “old power” and “new power” as a driver of transformation. Here’s an excerpt:
The authors, Henry Timms and Jeremy Heimans, don’t necessarily favor one form of power over another but merely outline how power is transitioning, and how companies can take advantage of these changes to strengthen their positions in the marketplace.
Our Powerbook issue might be viewed as a case study in the new-power transition. This annual book of lists provides information on leading businesses, nonprofits and universities in the state. Most of the featured companies are entrenched power players now pursuing more flexible and less hierarchical approaches to doing business. Law firms, for example, are adopting new technologies and fee structures to make legal services more accessible and affordable.
This month we also take a look at a controversial new U.S. Securities and Exchange Commission rule requiring public companies to disclose the median pay of workers, as well as the ratio between CEO and median-worker pay.
Part of the 2010 Dodd-Frank financial reform law, the rule will compel public companies to be more open about employee compensation, with the assumption that greater transparency will improve corporate performance and, perhaps, help address one of the major challenges of our time: income inequality.
New power is not only about strategy and tactics, the Harvard Business Review authors say. “The ultimate questions are ethical. The big question is whether new power can genuinely serve the common good and confront society’s most intractable problems.”
That sounds like a call to arms. Or a New Year’s resolution. Old power or new, the goals are the same: to be a force for positive change in the world. Happy 2015!
Thursday, December 11, 2014
BY OREGON BUSINESS STAFF
An SEC rule targets the disparity between executive and employee compensation, reigniting a long-standing debate about corporate social responsibility.
Thursday, November 20, 2014
BY JASON NORRIS | OB CONTRIBUTOR
Each month for Oregon Business, we assess factors that are shaping current capital market activity—and what they mean to investors. Here we take a look at two major developments regarding possible rollbacks of the Affordable Care Act (ACA).
Thursday, November 13, 2014
BY RYAN CARSON | OP-ED CONTRIBUTOR
How do we skill up our future technology workforce in a smart way to take advantage of these high-paying jobs? The answer shouldn’t focus only on helping people get a bachelor’s degree.
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