Follow the Money: Where does the Michigan Athletic Department Get It, and Where Do They Spend It?

Posted by on Dec 5, 2013 in Uncategorized | 931 comments

To listen to the audio version, click here: Bacon_final-_budget_issues_2013_for_web_with_open-_12-6-2013

I’ve often joked that some Michigan football fans aren’t happy unless they’re not happy.  But after eleven games this season, even they could be excused for having plenty to be unhappy about. A week ago, the Wolverines were 3-and-4 in the Big Ten, with undefeated Ohio State coming up next.

The Wolverines had been surprisingly bad all season — until the Ohio State game, when they were suddenly, surprisingly good, falling short by just one point in the final minute.  It was the first time I have ever seen Michigan fans feeling better about their team after a loss than before it.

Still, the heroic performance was bittersweet.  The most common reaction I’ve heard this week: Where was that team all year?  And which team will return next year – the one that got crushed by Michigan State, or the one that almost beat the Buckeyes?

But Michigan’s bigger problems are off the field, not on it.  In just four years, the athletic department’s budget has expanded from $100 million to $137 million dollars – and that does not include the $340 million earmarked for a new building master plan.  This rapidly growing empire could be threatened by a perfect storm of a bad record, skyrocketing ticket prices, and next season’s horrible home schedule.

This brings up two questions: How do they increase the budget by 37-percent?  And where do they spend it?

First, Athletic Director Dave Brandon pushed aside faculty control.  Michigan’s Advisory Board on Intercollegiate Athletics didn’t even know he planned to promote Michigan’s men’s and women’s lacrosse teams to varsity status – at a cost of over $3 million year — until the day before it was announced.  But that’s one day sooner than they hear about large hikes in ticket prices, and just about everything else the athletic department is doing.

Michigan’s late athletic director, Don Canham, wrote in 2005 that without faculty control, athletic directors have virtually no restraints.  “What $70-million dollar business could conduct business without a board of control?”  Just eight years after Canham wrote his final piece, warning of “unbridled expansion,” Michigan’s athletic budget has almost doubled.  Guess Mr. Canham knew what he was talking about.

Second, the athletic department needed to find new sources of revenue, and squeeze more money out of the old ones.  To do so, it has tripled the size of its development staff, and pumped the prices of tickets and “seat licenses” by roughly 30- to 50-percent, or about $100 per seat. The athletic department now charges $9,000 for corporate events in the stadium skyboxes and $6,000 for a one-hour wedding reception on the 50-yard line.  They even charge school kids for tours, which Michigan had always provided for free.

When former athletic director Bill Martin told me, “Just because you can charge them more, doesn’t mean you should,” he sounded like somebody who had retired thirty years ago, not three.

Add it all up, and the department will not just cover its expanded $137 million dollar budget, it will show a nearly $9 million dollar budget surplus.

So, where does all this money go?  Brandon declined to be interviewed for my latest book, Fourth and Long: The Fight for the Soul of College Football, so I talked to Bill Martin and former Michigan president James Duderstadt, who have seen a few budgets in their day.  They’re alarmed that so little of the new money actually goes to student-athletes, and is instead spent on – well, just about everything else.

Staff salaries, for example, have grown from $34 million to $49 million under Brandon, including a 62-percent increase in administrator compensation.  The athletic department’s spending on “Marketing, promotions and ticketing,” and “Professional travel and conference dues,” have tripled to almost three million.   But perhaps most surprising is the $2.6 million the department now spends on “Hosting, Food and Special Events,” an increase of almost 500-percent.

In other words, the additional millions the fans are now being forced to pay are not going to the students on the field, but the suits in the building – including almost a million dollars a year for the Athletic Director himself, three times the salary of his predecessor.

“Look into how much is spent on marketing, then look at how effective it is,” Martin told me.  “You don’t have to do marketing at Michigan. We have the fans. We have the support. We have a great reputation. All you have to do is win. If you win, they will come. You just need to make it as affordable as possible for your fans.”

Dudertadt added, “It’s a different operation now.  And I think it’s a house of cards.  No matter how much you ‘build the brand,’ if you don’t have the product, sooner or later, it gets you.”

And that’s why the football players aren’t just fighting for their teammates and their school, or even the school’s other sports.  They’re fighting to pay for the soaring salaries of people they’ll never meet.

If you care about Michigan athletics, it’s scary to think what could happen when the players inevitably fall short, and the fountain of fan money starts to dry up.

 * * * * *

Also, I’ll be updating the Events link on my website soon – promise! – but until then, here are the ones coming up soon.  You can also find several excerpts of Fourth and Long, simply by googling my name and the following publications.

Details to come:
Thursday, Dec. 12: Indianapolis UM Club, Columbia Club, Indianapolis, IN

Friday, Dec. 13: U-Chicago Barnes & Noble.

Thursday, Dec. 18: UM Alumni Club of Phoenix.

 

INTERVIEWS

NPR Here and Now: Friday, August 30, 2013:

http://hereandnow.wbur.org/2013/08/30/college-football-soul

-My appearance on Keith Olbermann’s show on ESPN. 

http://www.youtube.com/watch?v=EQOuTs9MF4A

September 3, 7:45 p.m. Fox Business, “Lou Dobbs Tonight.”

 

REVIEWS:

Mark Dent’s review in the Pittsburgh Post-Gazette:

http://www.post-gazette.com/ae/book-reviews/2013/10/27/BIG-DREAMS-AND-TOUGH-LOVE-IN-THE-BIG-TEN.print

Richard Retyi’s review in the Detroit News

http://www.detroitnews.com/article/20130829/OPINION01/308290002/1008/OPINION01/Fourth-Long-reviewed

 

LINKS:

Some of my pieces for Yahoo Sports are under this link, with the piece on how to fix college football below.

http://www.thepostgame.com/author/john-u-bacon

http://www.thepostgame.com/commentary/201309/john-u-bacon-fourth-long-book-reforms-college-sports-jim-delany-big-ten

My Q&A with MGoBlog about UM athletics.

http://mgoblog.com/content/john-bacon-qa-college-football-crossroads

MORE LINKS (Just google my name with the following.  Links to come.)

-The Wall Street Journal (Penn State)

-Yahoosports.com (Penn State)

-elevenwarriors.com (OSU),

-MGoBlog.com (UM)

-sippinonpurple.com (Northwestern)

-The Detroit News (Our love of college football)

 

Many more will be posted above in the days ahead, and on my website under EVENTS.

You can also follow me on Twitter to be updated on all media appearances and speeches.

Thanks!

-John

20 Responses to “Follow the Money: Where does the Michigan Athletic Department Get It, and Where Do They Spend It?”

  1. Jon Bennett says:

    Nice John, I started to sense the over reaching with the epic hideous uniform parade Brandon launched in 2011. God help us. The rest of the smarmy marketing I like to call smarketing, I’m sure has Bo rolling in his grave. It’s gratuitous and shameful that this athletic program, usually known for speaking softly and carrying a big stick, is now a very flashy vega with an extremely loud exhaust. Here’s hoping the alumnus starts to raise its own smoke.

  2. Outstanding blog! Brandon needs to read this and then be held accountable to and by the fans.

  3. Any more skywriting events planned for next season? That worked out so well last fall, after all.

  4. J. Chambers says:

    The most puzzling part of this topic for me is that the athletic department was selling tickets for over twice the face value of the ticket. This was in conjunction with the new partner, Stub Hub.

    • This was more than likely Season Ticket Holders reselling their tickets on Stub Hub and jacking up the price. The department can’t sell for over face value.

  5. Mick Stewart says:

    This is very bad. It is equivalent to corporations wherein the boards of directors are responsible to the administrators rather than to the shareholders; the situation almost always leads to disaster.
    The Athletic Department must return to Don Canham’s princpals: benefits of the athletic program must go first to the athletes, second to the student body, third to the faculty and alumni.
    Go Blue
    Mick Stewart
    Engineering, 1968

  6. David Ellies says:

    An outstanding expose Mr. Bacon! When and how did Brandon push aside faculty control of Athletics? It certainly does need a board of control and this pompous, overpaid administrator needs to be reined in!

    • johnubacon says:

      Thanks, Dave.

      To answer your question, Brandon apparently just ignores the Advisory Board, as described in this article from a year ago: http://www.annarbor.com/news/faculty-want-more-say-on-university-of-michigan-athletics/

      He – or, more often, his staffers — occasionally tell the board what they’ve already done, after they’ve done it. As you might imagine, this does not sit well with the board members.

      Thanks for reading, and writing.

      -JUB

      • Robert Carian says:

        How you ask? The same way a president issues an “Executive Order”. He just does it. If the U.S. Constitution and Federal laws can be easily and routinely ignored by a sitting U.S. President, why would there be a problem for an egotistical A.D. in circumventing some lowly “Advisory Board”? Your thinking is so 1970′s.

        It’s called apathy.

  7. Mike Jones says:

    So, just wanna check. Do y’all have a problem with all these price raises just because you have to pay more? Or do you think it’s because athletes are doing all this work/making all this money and not seeing a dime?

    If it’s the former, stop whining and just don’t buy tickets. If it’s the latter, I can dig it.

    • Mike Jones says:

      To rephrase a bit, and this is for John Bacon: What is your angle here? I completely agree that these budgets are out of control, because I think it’s completely unfair that the athletes responsible for making all the revenue (Mostly football, partly men’s basketball and hockey), don’t get any cut. And don’t try to tell me that they’re getting an ‘education.’

      So, John, do you agree with this? Or do you have another problem with it that I’m missing?

      • johnubacon says:

        Mike,

        I have a few takes here. The first, obvious one, is the budget is growing at an alarming rate — especially for a nonprofit.

        Second, although the department wants its fans and donors to believe their contributions go to the athletes, in fact those expenditures have risen at normal rates (about 5-6% a year, as my book describes), while the administrator salaries, marketing, staff travel and entertainment budgets have soared. This is akin, to me, to a charity that uses most of your donations for the staff instead of the rightful recipients.

        Third, it’s the players who have the pressure to perform, lest this house of cards collapse, yet — as you note — there’s no additional benefit for them they were not receiving 30 and 40 years ago.

        As for the education, if you read the book, you’ll see that, as I write, the “student-athlete” part of the equation works much better than advertised. If you were to follow Devin Gardner or Penn State’s John Urschel or Northwestern’s Kain Colter — among many others — to class, as I did, you’d be very impressed. It’s a hard life, they lead honorably.

        I hope that clears up my position, and answers your questions.

        Thanks for reading, and writing.

        -JUB

  8. Mark Donahue says:

    Wow-great stuff. A lot to ponder. Couple items for me. Athletic dept should have oversight -assume that is the Presidents role. If lacking, then the Bd should instruct the Pres office to set up appropriate process.
    I really feel for today’s student athlete. Great respect for them but a demanding lifestyle. Truly not like a few decades ago. No downtime and no privacy.
    I worry about the “nuclear proliferation” impact or “keeping up with the Jones’s.” Bigger, bigger, bigger…. I went to buy some home tix this year and had sticker shock. This is like an NFL or NBA expense. Not sure that is sustainable.

    • johnubacon says:

      Readers,

      It’s worth noting that Mr. Donahue above was a two-time All-American lineman at Michigan in the mid-seventies. His knowledge of college athletics, and loyalty to Michigan, speak for themselves.

      -JUB

  9. Drew Hutton says:

    Brandon’s awful. Hopefully the new president will give him the axe when the house of cards blow over. Megalomaniacs are never leaders.

  10. Anything done to excess becomes a liability. You can be so organized that you are obsessive. Likewise, you can work to build a brand by focusing on externals and packaging while largely ignoring the internal grit and character it takes to actually be as excellent as the image you wish to project. Brandon is a branding specialist and he leans heavily on this acumen but he has a blind spot around the issue of depth. We don’t wish to be seen as privileged underachievers but that could happen.

  11. Kevin McGuinness says:

    Great article, UM should be a leader is keeping Collegiate Sports free of the mass hype and marketing. Instead they are leading in drive to make the athletic departments their own business and empire. A good start for 4th down would be to dismantle the electronic bill board they created on Stadium Blvd despite the disapproval of the faculty and the city of Ann Arbor.

  12. Frank Castle says:

    What, if any, role has U-M’s recent partnership with IMG Sports marketing played in the increased fees and prices? Are deals like the “official automotive sponsorship” with Toyota part of that 37 percent revenue increase?

  13. John, excellent article. Hopefully this further resonates through the UM community, something clearly needs to be done here to turn this around. Thank you deep down from my maize and blue heart.

  14. Nailed it

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