Lack of Significant Financial Resources Stressing FCS Programs

By JIM O’DAY

There are many obstacles to building successful and long-lasting intercollegiate athletics programs at small Division I schools – and, unfortunately, most future decisions may be dictated by limited financial resources.

Athletic programs at the level of Montana and Montana State, for example, rely primarily on eight funding sources to operate: Institutional support, gate receipts, student athletic fees, private contributions, guarantee games, NCAA/conference revenues, corporate advertising dollars and television revenues.

Currently, a school like UM can only expect so much more in the way of funds generated from ticket sales in the three major revenue generating sports of football, men’s basketball and women’s basketball.  The $4-plus million in football alone puts Montana far above the No. 2 ranked team (Appalachian State; about $2.5 million) at the FCS level – and comparable with many successful mid-major level FBS schools. Men’s and women’s basketball combined bring in almost $800,000 more. Total, UM Athletics generates almost a third of its budget from ticket sales alone.

Private support has also been amazing for such a small school, with the Grizzly Scholarship Association annually producing more than $2 million. Advertising dollars paid to UM by Learfield Sports for the rights to “sell” the Grizzly program to corporate sponsors, advertisers and such are in the $600,000 range, and are on a graduated scale of increase over the length of the seven-year contract.

Grizzly Football. Photo by Patrick Record.Two years ago, the Montana Board of Regents approved a significant jump in the UM student athletic fee – from $46 per semester (which includes an additional $10 fee increase until the eastside expansion in Washington-Grizzly Stadium is paid off in two years, at which point the fee “sunsets” by $10 as per the original financial agreement with ASUM when the project was built in 2008) to $71 per semester to help cover Title IX concerns, and start the sport of women’s softball. The increase also puts UM’s fee more in line with that at MSU.  Currently, advertising has begun for a head women’s softball coach – with the program scheduled to begin play in the spring of 2015. The student athletic fee increase now helps generate about $1,600,000 annually for the program – as long as enrollments remainstable.

The major differences between many FCS and FBS schools comes in the form of television, NCAA and conference allocations resulting from teams competing and winning games in the Division I men’s basketball tournament, as well as competing in various post-season football games – primarily at the BCS (Bowl Coalition Series) level. At present, the 11 Big Sky Conference basketball-playing schools and the league are splitting a single “unit” from the NCAA tournament financial pool, which amounts to about $1 million per year… or slightly less than $100,000 per year per school. That’s a far cry from the millions being paid annually to schools at the major BCS conferences – and even less than UM and MSU received a year ago when the 9-team league was receiving a second unit for six consecutive years as the result of UM’s victory over Nevada in the first round of the NCAA tourney in 2006. Also, there is limited, if any, funding for FCS schools from post-season football playoff appearances. In fact, it usually costs a school a considerable amount of money if it does qualify for the FCS championship game.

Television is another story.  Schools such as Montana and Montana State are currently receiving about $100,000 per year for their games – as are the others in the Big Sky Conference.  Meanwhile, schools at the FBS Mountain West level are making at least 10 times that amount.  Many schools in the SEC and Big 10 are pulling down as much as $25 million annually from their television contracts. That represents a major gap between the FCS and the FBS.

Guarantee games have been another source of revenue for FCS institutions.  In the past, Montana football has been able to attract some good “guarantee” money contests in the likes of Oregon ($450,000), Iowa ($650,000) and Tennessee ($500,000). Not as many of those are out there anymore for FCS teams, and the number could be less if other BCS conferences follow the recent lead of the Big 10 in no longer allowing their schools to schedule FCS opponents. Most believe the ACC, the Big 12, the SEC and the Pac 12 will be next, as strength-of-schedule will be heavily considered when the profitable new four-team FBS playoff becomes reality next year. That could hamper many schools, especially those at the FCS level who are already playing two “guarantee” games each fall to meet their budget requirements.

Grizzly Football.  Photo by Patrick Record.That leaves one more major funding source: Institutional support.  While the $5-plus million in state funds afforded to UM Athletics appears to be a large investment at face value, it is a far cry from what some schools are putting into their athletic programs to stay competitive (some by means of internal state monies, others by higher student athletic fees, and still others via a combination of both). It is also a smaller percentage than most FCS institutions as Montana has been very fortunate in the past by producing much-needed revenue through sources such as ticket sales, private contributions and corporate advertising.  Unfortunately, with enrollments declines, funds directed to UM Athletics and other entities on campus are being reduced – so it’s highly unlikely there will be more internal funding for athletics in the near future.  Meanwhile, expenses (travel, insurance, salaries, equipment, etc.) continue to climb… and the full funding for women’s softball is on the horizon. While not alarming, it is a concern that will result in some tough business decisionssoon.

A recent study published by USA Today broke down the most recent budgets of Division I schools – both at the FBS and FCS level.  The University of Texas topped the list with an annual athletics fund budget of $163,296,115, while The Ohio State University is second at $142,043,057 – and neither requires any subsidy or student athletic fee from its respective university.  Fewer than 10 schools across the country don’t need any supplemental funding sources from the school or through student athletic fees to make its budget. As might be expected, none are mid-major FBS schools or any FCS school.

Outgoing FCS member Old Dominion is the highest ranking FCS team (65th place) on the list with a budget of $35,247,421, of which $26,024,885 annually comes from student fees/institutional support. James Madison (67th) has an annual athletics department budget of $34,595,223, of which 78.83% ($27,298,446) comes in the form of student fees/institutional support.

Delaware is the third-ranking FCS school in terms of athletics budget, placing 69th in the country at $31,115,528 – of which 75.32%, or $23,434,793 comes from one form of student fees or institutional subsidies. Stony Brook holds down the 86th position ($25,938,411 – of which $18,088,797 or 69.74% comes from internal funding sources). UC-Davis has the largest budget amongst Big Sky Conference schools with an overall athletic department budget of $25,554,765 – of which $20,811,787 or 81.44% comes from either student fees or institutional support.

The University of Montana is easily the most productive of FCS schools in attracting private funds (ticket sales, donations, corporate sales, etc.) to run its intercollegiate athletics department, yet still requires $7,877,258 (38.98%) of institutional support and student fees to make up its $20,208,369 budget… good for 114th place on the listing.  Montana State has the 100th highest budget in Division I at $22,572,300 – of which $11,142,900 (49.37%) come from state funding sources allocated by the school or student athletic fees.

All schools at the FCS level are facing similar financial challenges – and are trying to find new ways to produce revenues. No one really knows for sure what this will mean two, three or five years down the road as institutional funding mechanisms are drying up.  It is likely more schools will follow the leads of Appalachian State, Georgia Southern, Liberty and Old Dominion to head into FBS conferences such as the Sun Belt, Mid-American Conference or Conference USA for football – and in an attempt to produce more revenues through guarantee games, television and NCAA/conference allocations.  Most, though, will have to find ways to reduce expenses – maybe even as drastic as cutting the number of scholarships offered at an FCS school from 63 to 50.

Whatever, intercollegiate athletic programs are going to have to become much more creative with their budgets, and what they’re able to accomplish with the monies afforded to them.  Guaranteed, it won’t be easy, and it will be unlike any financial crisis ever faced by these athletics programs… but at least Montana and Montana State won’t be alone.

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Check out Jim O’Day’s blog archive. Big 10 Decision Could Have Major Impact On FCS SchoolsAre Predetermined Tournament Sites in the Big Sky Conference’s Future? What the Financial Numbers mean for UM/MSU Athletics. Hiring/Retaining College Coaches is Becoming ToughFormer UM Coaches/Missoula Stars Making it Big in College FootballWhy I chose to Make It Missoula, The Ups & Downs of Being a Griz Fan, Once a Griz, Always a Griz.

Jim O’Day was Director of Athletics at the University of Montana from 2005-2012. Prior to that, he served as the Assistant Director of the Grizzly Athletic Association and later as the Director of Development  for Intercollegiate Athletics. Prior to returning to his alma mater in 1998, O’Day was the owner and publisher of the family-owned Western Breeze newspaper in Cut Bank, MT. Jim currently works for The Farran Group, a real estate development/investment firm based in Missoula.  In addition, Jim serves as a consultant for Epio Solutions out of Seattle, a sports based agency primarily focused on monitoring social media platforms for various colleges and universities. Jim and his wife Kathy have three sons: Chris, Kevin and Brian.  Chris and Kevin are graduates of UM, while Brian is currently a senior atUM.

 

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