Archive for Sunday, May 13, 2018

How much does KU spend on athletics? More than the city spends on police, fire and roads, but returns are big too

Kansas guard LaGerald Vick runs out to the court as the team is introduced during Late Night in the Phog on Saturday, Oct. 1, 2016 at Allen Fieldhouse.

Kansas guard LaGerald Vick runs out to the court as the team is introduced during Late Night in the Phog on Saturday, Oct. 1, 2016 at Allen Fieldhouse.

May 13, 2018

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In Lawrence, college athletics is a basic necessity. Don’t believe it? Look at the numbers.

In 2017, according to budget documents, the city of Lawrence spent $81.9 million on police, fire and roads — often ranked among the most important of government services. Kansas Athletics during its fiscal year 2017 spent $94.7 million hosting athletic events and serving the university’s approximately 500 student athletes.

Everyone knows that big-time college athletics is, well, big. But dollar figures aren’t always evident. Based on Kansas Athletics’ audited financial statements — which are more expansive than the NCAA reports — KU Athletics is a $100 million enterprise, both in terms of revenues and expenses.

About this series

When KU announced in September plans to build $350 million in new facilities, primarily for football, it marked the beginning of one of the biggest financial bets the program has ever made. The Journal-World decided to study the financial books, talk to leaders and give readers a better understanding of the money game that is constantly a part of big-time college athletics. To see more articles go to: ljworld.com/kuath

There are not very many entities in Lawrence that crack the $100 million mark. The hospital and Lawrence public school system do, but other big public services don’t. The city-owned utility that provides water and sewer service to the more than 100,000 Lawrence residents was about a $45 million enterprise in 2017, according to city budget documents. The entirety of services provided by Douglas County government — the jail, the ambulance service, the road system — totaled about $84 million in 2017.

But to be fair, the Douglas County basketball team is not going to the Final Four anytime soon.

KU Athletics Director Sheahon Zenger didn’t put it quite that way. But he did put it in perspective: It would be easy to spend less, if you are willing to win less.

When you are competing against the likes of Texas and Oklahoma, spending less can get perilous in a hurry, Zenger said.

“I think we have been prudent and mindful of how we do that, though,” Zenger said. “As you look at the conference, Kansas over the years has typically been in the top four of the conference in both revenues and expenses. That is where we try to stay. Texas kind of sets a high bar.”

Indeed, you need a Texas-size Stetson to look the part in the Big 12 Conference. A complete database for revenues and expenses of college athletic programs isn’t yet available for 2017, but USA Today maintains such a database for 2016. It shows that Kansas’ spending isn’t extraordinary.

Texas’ is, though. The Longhorns spent $171 million during the 2016 period, which was the highest in the country. During that same period, Kansas spent $85.7 million, ranking No. 39 in the country. Ahead of it in the Big 12 was West Virginia at $85.9 million, Oklahoma State at $92.9 million, Oklahoma at $127.2 million, and Texas. (Worth noting, though, is that Baylor and TCU aren’t included in the database because they are private schools and they keep their financial numbers private.)

By that measure, Kansas’ spending is no better than middle-of-the-pack. Zenger said you don’t want to find yourself near the back of the pack.

“You don’t want to be the one that is receding or retreating,” Zenger said. “That is not the answer for your student-athletes, your coaches, or your constituents for that matter.”

If charging ahead is the strategy, often a new stadium or basketball arena is the tank that leads the charge. Zenger notes that is not what Kansas is proposing to do. The bulk of its $350 million in proposed facility improvements is to renovate the football stadium, not build a new one. The price tag for a new stadium would be even larger.

The proposed $350 million in facility upgrades already draws some interesting comparisons. That is about the same amount of money the university is spending on its Central District project, which encompasses 55 acres and more than a half-dozen new buildings, some extremely high-tech.

And a single football stadium costs about $300 million to renovate?

In the world of big-time college athletics, it does.

“You are asking a global question again,” Zenger said during a recent interview with the Journal-World. “That is every campus. If you are going to be in the game with others who are building facilities of that nature, you don’t go in and say, ‘Heck, we would like to build something like Baylor, but can we do it for half the price? Can we get cheaper steel? Can we make it just not look as nice?’ I don’t think that is who Kansas wants to be. So, you consciously operate on peer comparisons.”

‘Drunken sailors’

To be clear, the critics of college athletics aren’t arguing that Kansas is some type of particularly bad actor in the industry. If you were making a list of the athletic departments most awash in red ink, Kansas wouldn’t be on it. The concern many critics express has to do with the industry as a whole.

Does it have to cost this much to build athletic facilities? Are there better ways to spend money than pursuing athletic titles? Some think it is just bad economics. Yes, spending sometimes does help produce winners, but more often it does not.

“There is a theory if you spend like a drunken sailor, you’ll have success on the field,” said David Ridpath, an associate professor of sports business at Ohio University and board president of the Drake Group, an organization that advocates for more financial responsibility in college athletics. “But research doesn’t back that up. In a lot of ways, this is a winner-take-all market. There is only going to be one winner and a hell of a lot of losers.”

Ridpath is concerned that the athletics arms race is siphoning scarce donor dollars away from other needs that universities may have.

“Now alumni are giving money to this nonprofit athletic corporation that they might have given to the broader institution otherwise,” Ridpath said.

Athletic department proponents may counter that KU recently completed its largest fundraising campaign — the $1.6 billion Far Above campaign in 2016 — despite the athletics arms race.

But Murray Sperber, a professor emeritus at the University of California-Berkeley and a longtime author on the excesses of college sports, argues that private fundraising campaigns like Far Above have become more of a necessity as public support for higher education has declined. He thinks the industry of big-time college athletics is one of the reasons why.

“For the first time, a very sizable portion of the population is skeptical of higher education,” Sperber said. “One of the results is less willingness to fund higher education. There was a time higher education was almost entirely publicly supported.

“The problem is the public believes universities are making so much money from their athletic departments. Why should I pay for this when I see them paying millions of dollars to a single coach? It has had a negative effect. The irony is that the more money that comes into the system, the worse it will become.”

Economic engine

Whatever the ramifications for higher education, it is easy enough to see that the athletic programs are an economic engine for a town like Lawrence.

Economic development often is defined as an industry that attracts money from outside the community. Kansas Athletics has several of those magnets.

The department sold $19 million in tickets in 2017. A good number of them were bought by people from outside the city.

It collected $23 million in donations, with much of that coming from people who lived elsewhere.

And it received $32 million in NCAA and conference distributions, with all of that money coming from somewhere else.

Plus, unlike some big businesses in town, Kansas Athletics doesn’t have to ship off any of its revenue to a corporate headquarters somewhere else. The department, though, does send money to the larger university. The department paid $7.1 million in tuition, $2.1 million in meal programs and $1.6 million in housing costs to the university in 2017, according to audited financial statements.

And Zenger said he thinks it would be hard to find a department on campus that isn’t appreciative of something that KU Athletics has helped out with in the past.

“We try to be good partners across the institution in every way that we can,” Zenger said. “When we are asked, we try to answer the bell.

“It tugs at my heart to do this right every day. My goal is to do no harm and to help and assist this institution any way I can.”

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