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College Sports' $4 Million Man

January 11, 2007

Last Friday, on the first day of the National Collegiate Athletic Association’s annual convention, the biggest college sports story of the day was the University of Alabama’s hiring of Nick Saban to a record-breaking $32 million, eight-year contract.  

You couldn't help but appreciate -- or, in some cases, lament --the timing of the announcement. The next evening, Myles Brand, the NCAA's president, would say in his annual  state of the association speech that athletics departments should try to control spending. And late last year, Brand found himself largely on the defensive as he responded to a letter from the U.S. House of Representatives Committee on Ways and Means that called into question, among other things, why taxpayers should help support "escalating coach's salaries."

Sen. Charles E. Grassley (R-Iowa), former chairman of the U.S. Senate Finance Committee, spent a good part of 2006 scrutinizing executive compensation and perceived abuses by nonprofit entities, and he mentioned million dollar presidential salaries during a December hearing on tax exemptions and incentives for higher education.

Washington has grabbed hold of the compensation issue in higher education, and nowhere are the salaries more mind-boggling than in the upper echelons of Division I football and men's basketball. A  USA Today report last fall showed that at least 35 coaches were due to make $1 million last year in college football, and a Knight Commission survey found that four in five Americans are concerned that many assistant football coaches earn more than senior professors at their universities.

The Minnesota Legislature, upset that the University of Minnesota will spend millions of dollars to buy out the contracts of its ousted men's basketball and football coaches, is considering a bill that would ensure that tax money isn't used in buyouts in the future. (A university spokesman has said that the athletics department will cover the costs out of its annual budget.)  

With increasing scrutiny of athletics spending, how will all of this play in Congress and on campus?  

“They couldn’t have picked a worse time to get these issues in front of people -- in the middle of bowl season, before the NCAA convention and as the new Congress starts," said James J. Duderstadt, a former University of Michigan president and member of the Secretary of Education’s Commission on the Future of Higher Education. He voiced his concern over escalating coaches' pay in testimony during the December Senate hearing.

Duderstadt said that when the flagship university in Alabama, ranked near the bottom in state spending on higher education -- the state's entire budget for need-based aid in 2004-5 was $3.35 million, according to the National Association of State Student Grant and Aid Programs -- offers a coach $32 million, it sends the wrong message about priorities. (In a nod, perhaps, to perceptions, Saban donated $100,000 this week to a scholarship fund at the university.) 

Worse still, Duderstadt said, is the possibility that the enormity of the contract is the last straw for lawmakers looking to take aim at not just the nonprofit status of college sports but of higher education as a whole.

"My experience is that things push you over the edge," he said. “I think it’s going to come to the table, and it would be a tragedy if it does because of intercollegiate athletics."

Nathan Tublitz, a professor of biology at the University of Oregon and a co-chair of the Coalition on Intercollegiate Athletics, a faculty group that tracks sports issues, said the timing of Saban's hire should have no bearing on whether Congress pushes ahead with its college sports inquiries. He expects lawmakers to focus on the big picture --college sports' tax exempt status -- rather than single out the salary issue.

"That has to be addressed by the leadership of a university," Tublitz said. "It starts with presidents. They have to put their [feet] down, say enough is enough, and they can't do it without faculty."

The faculty coalition has taken aim at faculty senates to try to gain support for limiting spending on coaches' salaries. But, as Tublitz has discovered, there's often disinterest in championing a cause that can be quite unpopular on a campus. 

Duderstadt said he is "appalled" that university boards and presidents haven't taken a greater stand. He said while the NCAA has taken a hands-off approach on the question of coaches' pay, largely out of concerns of violating antitrust laws, Brand must be under increasing pressure from some Division I institutions to take action.  

Walter Harrison, president of the University of Hartford and chairman of the NCAA's executive committee, said that members of the Division I Board of Directors recently expressed dissatisfaction over the rising cost of hiring coaches. 

"It's clearly of concern, but there's very little the NCAA can or would do about it," he said. "Beyond the antitrust issues, there's a firm principle in the NCAA that institutions have autonomy. The only answer is self-restraint by individual universities."

Harrison added that at most institutions, the cost of expanding or renovating facilities to keep up with competitors is of more concern than the cost of paying a coach's salary.

Brand drew criticism among some academics for a line in his Ways and Means Committee response letter that stated: “Coaches’ compensation packages, especially those with seven-figure packages, include institutional salaries commensurate with other highly paid and highly recruited faculty and staff.” (The average salary for a full professor at the University of Alabama in 2005-6 was $97,800; for an instructor, it was $36,600.) 

Brand argues that the majority of the total income of high-paid coaches comes not from an institution’s tax-exempt dollars but from outside revenue. “This is exactly the same method that colleges and universities use to compete for top academicians in selected disciplines,” he said in the letter.

That's been the justification coming from the University of Alabama. Saban's contract, according to a university spokeswoman, is derived from ticket sales and a licensing agreement rather than from taxpayer money. The university's athletic department is self-supporting, no state funds are used in its budget and football generates more than 80 percent of the department's annual budget, she said. 

So, if the football coach brings in the most money for the institution, why shouldn't he be compensated accordingly? Grant Teaff, executive director of the American Football Coaches Association, told Inside Higher Ed this fall that a coach's high salary is a product of his financial value to an institution. He added that only a small percentage of coaches are earning top dollar.

But Tublitz, the COIA co-chair, said that the top-paid coaches are taking away money from other parts of the university. "If (the academic side) wasn't directly or indirectly affected in these cases, that's fine," he said. "But it is. Money that goes to athletics is money that could have gone to academics."

 

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