When University of Kansas Chancellor Douglas Girod thinks about his university’s athletic department, a number sometimes comes to mind. It is not one you’ll find on the scoreboard or in the record books, though. Rather, look through enrollment records.
The number is 40 percent, and that roughly is the share of KU students who come from outside the state of Kansas.
“That will continue to be a critical part of our enrollment strategy,” Girod said in a recent interview with the Journal-World.
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
In some ways, out-of-state enrollment has become a necessity. Kansas’ population growth has been stagnant for years now. Counting on there being enough Kansas families with enough tuition dollars to support KU’s rising costs is risky.
So, you try to grow the pie by getting kids from Chicago or Omaha or China to choose KU as their university home. Sure, hopefully KU’s academic pedigree seals the deal, but first you have to get them on the showroom floor. Kansas’ mountain views and world-renowned beaches are going to be of no help in that effort.
What may be? The Jayhawk. It has a national brand, and that is largely thanks to college athletics.
“You can’t buy the type of advertising that having the Jayhawk on national TV provides right now,” Girod said.
David Ridpath is familiar with the argument. Ridpath is 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. He said a common argument of chancellors and university presidents is that athletics is the front porch of the university.
At $100 million, which is about the amount KU spent on athletics in 2017, it is a gilded front porch. Ridpath said the entire analogy is built too much on anecdote and not enough on research. He said the research behind whether athletic spending produces more enrollment, better graduation rates, and more financial support for academic purposes is flimsy. Instead, leaders point to the general notion that the prominence of a school’s athletic teams naturally will lead to positive results for the rest of the university.
“They will tell you that the games are three-hour commercials for the university,” Ridpath said. “My response is, if they saw KU football play Ohio, that is not a commercial people want to watch.”
Point taken. KU’s football program hasn’t been very competitive recently. But Girod doesn’t see how spending less money on the program is going to make it better. Girod said he does believe facilities play an important role in attracting quality recruits who can improve the fortunes of the team. He thinks football facilities are particularly important for KU right now.
“When you don’t have that legacy of winning every single year, I think facilities come into play even more from a recruitment standpoint,” Girod said.
Critics don’t necessarily agree with that either. Some note that many of the $300 million-plus improvements proposed for KU have to do with fan amenities rather than facilities student-athletes will use, with the $26 million indoor training facility being the exception.
But university leaders and college athletic critics could disagree all day on a number of topics. There is, however, at least one point where they can find agreement: It is frustrating how academics is treated compared to athletics.
Girod said the academic side of the university operates on a completely different business model than the athletic side of the school. He worries that the disconnect can create fractures in the university community.
“I think it already is hurtful for morale,” Girod said. “There is a disconnect that doesn’t make sense. It does from a business standpoint, but it doesn’t make sense from a philosophical standpoint. It doesn’t make sense that the athletic side of the house is valued more by society than the academic side of the house. It is disappointing.”
When Kansas Athletics Inc. announced in September its Raise the Chant campaign to raise funds to build about $350 million in athletic facilities — with more than $300 million being for football — the Journal-World decided to review the finances of the athletic department as it prepared to make one of the bigger bets in its history.
The review found that the finances of the department were unbalanced in some regards. Expenses have been increasing at a rate significantly faster than revenues, both over the last decade and more recently. Pressure to generate donor money is immense. In fiscal year 2017, the department used about $19 million in donor funds to cover basic operating expenses.
During a recent interview with the Journal-World, though, Girod did not express concern over the finances of the department. He believes athletics at KU is going through a period of “catch-up” necessitated by KU not investing in a number of athletic facilities for “a lot of years.”
The increased spending levels at the department have been necessary to try to catch back up, but Girod is assuming that, at some point, KU will catch up. At that point, the finances of the department may look different.
“Historically, it may change,” Girod said. “At some point you can only spend so much on facilities, and then you have what you need.”
To be clear, Girod said nothing to indicate he thinks KU’s athletic department is facing financial trouble. Indeed, if you were making a list of athletic departments with the most red ink, Kansas wouldn’t be on it.
But $350 million in new spending on facilities creates questions about what the future will hold. Girod said he’s confident KU will manage future spending wisely.
“I’m comfortable that we are living within the budget,” Girod said. “I’m comfortable knowing that we are not going to borrow $300 million to build a project. That is just not going to happen. There is no reason to take major risks here.”
Donor money is expected to fund the bulk of facility improvements in the future. But debt is expected to play a role too. Kansas Athletics officials have been reticent to talk about how much debt could be in play. Girod offered a little more guidance. Girod said the university would have to “look really hard” at taking out even $50 million in debt for facility upgrades.
Even at that level, though, the impact on Kansas Athletics’ finances would be significant. A $50 million debt issuance likely would take KU’s debt and long-term lease obligations to more than $115 million.
Sharing the riches
Maybe 2013 could have been the glimpse of a new future.
That was the first year after the Big 12 Conference announced its lucrative television deal. Conference and media revenues jumped by more than 30 percent and totaled about $27 million for Kansas Athletics.
Yes, as reported last week, the department did boost spending significantly that year, with support and administrative salaries increasing by more than 40 percent in a single year. Even with that, though, there was still plenty of money left over. The department had revenues that exceeded expenses by about $13 million, according to NCAA reports.
Maybe this new era of big television money would create a world where athletics had all the money it needed and even could financially help the academic side of the university.
“I thought there was so much money coming in that they couldn’t piss it all away,” said Murray Sperber, a professor emeritus at the University of California-Berkeley and a longtime author on the excesses of college sports.
Indeed, the money kept rolling in. KU conference and media rights totals grew from about $7 million a year in 2006 to $32 million in 2017. But the money never did flow to the university’s general fund, and that wasn’t just at Kansas.
Both Ridpath and Sperber said university presidents simply don’t take money from athletic departments to fund academics, not even when windfalls of TV money appear.
“Nobody says the very rational thing: 'That $25 million you just got? How about $15 million of that comes to undergraduate education?'” Sperber said.
There’s also a rational reason why university presidents don’t say that. What would make university presidents think they could order that and still keep their jobs?
“When you have a coach making $5 million or $6 million more than a president, when you have offensive line coaches making more than some presidents, you have shifted the power structure," Ridpath said. "They don’t want to stand up to that.”
Girod didn’t get into those details with the Journal-World, but he did talk about how athletics, its spending and its place in the world really isn’t the big problem facing higher education right now. It is the public’s change in attitude toward higher education.
“The bigger perception shift is one away from higher education as a public good and a public responsibility to one that is more of a personal benefit and a personal responsibility,” Girod said.
For evidence of that, look at the decline in state funding.
That puts more pressure on private fundraising. Girod has been on enough fundraising calls to know that athletics helps in that regard.
“The major way in which people stay connected to the university is by keeping in touch with what happens with the athletic department,” Girod said. “I hear that again and again.
“It is a valuable tool. It is one you really couldn’t replace with any other mechanism.”
Folks like Sperber — who is old enough to remember watching Gale Sayers as a Jayhawk — worry where it all will end.
“In the beginning, when Dr. Naismith blew up that first basketball, he truly though it was for students,” Sperber said. “Now, he was interested in including the students who were best at his game, but he couldn’t conceive of the commercial world it has become.
“There doesn’t seem to be any way of putting it back in the box. It has increased exponentially in the last 25 years. I don’t know where the ceiling is.”