In this article, Schlabach attempts to highlight the impact of the recent financial crisis on college sports across the country. When the housing bubble caused financial depression in the national economy, colleges and universities were some of the most affected institutions, especially because the state and federal legislatures were forced to cut funding, the major source of money for college sports. In this article, Schlabach highlights college sport in our institutions of higher learning to demonstrate the impact of the financial recession on sports. While different colleges used different measures in responding to the recession, it is clear that the pattern is similar across the country. For example, college sports sector was negatively affected due to reduced finances. Nevertheless, the author gives some rare scenarios in which some states, attempted to increase the funding for college sports, despite the negative impact of the recession (Schlabach 1).
Schlabach starts with the case of Stanford University as an example of the valued institutions of higher learning whose funding for sports was reduced. The institution could not support its sports teams, despite its long history of good performance and a huge funding tradition. Despite Stanford’s tradition of winning national championships for more than 30 years and producing renowned athletes like Tiger Woods, Mile Mussina and John McEnroe, it could not resist cutting funds (Schlabach 1). For instance, the institution dismissed about 21 members of the staff in the athletic department. In addition, it reduced its funding for men’s fencing team in order to save money. Wages and salaries at the department were also affected. Similarly, the number of students participating in sports was reduced significantly. In some colleges like Stanford, the tradition of using endowments to fund sports was a major problem during the crisis. For instance, most colleges and universities across the country have been depending on state legislature funds as well as donations from boosters and their alumni. When the recession hit the country, it negatively affected almost all sectors, companies and individuals. The author thinks that the impact on the states, boosters, investors, alumni and sponsors made it difficult to continue funding college sports, thus affecting their activities. In fact, the author reports that Stanford’s Cardinal Athletic faced a 20% to 30% reduction in the value of endowment as financial markets went down, which was equal to a drop from $520 million to less than $410 million in two years (Howard and Crompton 78).
Other colleges and universities faced similar problems, although the responses were slightly different. For instance, the author states that some institutions like Pac-1- School Washington was forced to take strict measures that included completely shutting down men’s and women’s swimming teams to save money. A renowned institution like MIT had to shut eight sports teams, including hockey, gymnastics, Alpine skiing and wrestling (Schlabach 1). However, this caused tension in the school, with students protesting violently within the institution. Some states like Indiana, Maine and Vermont were the most affected by the recession, forcing them to drop major sports activities like tennis, soccer, football and volleyball (Schlabach 1).
However, most universities, after realizing that they could no longer rely on the traditional sources of funding, decided to look for new ways of getting or saving money. For instance, universities and colleges in the state of Colorado were instructed to cut huge sums of money from their budgets because the state itself was cutting over $160,000 from its budget meant for funding sporting activities (Schlabach 1). Others like UNLV in California were forced to eliminate insurance facilities for both players and coaching staff. In Texas, colleges decided to eliminate soft drinks traditionally given free to the employees, hoping to save money. Others decided to eliminate publishing media guides or recruiting brochures because they are costly. Instead, many schools turned to DVD production to save money (Howard and Crompton 78).
Another major problem noted in the article is the tradition of paying coaches and their staff huge sums of money, a culture that has become common across the country. In fact, the author notes that some universities and colleges used to pay coaches more than the university leadership, including the presidents. For instance, Pete Varroll, the University of South California coach, was receiving around $4.4 million in a year, which is approximately four times higher than the salary the university president Steven Sample was earning in a year (Schlabach 1). Several other examples are highlighted in the article. This provides enough evidence of the tradition of excessive use of resources in college sports at the expense of other activities, including education and research. Like corporate CEOs, coaches and their staff were getting excessive salary, yet the universities were using endowments to pay their staff (Schlabach 1).
Nevertheless, the article highlights a relatively rare phenomenon during the recession. In this case, the author notes that some universities were expanding their sports businesses, despite the financial impact. For instance, some universities like Georgia Tech were not hit during the recession. In fact, the institution sold over 24,000 season tickets during the period, a relatively rare phenomenon in a hardly hit economy. Similarly, the University of Michigan’s athletic department achieved a surplus of nearly $9 million in 2009 compared to 2008, with its Wolverines completing construction projects worth millions of dollars. The team won Florida’s football BCS national championship for the third year in row during the period, increasing the college’s budget for athletics by more than $5 million (Schlabach 1). Texas experienced a similar phenomenon, especially in college football that generated more than $73 million (Schlabach 1).
Other colleges turned to selling lucrative TV contracts to corporations such as ESPN and CBS. The media corporations were given the right to air the leagues’ matches throughout the country. This initiative generated huge amounts of money for the University of Georgia and other SEC schools, which allowed them to deal with the financial crisis (Schlabach 1).
How does Schlabach’s article relate to sports finance? What is the author’s message to policy makers in sports finance? Schlabach’s article attempts to examine the impact of the recent financial crisis on college sports. The author’s motive is to describe the harmful impact of a national economic crisis on college sports. In addition, the author indicates that the tradition of using endowments to finance college sports is not effective because a minor financial crisis is likely to disrupt the entire system. Moreover, Schlabach wants to highlight other ways of soliciting funds to help colleges face financial crises, especially by selling TV contracts and tickets rather than depending on state legislatures and endowments (Howard and Crompton 79). I believe that the traditional methods of funding college sports are good, but there should be other alternatives as shown in the article. To avoid sacking employees or shutting important teams meant to improve athletics, it is better to look for alternatives as shown in the Georgia example (Howard and Crompton 79).
Works Cited
Howard, Dennis R and John Crompton. Financing sports. Austin, TX: FIT, 2009. Print
Schlabach, Mark. Programs struggle to balance budget. ESPN College Sports, 2009. Web.