Monday, May 21, 2012

College Presidents vs. College Football Coaches

1.  A new list of the highest-paid public university presidents in 2011, from today's Chronicle of Higher Education; E. Gordon Gee at Ohio State University is No. 1 at almost $2 million. 

2. USA Today's list of the highest-paid college football coaches in 2011, mostly at public universities.  Mack Brown at Texas is No. 1 at more than $6 million (with maximum bonus). 

50 Comments:

At 5/21/2012 10:01 AM, Blogger Jon Murphy said...

Other than OSU,USC, and I think Texas, schools lose tons of money via their athletic teams.

 
At 5/21/2012 10:29 AM, Blogger Ken said...

But we need to spend all this money on administrators and professionals because their "focus is not on academics.

This is indeed a reason for rising tuition costs in some schools and some fields; ie the fields require a lot more focus on [entertainment] these days then before, because that is what the market demands."

 
At 5/21/2012 10:45 AM, Blogger geoih said...

Big college athletics is just a state subsidized farm system for the NFL and NBA.

 
At 5/21/2012 10:54 AM, Blogger Buddy R Pacifico said...

Is the governor of the state of Washington the highest paid public employee?

You probably guessed no and that is correct. Would you have guessed that nearly 1,000 state employees are paid more than Gov. Gregoire?

Almost all of these public employees are paid more than the governor because of research grants, donations and the self supporting athletic departments.

Yep, U of Dub football coach Steve Sarksian is #1. U of Dub prez, Michael Young, makes a base of $550,000 annually with other good bennies. President Young gets a mansion to reside in, tenure at the Law School, ample retirement contributions and other $ perks.

 
At 5/21/2012 11:12 AM, Blogger Pulverized Concepts said...

What is there, maybe 115 DI football programs in the country and roughly 5 million guys qualified to coach football? And, don't forget, the coach drags along a staff that equals the number of players. They each get paychecks, too. It wasn't all that long ago that the head football coach was the most charismatic senior on the team. Not anymore. It's somehow in the best interest of these schools to spend the maximum amount of money possible.

 
At 5/21/2012 11:25 AM, OpenID moneyjihad said...

I'd like to see the total personnel costs for all the top university officials (including presidents, provosts, deans, assistant deans, etc) compared to the personnel costs for the top athletic officials (athletic directors, head coaches, assistant coaches). As much as the football coaches are being paid, I suspect there's more central office fat to be cut among the deans than the coaches...

 
At 5/21/2012 11:25 AM, Blogger Alan said...

Coaches who don't do well get fired. Wouldn't you expect higher pay in fields where one really has to accomplish things?

 
At 5/21/2012 11:25 AM, Blogger Alan said...

Coaches who don't do well get fired. Wouldn't you expect higher pay in fields where one really has to accomplish things?

 
At 5/21/2012 11:41 AM, Blogger stan said...

Big time college football programs subsidize lots of other programs at most schools. They subsidize a number of other teams in other sports, often pay for recreation facilities used by the other students, often pay for parking that is used by the university the rest of the year, and sometimes even make direct cash gifts to the school. They are the single best way for the school to stay connected to alums, maintain visibility in the state and nation, and rally the student body and school spirit. They are also the subject of some of the silliest, brain-dead academic studies ever done.

 
At 5/21/2012 11:57 AM, Blogger Ken said...

stan,

Most college sports don't subsidize anything. It's really not "brain-dead" to find out if a program is losing money, particularly when people go around claiming the exact opposite.

 
At 5/21/2012 12:36 PM, Blogger morganovich said...

ken-

i don't think that was his point.

he was pointing to huge football programs like alabama, texas, or whatever. those programs DO throw off a lot of money and do subsidize other sports.

athletic programs in aggregate may lose money (nobody makes money on a swim team or on fencing) but that does not means that the big football programs do not make money.

many do.

u of texas made over $68 million in 2010 on over $96 million in revenues.

that's as much as the whole big 12 made on basketball, one of the only other sports anyone makes money on.

as this shows, lots of football programs make money.

http://www.bloomberg.com/data-visualization/texas-tops-college-football-with-75-operating-profit/

that huge profit puts the pay of the coach into some perspective. if a hedge fund manager made $68 million in profit, he'd get paid over $13 million. (20% profit share is pretty standard)

if you have a program that valuable, why wouldn't you pay up to get the best guy to run it?

maybe another guy would do it for $300k, but if revs dropped by $20 million, that would be a terrible decision. paying up for the best is not always a bad decision.

could another guy do the same job just as well for less money? hell if i know. maybe. maybe not. i know i couldn't and i have serious doubts about that 5 million number pc tossed out. if there were that many folks who were really qualified, no way salaries would be as high as they are.

 
At 5/21/2012 2:04 PM, Blogger Larry G said...

why is this kind of sports part of College to start with?

Does this essentially pervert the whole idea of the purpose of academics?

If college administrator know people will pay extra to go to a college with a big time sports programs...guess what.. the costs go up - not only for sports but all of it.

this is what many people want and yes..they are willing to pay 20-40K a year in debt to graduate with that brand name on their diploma.

 
At 5/21/2012 2:21 PM, Blogger 434AT3M3 said...

morganovich is spot on correct Ken.

Cal Berkeley's coach, Jeff Tedford, is paid by alumni and Nike. Less than $250K of his more than $2M salary is paid for by UC Berkeley.

The football team hands $15M back to the athletic department and University.

Ken - You and Mark Perry should have been football coaches. haha

 
At 5/21/2012 2:23 PM, Blogger 434AT3M3 said...

Larry G,

The costs to higher education go up because the federal government supports the student loan program.

Sallie Mae...I know you have heard of it.

Mark talks about it all the time.

 
At 5/21/2012 2:38 PM, Blogger Larry G said...

re: Sally Mae

the costs go up - not only because of Sally Mae - but because there is a demand and there is a demand at many Universities because of their Sports Program reputations.

The big name Sports Universities are "in demand".

getting subsidized loans to do so just makes it even easier.

here's a graph that would be interesting...

the name of the University, the average tuition and the average debt.

I bet the big time sports colleges would have impressive numbers.

 
At 5/21/2012 2:41 PM, Blogger Jon Murphy said...

I gotta agree with you, Larry.

No doubt the attractiveness of a school's sports program would entice students to attend, thus increasing the tuition. I know when my brother was looking at grad school, we definitely wanted a D1 sports school. He doesn't even play.

 
At 5/21/2012 3:19 PM, Blogger 434AT3M3 said...

Larry G,

You are confusing correlation and causation.

...and...come on Murphy...

really?

Sports programs increase tuition costs.

Sounds like a win for administrators and professors.

Both of you are laughingly wrong.

 
At 5/21/2012 3:26 PM, Blogger Pulverized Concepts said...

University of Minnesota, perennial doormat in the conference, enrollment 51,721. University of Indiana, even worse, enrollment 42,464. University of Central Florida, buy one of their sweatshirts, 56,235 students will sell you theirs. University of Illinois, they have a football team?, 43,881. Football success is the key to large student body numbers.

 
At 5/21/2012 3:27 PM, Blogger Jon Murphy said...

Both of you are laughingly wrong.

Why?

You don't think a major athletics program, like LSU or OSU, benefits the school's recruitment of students? Ever watch college games? All the advertisements are for the school. Check out the school's websites (or any college, for that matter): they will have sections about athletics.

You can bet your bottom dollar athletics is something schools use to recruit, both students and athletes (I object to the term "student-athlete." The majority of athletes, especially on major campuses, are idiots).

Here's another way of thinking of it:

Let's assume that a school wants to have a successful national athletics program. They go out and recruit the best football players in the nation, offering them full scholarships. Seeing as there is no such thing as a free lunch, the school needs to make up that cost elsewhere: the regular student body. If you've ever looked at a student bill, you'll see a line item called "activities fee" or something similar. That's how the majority of schools pay for their athletics programs (of course, some get local funding for stadiums, but that is very much the exception rather than the rule).

 
At 5/21/2012 5:39 PM, Blogger Ken said...

morganovich,

Only 22 football teams made money in the 2009-2010 season, out of 120 teams. I have no problem with someone getting paid $5M for turning $96M in profit. I was disputing the idea that sports, even football, subsidizes a whole lot. That a couple are profitable doesn't change the fact that most are not.

 
At 5/21/2012 6:05 PM, Blogger NormanB said...

To use Babe Ruth's great line when he was questioned about making a lot more money than the President Coolidge: "I had a better year than he did."

Considering how college costs are going out of control vs football programs that pay for the whole athletic department and then some I have to say the football coaches get more than the presidents because they are having better years.

 
At 5/21/2012 6:05 PM, Blogger NormanB said...

To use Babe Ruth's great line when he was questioned about making a lot more money than the President Coolidge: "I had a better year than he did."

Considering how college costs are going out of control vs football programs that pay for the whole athletic department and then some I have to say the football coaches get more than the presidents because they are having better years.

 
At 5/21/2012 6:20 PM, Blogger Pulverized Concepts said...

Why would you compare the compensation of the football coach to the school president? The schools themselves compare coach compensation to other coaches. Likewise with presidents. That doesn't make any sense either, though. Only one team can win the conference championship, and only one can win the national championship, the rest are losers. Shoveling money on top of these sports psychos is institutional vanity, like buying a $5K bike to ride down to the coffee shop.

 
At 5/21/2012 6:24 PM, Blogger Larry G said...

College Sports undermines the basic mission of College IMHO.

There are many colleges in the country that have sports but they do not dominate the institution and the people who play sports have to meet the same academic standards as other students.

But they are basically providing what their customers want and as long as they can charge an arm and leg for tuition... they can then pay all those administrators.. so it's a "win-win" except for students.

 
At 5/21/2012 6:53 PM, Blogger VangelV said...

Other than OSU,USC, and I think Texas, schools lose tons of money via their athletic teams.

That is the reason why the volleyball coaches aren't paid very well. But many football programs make a huge amount of money for the schools and any coach that can create a successful program will be able to get a very good salary. As he should.

 
At 5/21/2012 8:57 PM, Blogger Jon Murphy said...

Vangel,

I'd agree if the stats were a lot more in your favor. But as Ken points out, only 22 of the 120 D1 football schools turned a profit. 18.3%. That's pretty shitty. There has got to be a reason why powerhouse schools are willing to lose money on these programs. I suggest it's the publicity.

 
At 5/21/2012 10:32 PM, Blogger VangelV said...

I'd agree if the stats were a lot more in your favor. But as Ken points out, only 22 of the 120 D1 football schools turned a profit. 18.3%. That's pretty shitty. There has got to be a reason why powerhouse schools are willing to lose money on these programs. I suggest it's the publicity.

It's the money that the publicity brings when big donors give millions to the school.

 
At 5/22/2012 5:34 AM, Blogger Larry G said...

when we say "did not turn a profit", what does that mean in terms of who is paying to make up the "loss"?

 
At 5/22/2012 6:46 AM, Blogger Jon Murphy said...

It's the money that the publicity brings when big donors give millions to the school.

That's a possibility. But I imagine most donors to universities are alum. And besides, if you are relying solely on donations to make up losses, then you'll go bankrupt. No doubt that donations help, but they are not the only way the schools make up the losses. They have to pass that cost on to someone else.

 
At 5/22/2012 6:49 AM, Blogger Jon Murphy said...

when we say "did not turn a profit", what does that mean in terms of who is paying to make up the "loss"?

For the most part, it's the students. They'll pay higher fees. In some of the big Southern cities, the city itself will help pay for the sports program (they get a lot of benefits out of it).

Whether you love, hate, or are indifferent to college sports, you have to admit they are helping to fuel this college bubble as well.

 
At 5/22/2012 6:59 AM, Blogger Larry G said...

"Whether you love, hate, or are indifferent to college sports, you have to admit they are helping to fuel this college bubble as well?

Well, I think big time sports programs damage the academic mission of a college and marginalize the idea that the college has true academic standards for admission and earning a degree and that realization affects other students who, as a result,adopt a cynical idea of what is actually involved in "earning" a degree.

but beyond that - it would be interesting to see a chart showing big time sports colleges tuition costs and average debt compared to colleges without big time sports programs.

I would not be surprised to see the "bubble" primarily associated with the big-time sports program schools.

 
At 5/22/2012 7:08 AM, Blogger VangelV said...

That's a possibility. But I imagine most donors to universities are alum. And besides, if you are relying solely on donations to make up losses, then you'll go bankrupt. No doubt that donations help, but they are not the only way the schools make up the losses. They have to pass that cost on to someone else.


There are no 'losses' for most schools when you factor in all of the revenue flows from football. Many of the alumni give hundreds of thousands of dollars for special access and privileges related to the program. It is not all generosity on their part because some of them use that access for business purposes so that they can be even more successful.

But that is peanuts when compared to the money flowing in from TV deals. The Pac-12 just signed a ridiculous $3 billion deal over 12 years. On top of that there are other media deals, revenues that come from uniform sales, and a lot of tie-ins to the programs. Add the gate receipts, the bowl game money, etc., and you have a huge amount of cash that is delivered by the football programs. But after the accountants get through and the administrators spend money on things that are not needed by the program much of that revenue turns into a cost that is not properly allocated and turns a profit into a loss. The Big 10 owns half its own network. SEC schools have their own TV networks or their own TV deals.

The much bigger costs are associated with the minor programs that have no TV deals or a big stadium audience. This is particularly true of the women's programs that would not exist without the government mandates that force the NCAA to subsidize them.

 
At 5/22/2012 7:16 AM, Blogger VangelV said...

Well, I think big time sports programs damage the academic mission of a college and marginalize the idea that the college has true academic standards for admission and earning a degree and that realization affects other students who, as a result,adopt a cynical idea of what is actually involved in "earning" a degree.

Big time sports are about image and money, not academic prestige.

 
At 5/22/2012 7:30 AM, Blogger juandos said...

"You probably guessed no and that is correct. Would you have guessed that nearly 1,000 state employees are paid more than Gov. Gregoire?"...

Would you guess that the questionable worth of the 1,000 state employees individually or collectively is costing the state's taxpayers less than what Gregoire cost the same taxpayers?

That's the 'opinion' I get from some people I know who live in King county...

Personally I find it a bit deifficult to believe but then again considering Granholm and Michigan maybe its not that much of a stretch...

 
At 5/22/2012 7:40 AM, Blogger juandos said...

" It's really not "brain-dead" to find out if a program is losing money, particularly when people go around claiming the exact opposite"...

Well ken I find it interesting that you would depend on the NCAA for financial information when they have long been the real millstone around the necks of colleges and universities that can and do make money off of a 'couple' of popular sports...

The NCAA is actually a political organization and like government add nothing to the value of college athletics...

There was quite a bit of profit both large and small in college athletics until the government and its Title IX stepped in...

BTW the NCAA did damn little to fight that incursion into the college athletics arena...

 
At 5/22/2012 8:04 AM, Blogger Jon Murphy said...

Well, I think big time sports programs damage the academic mission of a college and marginalize the idea that the college has true academic standards for admission and earning a degree and that realization affects other students who, as a result,adopt a cynical idea of what is actually involved in "earning" a degree.

You'll get no argument from me, Larry.

but beyond that - it would be interesting to see a chart showing big time sports colleges tuition costs and average debt compared to colleges without big time sports programs.

I would not be surprised to see the "bubble" primarily associated with the big-time sports program schools.


I'll see what I can do for you.

 
At 5/22/2012 8:10 AM, Blogger Jon Murphy said...

But that is peanuts when compared to the money flowing in from TV deals...

You are correct in all that, Vangel, but still schools are seeing a loss. Most of the revenue from TV deals go to the conferences themselves, not the schools. They schools get a cut, sure, but not the $3B.

Athletic gear revenue goes to the NCAA. Again, the schools get a cut, but not that much.

There's a textbook I used in one of my classes that does an excellent job of explaining the NCAA, revenue sharing, and the like. I'll try to find a non-gated version of the chapter, but no promises.

 
At 5/22/2012 8:17 AM, Blogger juandos said...

"There's a textbook I used in one of my classes that does an excellent job of explaining"...

What would the title of that book be?

How the NCAA rips off colleges and contributes nothing at the sametime?

 
At 5/22/2012 8:24 AM, Blogger Jon Murphy said...

What would the title of that book be?

Good question...I don't have it in front of me right now, so I'll have to find it and get back to you.

How the NCAA rips off colleges and contributes nothing at the sametime?

Well, they're not really "ripping them off." Except the students. They're kinda getting this in the shorts.

Stadium revenue is the only source that goes directly to the schools. Other things, such as gear, TV deals, etc., go to the NCAA or Conference, who then distributes the revenue around to the schools. Revenue sharing. The idea is no major school, like a Texas or LSU, can dominate recruiting by promising gobs of scholarships that smaller schools (your Boise States and Bowling Greens) can't afford.

 
At 5/22/2012 8:52 AM, Blogger VangelV said...

Well, they're not really "ripping them off." Except the students. They're kinda getting this in the shorts.

Let me be clear that I detest artificial monopolies like the NCAA and prefer a free market. That said I do not buy into the argument that students are ripped off. If you are a scholarship athlete you get everything paid for and get to gradate if you try to with a degree that is not associated with any debt. That is worth a great deal. If you play basketball and don't like the terms you can go to Europe and play ball that pays you a salary as you wait for the NBA draft. If you are a football player and are good enough you can play in Canada and get paid while you wait.

The other students are not ripped off. They have a choice whether to support their teams or ignore them.

Stadium revenue is the only source that goes directly to the schools. Other things, such as gear, TV deals, etc., go to the NCAA or Conference, who then distributes the revenue around to the schools. Revenue sharing. The idea is no major school, like a Texas or LSU, can dominate recruiting by promising gobs of scholarships that smaller schools (your Boise States and Bowling Greens) can't afford.

But look at the recent conference changes. Obviously some of the schools have seen what is best for them and gone on to get a bigger piece of the pie. And there is always the choice of being independent and cutting your own deals as ND did for so long.

 
At 5/22/2012 8:55 AM, Blogger juandos said...

"Well, they're not really "ripping them off." Except the students. They're kinda getting this in the shorts"...

That's a for sure jon m!

"Revenue sharing. The idea is no major school, like a Texas or LSU, can dominate recruiting by promising gobs of scholarships that smaller schools (your Boise States and Bowling Greens) can't afford."...

Aint it great?!?! The Boise States and Bowling Greens leeching off the productive?

 
At 5/22/2012 9:28 AM, Blogger Pulverized Concepts said...

Land grant schools like Alabama and Oklahoma can't compete with the elite bastions of learning like Harvard, whose grads run governments and businesses around the world. Instead they make their mark on the football field, it's cheaper and easier to win a conference football title than it is to build a world-class university.

 
At 5/22/2012 9:36 AM, Blogger VangelV said...

Land grant schools like Alabama and Oklahoma can't compete with the elite bastions of learning like Harvard, whose grads run governments and businesses around the world.

Sure they can. They do it in the competitive marketplace instead of government bureaucracy.

And you give the schools too much credit. Bill Gates did not form Microsoft because of what he learned at Harvard. And Michael Dell did not start his computer company in his University of Texas dorm room because of the University of Texas.

Instead they make their mark on the football field, it's cheaper and easier to win a conference football title than it is to build a world-class university.

More nonsense. If I wanted to learn something useful so that I could understand the real world I would rather learn my undergrad economics at Auburn than at Harvard.

 
At 5/22/2012 10:16 AM, Blogger Jon Murphy said...

If you are a scholarship athlete you get everything paid for and get to gradate if you try to with a degree that is not associated with any debt.

I'll agree with you there. Of course, that is also assuming these guys choose a useful (for lack of a better word) major, rather than puppetry.

Also, with the exception of your top prospects, most of the guys playing football aren't getting a full scholarship. However, these guys are being used to make money for the school. Their likeness is being sold, their skills are being broadcast nationally. They risk life and limb playing the game, but they aren't compensated. Most of these guys are playing the game for the love of it, and good for them. But when you consider the tons of money the NCAA is making off selling them, they are kinda getting screwed. Especially when you consider that maybe 0.1% of all these athletes will go pro.

The other students are not ripped off. They have a choice whether to support their teams or ignore them.

Well, it's not quite that easy. You're still paying an activities fee that supports the program. of course, you know what you are getting into when you sign up.

 
At 5/22/2012 10:18 AM, Blogger Jon Murphy said...

By the way,

Structure of American Industry is the textbook I referenced earlier.

 
At 5/22/2012 10:53 AM, Blogger Pulverized Concepts said...

. If I wanted to learn something useful so that I could understand the real world I would rather learn my undergrad economics at Auburn than at Harvard.

That's not the point and you know it. How many Mises Institute grads are working for BHO? How many are a threat to win a significant election? Bogus Cherokee Elizabeth Warren, if she were a tenured professor at South Dakota State, couldn't get elected county commissioner, being from Harvard she's a threat to take the dipsomaniac seat in the US Senate.

 
At 5/22/2012 11:37 AM, Blogger 434AT3M3 said...

Murphy,

You are wrong about NCAA apparel deals.

Each University has their own deal which pays an astonishing amount.

You are clueless.

You should have been a football coach.

Why do you have capitalism so much?

 
At 5/22/2012 12:45 PM, Blogger Jon Murphy said...

From the NCAA website:

Overall annual revenue for college athletics programs was estimated for 2008-09 at about $10.6 billion. That includes about $5.6 billion in generated revenues, which is income from ticket sales, radio and television receipts, alumni contributions, guarantees, royalties and NCAA distributions. The remainder of the revenue is considered allocated revenue, which comes from student fees directly allocated to athletics, direct and indirect institutional support, and direct government support.

Source

So, about half of college athletics revenue comes from the NCAA, and the other half they have to raise via fees, government support, or sales.

 
At 5/22/2012 1:05 PM, Blogger Jon Murphy said...

Oh, and expenditures are about $10.5 billion. Same source as above

 
At 5/22/2012 2:05 PM, Blogger VangelV said...

I'll agree with you there. Of course, that is also assuming these guys choose a useful (for lack of a better word) major, rather than puppetry.

It is their choice. The university offers a huge amount of money for education. If they choose badly it is their business, not ours.

Also, with the exception of your top prospects, most of the guys playing football aren't getting a full scholarship. However, these guys are being used to make money for the school. Their likeness is being sold, their skills are being broadcast nationally. They risk life and limb playing the game, but they aren't compensated. Most of these guys are playing the game for the love of it, and good for them. But when you consider the tons of money the NCAA is making off selling them, they are kinda getting screwed. Especially when you consider that maybe 0.1% of all these athletes will go pro.

It is their choices. Being an athlete at a good school opens a lot of doors for smart graduates. And while these athletes may not get a scholarship they get other benefits such as access to paid tutors and advisers that help them focus on future goals that may have nothing to do with professional athletics. They clearly get more access to girls and other benefits that are not available to the average student.

Well, it's not quite that easy. You're still paying an activities fee that supports the program. of course, you know what you are getting into when you sign up.

The football programs are not why the fees are set up. They are used to support the sports that generate little interest particularly the women's programs that only exist because of regulatory interference rather than real world demand by consumers.

 

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