O'Bannon ruling

[ChicosBailBonds]

I don't think you see my point. If all that is true about Mississippi Valley State, then they should cut their basketball team. But they should cut their sand volleyball team first.(Assuming it has a lower roi)

If I could, I would cut every low roi program in the nation. It could potentially save higher education as we know it.

If you don't benefit the academic mission of the university, you don't deserve an academic scholarship imho. Marquette basketball does that, Marquette tennis does not.

I'm just curious how the Marquette tennis team does not benefit the academic mission.  It MAY not benefit it, but I don't think you can categorically say it doesn't.  Hell, someone can make the argument that some of these high profile programs have hurt the academic reputation (short term) of some schools due to academic scandals, etc.  I don't disagree with your general premises, but seems to me you're making too black and white an argument on some of these.

Then we have opportunity costs.  The men's basketball team likely serves the MU academic mission better than the tennis team...point taken to a degree.  One could argue not having any basketball or athletic team and using those resources could push the mission even further ahead. In fact, there are a number of folks that have made that very pitch at MU and at other schools. 

At the end of the day, it's not a pure ROI calculation, as I'm sure you know very well.  Sometimes it's to say you got a big johnson, too, and want to play in the big leagues.  There is a cost to doing that.  Often it can be nothing more than that, just the cost of getting that "prestige".  Definitely interesting perspectives, would love to have a beer about it some day in College Station!   

[mu03eng]

So everyone is in agreement that college football makes tons and tons of money and any stat to the otherwise is a enron-isk lie?

And the fact that Cal-Berkeley and Michigan are spending $550 million on two stadiums means nothing when calculating the profitability of football?

On this point, all I'm arguing is college football does not make as much as you think and the only way for you to make your point is reject data and "just announce" they do.

FYI you aren't using data either.  You are using a factoid(with no verification) that an interested party used to form their side of the argument.

I've seen the books on several D1 Athletic departments that are not the top 25 programs.  Depending on how you assign dollars and cents and quantify relatively intangible benefits to the school, you either got a lot of football/basketball programs that are profitable or only 20-25 that are.  Neither scenario is factually inaccurate, however depending on your philosophical bent one has more relevance for the argument you are trying to make.

You aren't wrong, but that doesn't mean you are right either.

[Tugg Speedman]

The O'Bannon Ruling and the Beginning of the End of NCAA Inc.

http://www.businessweek.com/articles/2014-08-11/inside-obannon-ruling-ncaa-inc-dot-business-model-starts-to-unravel?campaign_id=DN081114

It’s not going to happen overnight, but the current structure of NCAA Inc.–the $16 billion-a-year college sports industry–will have to change. Old myths of amateurism and sport-as-hobby, which for generations have held the National Collegiate Athletic Association together, are crumbling under twin pressures: university sports factories demanding freedom to commercialize football and basketball as they see fit, and elite players demanding a slice of the revenue pie. The center cannot hold.

Last week the NCAA’s Division I board gave the 65 schools with the richest sports programs greater freedom to increase financial benefits for top recruits and allow aspiring pro athletes to hire agents. Then a federal judge in Oakland struck down the NCAA’s rule barring players from licensing their names and likenesses for commercial purposes. The future will bring more concessions to the mutinous power conferences and more player lawsuits. And don’t forget the campaign to allow NCAA football players to unionize.

Given all the turmoil, it’s worth taking a close look at the Aug. 8 ruling by U.S. District Judge Claudia Wilken in the antitrust case known as O’Bannon v. NCAA, a reference to former University of California at Los Angeles basketball star and lead plaintiff Ed O’Bannon. Wilken’s ruling is far from the last word; the NCAA will appeal its defeat, and other cases are in the pipeline. Still, her 99-page disquisition constitutes the most probing judicial examination of the NCAA I’ve ever read. If higher courts embrace her findings, the revolution in the college sports industry will accelerate more rapidly than even the most ambitious advocates for change might had expected.
Story: Digging Into the Details of the NCAA's New Rules: Four Blunt Points

In a subsequent piece, I’ll explain what she proposes to do about the NCAA’s unlawful cartel-like conduct. For now I’ll boil down Wilken’s “findings of fact.”

1. The marketplace. To find a violation of the Sherman Antitrust Act, a judge must define the relevant market in which trade is being unlawfully restrained. Wilken identified two such markets. In one, which already exists, universities compete for top athletes who are compensated with scholarships and other come-ons. In the other, which would exist in the absence of the NCAA’s restrictions, television broadcasters and video game makers would compete for licenses sold by players for the use of the athletes’ likenesses.

2. The cartel. Under Wilken’s view of the marketplace, the NCAA is immediately in trouble. Its member schools explicitly collude to cap compensation in the competition for athletic talent, while they squelch altogether the market for student-athlete licenses. That’s illegal unless the NCAA can come up with a “pro-competitive” justification for its conduct. Wilken knocked down each of the NCAA’s purported justifications.
Story: The NCAA Needs Reform, but Paying Players Doesn't Cut It

3. Amateurism. The association claims that consumer demand for its product–football and basketball games–rests on fan preference for amateur competition. Wilken noted, though, that the very concept of amateurism is an NCAA confection and one that universities have defined inconsistently over the decades.

Early in the 20th century, NCAA rules barred athletic scholarships that today are seen as sacrosanct. So schools recruited students with flat-out “subsidies” and under-the-table payments. In 1948, the NCAA enacted a “Sanity Code” designed to eliminate the cash-in-envelopes for ringer football players. That code banned financial aid based on athletic skill, a prohibition that would, again, have ruled out present-day sports scholarships. The NCAA soon repealed the Sanity Code and created an enforcement committee to investigate rules infractions, the forerunner of the contemporary disciplinary apparatus that (absurdly) polices such sins as students selling jerseys or championship rings on EBay (EBay). In 1956, the NCAA reconceived amateurism as allowing athletic scholarships that included supplemental cash for incidentals like laundry and supplies. In 1975, it retracted permission for incidental cash but later allowed players to receive federal Pell grants, even if the latter exceed the cost of attending college. Other exceptions now allow, for example, NCAA tennis players to accept professional tournament prize money earned as teenagers.

In short, Wilken found that amateurism is whatever the NCAA says it is–a justification that’s too convenient by half. Moreover, she poked large holes in consumer surveys upon which the NCAA relied to show that college sports fans want to watch only amateur competition. The surveys were distorted by leading questions and dubious interpretations of ambiguous results. The NCAA’s own witnesses conceded that fans buy tickets based on alumni loyalty and regional attachments. An athletic department official from the University of Texas testified that UT sports would remain popular as long as they had “anything in our world to do with the University of Texas.”

[TAMU, Knower of Ball]

I'm just curious how the Marquette tennis team does not benefit the academic mission.  It MAY not benefit it, but I don't think you can categorically say it doesn't.  Hell, someone can make the argument that some of these high profile programs have hurt the academic reputation (short term) of some schools due to academic scandals, etc.  I don't disagree with your general premises, but seems to me you're making too black and white an argument on some of these.

Then we have opportunity costs.  The men's basketball team likely serves the MU academic mission better than the tennis team...point taken to a degree.  One could argue not having any basketball or athletic team and using those resources could push the mission even further ahead. In fact, there are a number of folks that have made that very pitch at MU and at other schools. 

At the end of the day, it's not a pure ROI calculation, as I'm sure you know very well.  Sometimes it's to say you got a big johnson, too, and want to play in the big leagues.  There is a cost to doing that.  Often it can be nothing more than that, just the cost of getting that "prestige".  Definitely interesting perspectives, would love to have a beer about it some day in College Station!   

Oh absolutely. I agree with pretty much all of this. I have no data on the basketball team's ROI or the tennis team's or any other team's for that matter. That would take much smarter people than I to do a proper assessment. My hypothesis is that the ROI for certain sports will be a lot higher than it is for other sports. And there are other factors that need to be considered besides an ROI calculation. Again, it takes a lot smarter people than I. But in the current political landscape I think higher education as a whole (not just athletics) needs to be more focused on the ROI of their various programs.

And anytime you are in college station, give me a hollar. I'd be happy to buy a Californian gentleman such as yourself a nice cold shiner right in the middle of God's country.

[forgetful]

The O'Bannon Ruling and the Beginning of the End of NCAA Inc.

In short, Wilken found that amateurism is whatever the NCAA says it is–a justification that’s too convenient by half. Moreover, she poked large holes in consumer surveys upon which the NCAA relied to show that college sports fans want to watch only amateur competition. The surveys were distorted by leading questions and dubious interpretations of ambiguous results. The NCAA’s own witnesses conceded that fans buy tickets based on alumni loyalty and regional attachments. An athletic department official from the University of Texas testified that UT sports would remain popular as long as they had “anything in our world to do with the University of Texas.”

This last section though would argue that they are incredibly well compensated by their association with the university and loyal alumni.

That without this association, the individuals have no value.  So they are not marketing their likeness, they are marketing quarterback X from the University of Texas.

[brandx]

This last section though would argue that they are incredibly well compensated by their association with the university and loyal alumni.

That without this association, the individuals have no value.  So they are not marketing their likeness, they are marketing quarterback X from the University of Texas.

They are marketing their exact likeness.

If the NCAA is correct, why not just license a generic-faced QB with Texas gear since the athlete only has value through his association with Texas (which very few people believe, BTW)?

[source?]

 The purpose of a University is not to make money.  We have a separate category of "for-profit schools" ... none of which are NCAA members.

Not that it really adds to the discussion (which I'm finding very enlightening), but just because I'm a stickler...Grand Canyon University.

[Tugg Speedman]

Not that it really adds to the discussion (which I'm finding very enlightening), but just because I'm a stickler...Grand Canyon University.

Are they a NCAA member?

[GGGG]

Are they a NCAA member?

Yes...member of the WAC.

[jficke13]

Are they a NCAA member?

This is a fairly recent development. I want to say within the last two years or so.

[Tugg Speedman]

So we have at least one for profit school ... and they offer more college sports than MU

http://www.gculopes.com/sports/2010/1/19/GEN_0119104423.aspx?id=3

The Grand Canyon University Department of Intercollegiate Athletics is dedicated to providing quality programs and athletic experiences for men and women with interest and ability that is consistent with the stated mission and values of the university.

We are committed to the development of the whole person. The department strives to educate and involve students and the university community in the promotion of personal growth. This department strives to prepare men and women to be student-athletes distinguished by integrity, effort to succeed, and Christian conduct.

We expect our student-athletes to pursue excellence on the courts and playing fields, in the classroom, and in our community. Students who choose to participate in our athletic programs are challenged to lead lives committed to health, discipline, perseverance, and stewardship. We expect our student-athletes, coaches and staff to emulate Christ in all aspects of their lives including their academic and athletic endeavors.

--------------------

Maybe if MU did the ROI calculation TAMU wants they will conclude MU need MORE sports?

[ChicosBailBonds]

GCU advertises here in So. Cal like nobody's business.  They have quite the operation going on.

[TAMU, Knower of Ball]

Higher education institutions across the nation are watching Grand Canyon very closely. They are almost like a hybrid of traditional four year bachelor's granting institutions and the crazy cheap but significantly sketchy online universities such as university of Phoenix. They may be destined for failure, they may be the future of higher education, or they could be the thing that complete undermines years of tradition. I think most traditional universities are hoping that they fail.

[dgies9156]

Not really sure what the bolded part above has to do with this.  That would only affect year-over-year profitability within the same program.  The allocations portion makes a ton of sense, but the Big House a football only resource so the amortization schedule would only affect expenses for football timing wise.  Accruals would only have a timing effect as well.

Put the Big House renovation on a five-year amortization and watch what happens to the financial statement profitability of Michigan football!

On an economic -- or cash flow -- basis, you're right, it does not matter. But GAAP, as I am sure you know, doesn't work that way. A 40 year amortization has a very modest impact on year-over-year profitability. A five year amortization would kill it!

[forgetful]

Higher education institutions across the nation are watching Grand Canyon very closely. They are almost like a hybrid of traditional four year bachelor's granting institutions and the crazy cheap but significantly sketchy online universities such as university of Phoenix. They may be destined for failure, they may be the future of higher education, or they could be the thing that complete undermines years of tradition. I think most traditional universities are hoping that they fail.

Many higher education institutions are already adopting aspects like this.  ASU has an online only program, Central Michigan, Penn State, University of Florida  all have online only bachelor degrees.

We will see more universities progress towards this type of model.  I think it greatly undermines the quality of the education.  There are already people that make a small fortune taking courses for people to get them a degree without any actual effort.

But with the value of a Bachelor's degree declining it is not possible to maintain the current model either.

[WarriorInNYC]

Put the Big House renovation on a five-year amortization and watch what happens to the financial statement profitability of Michigan football!

On an economic -- or cash flow -- basis, you're right, it does not matter. But GAAP, as I am sure you know, doesn't work that way. A 40 year amortization has a very modest impact on year-over-year profitability. A five year amortization would kill it!

Yes I get that.  But it seemed like most of the discussion here around the tricky accounting sports departments are doing are shifting costs/revenues from one sport to the other, handling costs/revenues of merchandising, handling donations, etc.  All items that change the profitability of individual sports within the same year.

Changing the amortization schedule affects the profitability of Michigan football-only and only affects it YOY.

[brandx]

Higher education institutions across the nation are watching Grand Canyon very closely. They are almost like a hybrid of traditional four year bachelor's granting institutions and the crazy cheap but significantly sketchy online universities such as university of Phoenix. They may be destined for failure, they may be the future of higher education, or they could be the thing that complete undermines years of tradition. I think most traditional universities are hoping that they fail.

TAMU, I have worked with many guys in the IT industry who got their degrees at U of Phoenix. All very smart guys. Of course I don't know if that was due to U of P or not or if they were already talented guys in the field that just needed the degree to move up the ladder.

[TAMU, Knower of Ball]

TAMU, I have worked with many guys in the IT industry who got their degrees at U of Phoenix. All very smart guys. Of course I don't know if that was due to U of P or not or if they were already talented guys in the field that just needed the degree to move up the ladder.

Oh absolutely. Online education is a great tool when used for the proper need. The problem comes when University of Phoenix (and others) try to market themselves as being able to confer the same quality of education as a four year brick and mortar university. U of P is actually in the middle of a lawsuit right now where a group of former alumni are suing them for fraud and false advertising.

[keefe]

TAMU, I have worked with many guys in the IT industry who got their degrees at U of Phoenix. All very smart guys. Of course I don't know if that was due to U of P or not or if they were already talented guys in the field that just needed the degree to move up the ladder.

x

smart guys who needed a credential. Their Phoenix 'education' did nothing for their skill or knowledge store.