Today's WSJ Article on Rice's Athletics

[Water Pony]

THE JOURNAL REPORT: FOOTBALL

Another Money-Losing Season

College football: Can't live with it, can't live without it. Just ask Rice University.
By AMY MERRICK
Staff Reporter of THE WALL STREET JOURNAL
September 20, 2004; Page R6

To understand just how large Rice University's 70,000-seat football stadium is, consider this: It could seat all the school's undergraduate alumni, living and dead -- and it wouldn't even be half full.

And to understand the financial burden that football places on the private Houston university, consider this: Largely because of the football team, the school's athletic department runs annual deficits in the millions of dollars.

So last year, the school's board of trustees asked a consulting firm to weigh the advantages of dropping out of Division I-A -- the most competitive level of college sports -- altogether. Yet the pull of tradition was so strong that in May, after a fierce debate among students, faculty and fans, Rice chose to stay in the fight.

While the dilemmas at Rice are magnified because of its size -- with about 2,850 undergraduates, it is the smallest school in Division I-A after the University of Tulsa in Oklahoma -- and high academic standards, they illustrate problems other colleges and universities face as they grapple with the admissions pressures and skyrocketing budgets of big-time athletics.

At Rice, the trustees commissioned McKinsey & Co. to study the school's options for its athletic program, and many involved in college sports rank the firm's report among the most detailed analyses ever published by a university on the costs of intercollegiate sports.

The board asked McKinsey not to make any recommendations, but simply to explain the academic, competitive, economic and social consequences of potential changes to the sports program.

Bleak Outlook

"I thought it would be very clear that their conclusions were carefully done, and that they would not bend any of their answers to suit us," says E. William Barnett, chairman of the Rice board.

Delivered to the board in April, the 121-page report lays out a stark diagnosis: "Without improved gate receipts, better support from a group of alumni who are already contributing more than ever, or membership in a [Bowl Championship Series] conference with its much larger annual payouts, the economic outlook is bleak."

STAT SHEET



Facts about Rice University and football

Location Houston
Classification NCAA Division I-A
Conference Western Athletic Conference (moves to Conference USA in 2005)
Enrollment 2,822 undergraduates (fall 2003)
First in high-school class 21% of undergraduates entering fall 2003
Varsity athletes as percentage of student body, 2001-02 12
Annual athletic deficit, including financial-aid grants $10 million+
Spending on athletics per undergraduate, 2001-02 $6,809
Annual football revenue $2 million
Football expenses exceeding revenues, 2002 $3.7 million
Average student attendance at home football games, 2003 300
Student attendance as percentage of student body 12
Average non-student attendance at home football games, 2003 12,100
Rice Stadium seating capacity 70,000
Average total home attendance as percentage of seating capacity 18
Football win-loss record, 2003 5-7
Head football coach Ken Hatfield (11th season)



The report calculates that, including the increased financial aid an athlete receives compared with an average Rice student, the deficit between revenue and expenses in the athletic department has ballooned to more than $10 million a year. Football takes the largest share of the blame: While it produces about $2 million in annual revenue, it was responsible for nearly $4 million of that deficit in 2002, McKinsey calculates.

Rice is not alone. The McKinsey report notes that fewer than a dozen schools, regardless of their division, profit from their sports programs. And on average, a football team costs more than three times as much to support as a basketball team, and more than nine times as much as a baseball team.

Heavy Spending

Because of Rice's small student body, ticket sales don't contribute as much to sports revenue as they do at many other Division I-A schools. While the average university in Division I-A had $6.5 million in ticket sales in 2001, Rice had only $900,000. Overall, Rice spent $18.4 million on athletics in 2001, putting it in the bottom half of Division I-A schools. Per undergraduate student however, Rice spent the most on athletics -- $6,809, including financial aid -- of 115 Division I-A schools during the 2001-02 school year. The median spending for that group was $1,496.

But even schools with higher ticket sales and lower per-student costs face financial pressures. William C. Friday, chairman of the Knight Foundation Commission on Intercollegiate Athletics, a sports-reform group, cited a NCAA study showing that overall Division I-A schools have seen athletic department expenses exceed revenues in each year from 1993 to 2002, according to his testimony in May before the U.S. House Subcommittee on Commerce, Trade and Consumer Protection.

The commission's last comprehensive report, in June 2001, said that at more than half of Division I-A schools in 1999, athletic department expenses exceeded revenue by an average of $3.3 million, a margin that widened by 18% from 1997.

Rice has a long football tradition. It began playing other schools in 1912, and it helped form the Southwest Conference in 1914. In several ways, its standards serve as a model for other schools. It has had no major violations cited by the National Collegiate Athletic Association, and its athlete graduation rate of 81% in 2003 was one of the highest in Division I-A. Its baseball team won the College World Series last year.

But questions about the high costs of big-time sports and the admissions trade-offs necessary to bring in star athletes have gained momentum since the 1960s. Around that time, rivals such as the University of Texas and Texas A&M University exploded in size, gaining huge recruiting advantages, according to the McKinsey report. The birth of the Houston Oilers professional team in 1960 drew fans away from Rice games. In the 1960s and '70s, faculty members voiced concerns about athletes' academic caliber.

Tackling Disparities

More recently, schools in the conferences that participate in the college Bowl Championship Series -- the Rose, Sugar, Orange and Fiesta Bowls -- have received a much larger share of the football revenue from bowl-ticket sales and TV-broadcasting rights than schools such as Rice, gaining further advantages.

Citing an NCAA report, Mr. Friday told the House subcommittee earlier this year that the six conferences that make up the Bowl Championship Series alliance -- the Atlantic Coast, Big East, Big Ten, Big 12, Pacific-10 and Southeastern conferences -- received 90% of the revenue generated by the 2003 football bowl games, including the BCS games. He also said that has created a 50% revenue gap between the six BCS conferences and the five other conferences, such as the Mountain West, Conference USA and Rice's Western Athletic Conference, that do not participate in the BCS alliance.

Earlier this year, presidents of Division I-A schools agreed to a deal that increases the share of BCS bowl payments to colleges that don't belong to BCS conferences, and that gives them greater access to BCS bowl games. The fight for a new agreement was led by Tulane University, which does not belong to a BCS conference.

But the McKinsey report doesn't offer much hope for broad change across the NCAA. "The large and growing financial incentives among NCAA teams (whether formally controlled by the NCAA or not), combined with multimillion dollar coaching salaries, make Division I athletics look increasingly like a business instead of an extracurricular activity," it says.

Division III Alternative

One option considered in the report was to move Rice to Division III, a less competitive classification in which schools clearly consider sports a supplement to education. Rice has a standing invitation to join the University Athletic Association, a conference that includes academic peers such as Carnegie Mellon University, the University of Chicago and New York University. The move would save Rice $4.2 million a year, McKinsey estimates, mainly from reducing the costs of coaching salaries and eliminating athletic scholarships. Division II isn't considered an alternative, because Rice would lose the luster of Division I competition but wouldn't be playing schools similar in academic reputation to those in Division III.

Some faculty members say a move to Division III not only would address Rice's budget problems but also would improve the chances that the university could recruit student-athletes who could succeed academically as well as compete on the field.

While the McKinsey study was skeptical about the value of SAT scores in predicting students' performance in college, it noted that the standard for an athlete's admission to Rice, based on SAT scores, was lower than the standard for nonathletes by as much as 20%, with football and basketball accounting for the greatest portion of the dichotomy. It also says Rice athletes as a group have grade-point averages half a point lower than nonathlete students.

The Rice board held a two-day retreat to discuss the report privately, then released it to the public in May to a firestorm of criticism. "There is a price to transparency, and just as the people who wanted to keep athletics just as it was were pretty organized, the people who thought poorly of our current situation were less vocal in the beginning but have made their feelings very clear since then," says Mr. Barnett, the board chairman, who called the report "superb."

Fight to Remain

Alumni, students, staff members and Houston residents formed a group called Friends of Rice Athletics to support keeping the school in Division I-A. They organized a letter-writing and e-mail campaign and put together a rally on May 5.

Those who favor the status quo argue that the benefits of a top athletic program -- adding diversity to the student body, increasing national awareness of the university and pride in the school, and teaching young adults life lessons -- are largely emotional and difficult to quantify.

"I'm not sure every department in the university has in its mission that it is a profit-making business," says Ken Hatfield, the head football coach. "I think you invest in the lives of people who are going be leaders."

In e-mails, some supporters of athletics even invoked a speech by President John F. Kennedy at Rice's football stadium in September 1962. As he outlined plans to put a man on the moon, President Kennedy said:

"But why, some say, the moon? Why choose this as our goal? And they may well ask why climb the highest mountain? Why, 35 years ago, fly the Atlantic? Why does Rice play Texas?... We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills...."

Budget Curbs

On May 21, the Rice board decided to keep the school in Division I-A. But the board also recommended shrinking the athletic department's budget deficit, building a new basketball arena and student-faculty fitness center, and requiring athletes and nonathletes to go through the same admissions process.

With the escalating recruiting and economic pressures, the recommendations could be challenging to implement. But supporters of the athletic program are trying to build on their momentum. In July, the athletic department hired a new head of fund raising; ticket sales for the annual black-tie dinner were around $500,000, up from about $300,000 in recent years, according to the school.

And for the first time, the school recruited a slew of volunteers, including current football players, to blitz the area with phone calls pitching season tickets, helping to boost sales 14% so far. It also has moved its game against the University of Houston to Reliant Stadium, where the professional Houston Texans football team plays, to increase attendance for the matchup.

Rice Athletic Director Bobby May is also looking for ways to trim the budget. "We just have to sort of bear down," he says, "and make everyone aware of how important it is to do a good job of being creative in our approach."

Ms. Merrick is a staff reporter in The Wall Street Journal's Chicago bureau.

Write to Amy Merrick at [email protected]3

URL for this article:
http://online.wsj.com/article/0,,SB1095 ... 27,00.html

[Water Pony]

Rice is not alone. The McKinsey report notes that fewer than a dozen schools, regardless of their division, profit from their sports programs. And on average, a football team costs more than three times as much to support as a basketball team, and more than nine times as much as a baseball team.

Heavy Spending

Because of Rice's small student body, ticket sales don't contribute as much to sports revenue as they do at many other Division I-A schools. While the average university in Division I-A had $6.5 million in ticket sales in 2001, Rice had only $900,000. Overall, Rice spent $18.4 million on athletics in 2001, putting it in the bottom half of Division I-A schools. Per undergraduate student however, Rice spent the most on athletics -- $6,809, including financial aid -- of 115 Division I-A schools during the 2001-02 school year. The median spending for that group was $1,496.

But even schools with higher ticket sales and lower per-student costs face financial pressures. William C. Friday, chairman of the Knight Foundation Commission on Intercollegiate Athletics, a sports-reform group, cited a NCAA study showing that overall Division I-A schools have seen athletic department expenses exceed revenues in each year from 1993 to 2002, according to his testimony in May before the U.S. House Subcommittee on Commerce, Trade and Consumer Protection.

The commission's last comprehensive report, in June 2001, said that at more than half of Division I-A schools in 1999, athletic department expenses exceeded revenue by an average of $3.3 million, a margin that widened by 18% from 1997.

Rice has a long football tradition. It began playing other schools in 1912, and it helped form the Southwest Conference in 1914. In several ways, its standards serve as a model for other schools. It has had no major violations cited by the National Collegiate Athletic Association, and its athlete graduation rate of 81% in 2003 was one of the highest in Division I-A. Its baseball team won the College World Series last year.

But questions about the high costs of big-time sports and the admissions trade-offs necessary to bring in star athletes have gained momentum since the 1960s. Around that time, rivals such as the University of Texas and Texas A&M University exploded in size, gaining huge recruiting advantages, according to the McKinsey report. The birth of the Houston Oilers professional team in 1960 drew fans away from Rice games. In the 1960s and '70s, faculty members voiced concerns about athletes' academic caliber.

Tackling Disparities

More recently, schools in the conferences that participate in the college Bowl Championship Series -- the Rose, Sugar, Orange and Fiesta Bowls -- have received a much larger share of the football revenue from bowl-ticket sales and TV-broadcasting rights than schools such as Rice, gaining further advantages.

Citing an NCAA report, Mr. Friday told the House subcommittee earlier this year that the six conferences that make up the Bowl Championship Series alliance -- the Atlantic Coast, Big East, Big Ten, Big 12, Pacific-10 and Southeastern conferences -- received 90% of the revenue generated by the 2003 football bowl games, including the BCS games. He also said that has created a 50% revenue gap between the six BCS conferences and the five other conferences, such as the Mountain West, Conference USA and Rice's Western Athletic Conference, that do not participate in the BCS alliance.

Earlier this year, presidents of Division I-A schools agreed to a deal that increases the share of BCS bowl payments to colleges that don't belong to BCS conferences, and that gives them greater access to BCS bowl games. The fight for a new agreement was led by Tulane University, which does not belong to a BCS conference.

But the McKinsey report doesn't offer much hope for broad change across the NCAA. "The large and growing financial incentives among NCAA teams (whether formally controlled by the NCAA or not), combined with multimillion dollar coaching salaries, make Division I athletics look increasingly like a business instead of an extracurricular activity," it says.

Division III Alternative

One option considered in the report was to move Rice to Division III, a less competitive classification in which schools clearly consider sports a supplement to education. Rice has a standing invitation to join the University Athletic Association, a conference that includes academic peers such as Carnegie Mellon University, the University of Chicago and New York University. The move would save Rice $4.2 million a year, McKinsey estimates, mainly from reducing the costs of coaching salaries and eliminating athletic scholarships. Division II isn't considered an alternative, because Rice would lose the luster of Division I competition but wouldn't be playing schools similar in academic reputation to those in Division III.

Some faculty members say a move to Division III not only would address Rice's budget problems but also would improve the chances that the university could recruit student-athletes who could succeed academically as well as compete on the field.

While the McKinsey study was skeptical about the value of SAT scores in predicting students' performance in college, it noted that the standard for an athlete's admission to Rice, based on SAT scores, was lower than the standard for nonathletes by as much as 20%, with football and basketball accounting for the greatest portion of the dichotomy. It also says Rice athletes as a group have grade-point averages half a point lower than nonathlete students.

The Rice board held a two-day retreat to discuss the report privately, then released it to the public in May to a firestorm of criticism. "There is a price to transparency, and just as the people who wanted to keep athletics just as it was were pretty organized, the people who thought poorly of our current situation were less vocal in the beginning but have made their feelings very clear since then," says Mr. Barnett, the board chairman, who called the report "superb."

Fight to Remain

Alumni, students, staff members and Houston residents formed a group called Friends of Rice Athletics to support keeping the school in Division I-A. They organized a letter-writing and e-mail campaign and put together a rally on May 5.

Those who favor the status quo argue that the benefits of a top athletic program -- adding diversity to the student body, increasing national awareness of the university and pride in the school, and teaching young adults life lessons -- are largely emotional and difficult to quantify.

"I'm not sure every department in the university has in its mission that it is a profit-making business," says Ken Hatfield, the head football coach. "I think you invest in the lives of people who are going be leaders."

In e-mails, some supporters of athletics even invoked a speech by President John F. Kennedy at Rice's football stadium in September 1962. As he outlined plans to put a man on the moon, President Kennedy said:

"But why, some say, the moon? Why choose this as our goal? And they may well ask why climb the highest mountain? Why, 35 years ago, fly the Atlantic? Why does Rice play Texas?... We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills...."

Budget Curbs

On May 21, the Rice board decided to keep the school in Division I-A. But the board also recommended shrinking the athletic department's budget deficit, building a new basketball arena and student-faculty fitness center, and requiring athletes and nonathletes to go through the same admissions process.

With the escalating recruiting and economic pressures, the recommendations could be challenging to implement. But supporters of the athletic program are trying to build on their momentum. In July, the athletic department hired a new head of fund raising; ticket sales for the annual black-tie dinner were around $500,000, up from about $300,000 in recent years, according to the school.

And for the first time, the school recruited a slew of volunteers, including current football players, to blitz the area with phone calls pitching season tickets, helping to boost sales 14% so far. It also has moved its game against the University of Houston to Reliant Stadium, where the professional Houston Texans football team plays, to increase attendance for the matchup.

Rice Athletic Director Bobby May is also looking for ways to trim the budget. "We just have to sort of bear down," he says, "and make everyone aware of how important it is to do a good job of being creative in our approach."

Ms. Merrick is a staff reporter in The Wall Street Journal's Chicago bureau.

Write to Amy Merrick at [email protected]3

URL for this article:
http://online.wsj.com/article/0,,SB1095 ... 27,00.html

[Water Pony]

But the McKinsey report doesn't offer much hope for broad change across the NCAA. "The large and growing financial incentives among NCAA teams (whether formally controlled by the NCAA or not), combined with multimillion dollar coaching salaries, make Division I athletics look increasingly like a business instead of an extracurricular activity," it says.

Division III Alternative

One option considered in the report was to move Rice to Division III, a less competitive classification in which schools clearly consider sports a supplement to education. Rice has a standing invitation to join the University Athletic Association, a conference that includes academic peers such as Carnegie Mellon University, the University of Chicago and New York University. The move would save Rice $4.2 million a year, McKinsey estimates, mainly from reducing the costs of coaching salaries and eliminating athletic scholarships. Division II isn't considered an alternative, because Rice would lose the luster of Division I competition but wouldn't be playing schools similar in academic reputation to those in Division III.

Some faculty members say a move to Division III not only would address Rice's budget problems but also would improve the chances that the university could recruit student-athletes who could succeed academically as well as compete on the field.

While the McKinsey study was skeptical about the value of SAT scores in predicting students' performance in college, it noted that the standard for an athlete's admission to Rice, based on SAT scores, was lower than the standard for nonathletes by as much as 20%, with football and basketball accounting for the greatest portion of the dichotomy. It also says Rice athletes as a group have grade-point averages half a point lower than nonathlete students.

The Rice board held a two-day retreat to discuss the report privately, then released it to the public in May to a firestorm of criticism. "There is a price to transparency, and just as the people who wanted to keep athletics just as it was were pretty organized, the people who thought poorly of our current situation were less vocal in the beginning but have made their feelings very clear since then," says Mr. Barnett, the board chairman, who called the report "superb."

Fight to Remain

Alumni, students, staff members and Houston residents formed a group called Friends of Rice Athletics to support keeping the school in Division I-A. They organized a letter-writing and e-mail campaign and put together a rally on May 5.

Those who favor the status quo argue that the benefits of a top athletic program -- adding diversity to the student body, increasing national awareness of the university and pride in the school, and teaching young adults life lessons -- are largely emotional and difficult to quantify.

"I'm not sure every department in the university has in its mission that it is a profit-making business," says Ken Hatfield, the head football coach. "I think you invest in the lives of people who are going be leaders."

In e-mails, some supporters of athletics even invoked a speech by President John F. Kennedy at Rice's football stadium in September 1962. As he outlined plans to put a man on the moon, President Kennedy said:

"But why, some say, the moon? Why choose this as our goal? And they may well ask why climb the highest mountain? Why, 35 years ago, fly the Atlantic? Why does Rice play Texas?... We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills...."

Budget Curbs

On May 21, the Rice board decided to keep the school in Division I-A. But the board also recommended shrinking the athletic department's budget deficit, building a new basketball arena and student-faculty fitness center, and requiring athletes and nonathletes to go through the same admissions process.

With the escalating recruiting and economic pressures, the recommendations could be challenging to implement. But supporters of the athletic program are trying to build on their momentum. In July, the athletic department hired a new head of fund raising; ticket sales for the annual black-tie dinner were around $500,000, up from about $300,000 in recent years, according to the school.

And for the first time, the school recruited a slew of volunteers, including current football players, to blitz the area with phone calls pitching season tickets, helping to boost sales 14% so far. It also has moved its game against the University of Houston to Reliant Stadium, where the professional Houston Texans football team plays, to increase attendance for the matchup.

Rice Athletic Director Bobby May is also looking for ways to trim the budget. "We just have to sort of bear down," he says, "and make everyone aware of how important it is to do a good job of being creative in our approach."

Ms. Merrick is a staff reporter in The Wall Street Journal's Chicago bureau.

Write to Amy Merrick at [email protected]3

URL for this article:
http://online.wsj.com/article/0,,SB1095 ... 27,00.html

[Water Pony]

With the escalating recruiting and economic pressures, the recommendations could be challenging to implement. But supporters of the athletic program are trying to build on their momentum. In July, the athletic department hired a new head of fund raising; ticket sales for the annual black-tie dinner were around $500,000, up from about $300,000 in recent years, according to the school.

And for the first time, the school recruited a slew of volunteers, including current football players, to blitz the area with phone calls pitching season tickets, helping to boost sales 14% so far. It also has moved its game against the University of Houston to Reliant Stadium, where the professional Houston Texans football team plays, to increase attendance for the matchup.

Rice Athletic Director Bobby May is also looking for ways to trim the budget. "We just have to sort of bear down," he says, "and make everyone aware of how important it is to do a good job of being creative in our approach."

Ms. Merrick is a staff reporter in The Wall Street Journal's Chicago bureau.

Write to Amy Merrick at [email protected]3

URL for this article:
http://online.wsj.com/article/0,,SB1095 ... 27,00.html

[Sam I Am]

One of my alma maters, Trinity U., dropped big time football decades ago and it broke my heart for a while. Now, I am very proud of how well they do in all Div. III sports. Plus, their academic standings has risen even higher and the enrollment has done just fine. Conversely, if the NCAA continues to allow big time football, then it should drop the rules about amateurism like the Olympics have done. The only requirement should be that the athletes be genuine students, then pay them market value for their services.

[ponyboy]

"It could seat all the school's undergraduate alumni, living and dead -- and it wouldn't even be half full."

This is a ridiculous statement. Rice has certainly graduated more than 35,000 undergrads in its long history.

[MustangStealth]

"It could seat all the school's undergraduate alumni, living and dead -- and it wouldn't even be half full."

This is a ridiculous statement. Rice has certainly graduated more than 35,000 undergrads in its long history.

I've heard this before and I'm pretty skeptical. It was probably said back in the 70s or something and was true at the time and has been repeated since then.

[Stallion]

I'm not so sure. the school now has something like 2,500 students-maybe 500 seniors per class (assuming the senior class is smaller due to attrition) times 100 years is only 50,000-and the school was likely smaller in earlier years.

[MustangStealth]

I've gotta give it to Stallion. I put this here computer to good work and look what I found.

"The Rice Institute opened on September 23, 1912, the anniversary of Mr. Rice's murder, with 77 students and a dozen faculty. An international academic festival celebrated the opening three weeks later, a spectacular event that brought Rice to the attention of the entire scholarly world. Four years later, at the initial commencement, 35 bachelor's degrees and one master's degree were awarded, with the first doctorate conferred in 1918.
"

So that leaves 88 years of alumni, with only 35 in the first class and probably steadily up to about 500-600 per year now. If we assume the average is 300 per year, for 88 years that makes 26,400. Well under half the stadium capacity. Wow.

[Dooby]

Why is that so hard to believe? They only graduated 700+ in 2004. 35000/700=50 years. And you have to logically extrapolate that class sizes have increased over time, and until post WWII, their graduating classes were significantly smaller.

35,000 is not too hard to believe.