The support of athletic programs through institutional subsidies and student fees is also well-documented, by organizations such as the Knight Commission on Intercollegiate Athletics and the Delta Cost Project; however, few have attempted to quantify levels of efficiency within athletic departments – both at the departmental and sport levels.

Trending Total Athletic Expenditures and Athletic Success

Annually the National Association of Collegiate Directors of Athletics (NACDA) awards athletic departments points as part of the Learfield Sports Directors’ Cup. The Directors’ Cup represents a measure of entire athletic departmental performance, and awards athletic departments points for both sport sponsorship and athletic performance. The Directors’ Cup represents the most recognizable and accepted measure of athletic departments.

The graph above uses a quadratic form to plot performance on the Directors’ Cup by total athletic expenditures (in 10,000s). Data illustrates that there appears to be a diminishing return as an athletic department approaches the top 10th percentile in spending. Within the middle of the distribution, there appears to be consistent returns on investments (in terms of athletic performance). This return is directly related to the additional sponsorship and support of more athletic programs.

Measuring Conference Efficiency

Traditional measures of the athletic department efficiency rest with the comparison on marginal costs for increases in athletic performance. Using this framework (Table 1 – below), the Pacific-12 Conference had the lowest marginal costs associated with Directors’ Cup performance at $104,800 per Directors’ Cup point. The Mid-American Conference has the largest marginal costs for each Directors’ Cup point at almost 4x that of the Pacific-12 Conference – $380,300. The Mountain West was the highest-performing non-BCS conference, costing approximately $90,000 more in expenditures than the Pac-12 conference.

While marginal costs provide a good initial barometer for efficiency, there are additional factors that impact performance on the Directors’ Cup. The following table provides the average technical efficiency (see methodological note for information on the estimation parameters) for FBS conference between 2008 and 2011. The utilization of four years allows for efficiency estimates to control for abnormal years of success or “down” years.

Accounting for factors such as conference membership, sport sponsorship, institutional type and support, and athletic resource allocation, the table below provides the average technical efficiency (explanation of technical efficiency within the methodological note) by conference. In this case, the Big Ten represents the most efficient conference, followed closely by the Pac-12, SEC, and Big 12 Conference. The Atlantic Coast Conference is the least efficient of all BCS conferences. While the Mountain West Conference had the lowest marginal costs of non-BCS conferences, the Sun Belt Conference had the highest technical efficiency of non-BCS conferences.

Redefining the Directors’ Cup Methodology

The major drawback with using the Directors’ Cup as a measure of institutional and conference athletic success is that the current calculation assumes all sports are equal. When using economic efficiency models, it is important to embed organizational priorities within resource allocations. Using sport-level expenditure data, we developed a weighted calculation using the proportion of athletic budgets allocated to each sport as a measure of priority and prominence. This weighting approach provides additional value to sports whose expenditures are greater within a school, directly proportional to dollars spent.

By using a dollars spent calculation, it allows for efficiency arguments to be articulated systematically. Institutions are given increased points for sports that have invested more into their operation. In most cases, men’s football and men’s basketball are the two most weighted sports; however, no athletic departments have the same weighting structure.

For example, the University of Texas’s football program has a weight of 0.1860 compared to 0.3207 at Ohio State University. This places higher expectations for athletic performance on the football program at Ohio State, since it comprises 32% of their adjusted Directors’ Cup rather than less than 10% within the original weighting. The impact of using the adjusted approach can be seen at athletic departments such as the University of Kentucky where their weight for football performance is nearly the same as their men’s basketball performance (0.16 compared to 0.15). For Kentucky, their basketball performance weight is 2x greater than the FBS average.

The table below provides a snapshot of the various point weights assigned to football and men’s basketball. All other sports would share the remaining weight value, directly proportional to their expenditure percentage.

One limitation to this approach is private institutions that do not publicly report athletic data. For these schools, they were assigned the average weight for each sport derived from all the school within their athletic conference who reported financial information.

We use the 2011 Directors’ Cup results to provide continuity with the research above. Table 1 below provides the final standings presented on the Directors’ Cup website. For the 17th straight year, Stanford University achieved the highest total point value.

Table 1: Unadjusted Directors’ Cup Results – 2011

However, after applying the expenditure proportional weights; the adjusted top twenty-five would have been as follows.

Table 2: Adjusted Directors’ Cup Ranking – 2011

Stanford University and Ohio State remain the top two programs even after adjusting for sport priority; however, Penn State and Arizona University both made the jump into the top ten – each gaining 9 positions from their previously unadjusted ranking. Results indicate that taking into consideration the importance of institution-specific priorities provide a more robust measure of intercollegiate athletic success.

Thoughts for Practice

The Directors’ Cup provides a solid foundation for examining overall athletic departmental success. However, using a modified approach that takes into account institutional investments and priorities placed on various sports allows this measure to more accurately and appropriately compare athletic department success. Within the paper, key take away for athletic decision makers in terms of increase overall athletic success might be:

1. From a purely economics approach, there exists a diminishing return for total athletic expenditures on athletic success as measured by the Directors’ Cup; however, the effort to maintain a top performing athletic department may outweigh the increased costs associated with each point increase.
2. Automatic qualifying (BCS member) institutions have a higher level of average technical efficiency than non-automatic qualifying conversations.
3. Targeted expenditure categories appear to have the larger impact on increasing overall athletic efficiency than others.
   • Investing in expenditures that directly impact student athletes has the largest impact on athletic efficiency – a 10% increase in direct student athlete expenditures produces an estimated increase of 7% in athletic outcomes.
4. The adjusted Directors’ Cup approach allows for athletic leaders to see a more comparable and equitable approach to athletic success – moving the value from broad-based athletic sponsorship to one of success within sports that receive the largest institutional investment.

Methodological Note: To account for the complexities associated with estimating economic data, contemporary parametric models were used with assumed functional forms. To estimate the cost frontier, a balanced panel data on intercollegiate athletic departments was used for the years 2007/08 to 2010/11. Based on the available data, a generalized Cobb–Douglas stochastic cost function was used to estimate the technical efficiency of each athletic department. The adoption of a traditional log–log specification allowed for the possible nonlinearity of the frontier and was in line with traditional econometric utilization of frontier models.

Technical efficiency is the effectiveness with which a given set of inputs is used to produce an output. A firm is said to be technically efficient if a firm is producing the maximum output from the minimum quantity of inputs, such as labor, capital, and technology. Technical efficiency assumes that the optimal would be production maximization.

In just their second seasons at the helm, Arkansas State’s Jim Patchell and Loyola Chicago’s Randy Hasenbank have already brought conference titles to programs starving for victory. Patchell’s Red Wolves claimed their first Sun Belt championship since 1998, while the Ramblers brought home the program’s first ever Horizon League title.

So too were there first time champions in the Mountain West, where fourth-year coach Sheila Burell vaulted her San Diego State squad to the top of the conference. Additionally, in the Great West, the consistent year-in, year-out improvement by sixth-year coach Theresa Fuqua’s Houston Baptist team finally reaped the Huskies’ their first ever conference title. And while Caryl Smith Gilbert had already boosted a struggling Central Florida team to the C-USA summit, Gilbert again has the Knights atop the conference. And even more, Central Florida’s fifth place NCAA championship result this season is also a program record, besting last year’s 8^th place finish. As a result of their successes, all of these coaches were named their conference’s Indoor Coach of the Year.

But many more non-traditional programs are also hot at these—and other champions’—heels, making up ground just as swiftly, and in prime position for a pass in 2014.

Joe Franklin (6 Years) – University of New Mexico; (2013: 2^nd of 9 in MWC)

• Franklin’s Lady Lobos have only finished at or better than each of their previous MWC final standings. Their 2^nd place finish in 2013 meet marked the program’s highest ever point total.

Angela Williams (6 Years) – Prairie View A&M; (2013: 2^nd of 9 in SWAC)

• Though Ritchie Beene’s Alabama State team has claimed five straight SWAC titles, Williams’ Panthers finished 2nd in the conference in 2011, for the first time in over a decade, and haven’t left Alabama State’s back pocket since.

Shameika McField (6 Years) – UMKC; (2013: 4^th of 8 in Summit)

• An old proverb says that slow and steady wins the race. They may have only finished 4th in her 6th season, but McField’s Kangaroos have improved their final placing in five straight Summit meets.

Ronnye Harrison (5 Years) – Portland State; (2013: 2^nd of 11 in Big Sky)

• On the backs of a fearsome sprint program, Harrison’s squad, dead last in his first year, has steadily pushed itself all the way to the Big Sky runners up spot.

Aaron Fox (5 Years) – UTSA; (2013: 2^nd of 8 in WAC)

• In the Roadrunners’ inaugural WAC campaign, UTSA built on its recent strides in the Southland Conference to achieve the program’s highest conference point total in 17 years.

Eric Campbell (5 Years) – FIU; (2013: 3^rd of 10)

• Campebll’s Lady Panthers have come a long way since their 10th place season in his first year, and haven’t looked back since.

Brendon Gilroy (5 Years) – McNeese State; (2013: 3^rd of 10 in Southland)

• In 2013, Gilroy’s Cowgirls continued to climb higher, posting their best conference finish since 2000.

Kurt Thomas (4 Years) – UAB; (2013: 3^rd of 12 in C-USA)

• Thomas’ Blazers made quite a leap in 2013, posting their best conference finish since 2005.

Darlene Moore (4 Years) – Florida A&M; (2013: 4^th of 13 in MEAC)

• Dead last with .5 points in 2010’s MEAC meet, the Lady Rattlers have quickly catapulted to the top half of the conference.

Donald Cooper (4 Years) – Bethune-Cookman; (2013: 5^th of 13 in MEAC)

• Cooper has his Bethune-Cookman women’s program on the rise after scoring their most conference points since 2008.

Angela Martin (3 Years) – Indiana State (2013: 2^nd of 8 in MVC)

• The Sycamores’ recent 2nd place finish in the MVC was the program’s best since 2001.

Jenny Severns (3 Years) – Murray State University; (4^th of 9 in Ohio Valley)

• Severns’ Murray State squad is on an upward trajectory that finds them in the top half of the OVC.

Brian Johnson (2 Years) – Southern University; (2013: 3^rd of 9 in SWAC)

• In a conference meet where the top two squads haven’t given any ground for three years running, the Lady Jaguars leapt up five spots to grab third place.

But Franklin isn’t the only young coach who’s shaken up their school’s all-around running program and ended a men’s indoor conference title drought. Take fellow sixth-year coach Theresa Fuqua’s Houston Baptist men’s squad, who survived a dramatic 4×400 finals to seize the school’s first ever Great West Conference Championship. An impressive feat in and of itself, until you consider that Fuqua’s women Husky indoor team, simultaneously nabbed a Great West crown.

Or consider the work Randy Hasenbank has done at Loyola Chicago in just two seasons. Taking over a Ramblers men’s track team that had been a Horizon League bottom feeder for quite some time, Hasenbank’s men followed a runners up performance in last year’s championship, with the program’s first Horizon title since 1980. Along with the women’s 2013 Horizon championship, this past season marked the school’s first ever indoor sweep to boot.

Then there’s Prairie View A&M’s Chris Clay. After propelling the Panthers to SWAC runners up in his first season, Clay took the next step in 2013, ousting Bertram Lovell’s dominant Grambling State to claim the SWAC title. For Prairie View A&M, this year’s men’s indoor championship marks their fifth overall. Incredibly, Clay has had a hand in all five as either an athlete, assistant, and now head coach.

Other new-to-the-scene men’s indoor track and field coaches who have their programs on the rise:

Curtis Kraft (7 Years) – East Carolina; (2013: 3^rd of 6 in C-USA)

• Kraft’s Pirates have steadily climbed up the C-USA championship results, posting the program’s best finish (3^rd) in both of the last two seasons.

Jason Saretsky (7 Years) – Harvard; (2013: 3^rd of 8 in Ivy)

• Last in his first season at the helm, The Crimson have only climbed since, recently posting their best men’s indoor finish since 1985.

Bob Hamer (5 Years) – Rider; (2013: 2^nd of 5 in MAAC)

• Since his first year, Hamer’s Broncs have been the model of consistency at the MAAC Championships, coming in second for the fourth consecutive year, but inching ever closer to overtaking conference powerhouse Manhattan.

Rod Tiffin (5 Years) – Samford; (2013: 2^nd of 9 in SoCon)

• Their progress capped at third the last few years, Tiffin’s Bulldogs finally made the push higher, garnering a second place finish at the SoCon Championship that earned Tiffin Men’s Indoor Coach of the Year honors.

Erik Jenkins (5 Years) – Western Kentucky; (2013: 1^st of 10)

• The Hilltoppers under Jenkins have only known success. This year’s Sun Belt title marked the program’s first back-to-back conference championships since 2003-2004, and won Jenkins his third Indoor Coach of the Year Award in just his fifth season.

Brendon Gilroy (5 Years) – McNeese State; (2013: 3^rd of 10 in Southland)

• Under Gilroy, the Cowboys have maintained or bettered their SLC placing each season. This year’s 3rd place finish is the program’s best since 1991.

Donald Cooper (4 Years) – Bethune-Cookman; (2013: 3^rd of 13 in MEAC)

• The Wildcats’ third place finish at this year’s MEAC Indoor Championship is the program’s highest ever.

Wayne Angel (3 Years) – Florida A&M; (2013: 5^th of 13 in MEAC)

• The MEAC competition has gotten fiercer as the conference has expanded, but Angel’s Rattlers finished higher for a second straight year.

Mike Turk (3 Years) – llinois; (2^nd of 11 in Big Ten)

• Taking over a squad that finished dead last in the 2010 Big Ten Champions, Turk had the Illini just points shy of the conference crown, in this, just his third season. Their 2013 runner up finish is the program’s best since 2000.

Andy Eggerth (2 Years) – Kennesaw State; (2013: 1^st of 6 in A-Sun)

• Though no strangers to A-Sun titles, Eggerth led the Owls to the program’s first ever back-to-back conference championships, this time by the largest margin of victory in A-Sun history (44.5 points).

The chart below displays the rises in conference championship meet placing for schools under two and three-year coaches. School logos in 2010 and 2011 denote the season before each respective coach was hired.

Mike Alden has been at the helm of the University of Missouri athletics since 1998 and has produced the most comprehensive run of athletic and academic success in school history. Alden’s mentorship has also produced a number of athletic administrators who have gone on to be successful ADs in their own right. At last count, five former assistant and associate ADs are currently coaching at other major programs, and all admit that Mike played a significant role in their later success.

Whit Babcock — Athletic Director for the University of Cincinnati — and Mark Alnutt — Athletic Director for Southeast Missouri State University — worked together under Mike for a number of years. All three were good enough to sit down with Ryan Matthews, Winthrop’s Managing Editor, to discuss their time together at the University of Missouri, that mentor relationship, shared challenges, and the process of transitioning to a senior AD position.

How does being at the helm and in the spotlight compare to being in a supporting role, what are some successful strategies for handling the pressure?

Whit Babcock – University of Cincinnati
Director of Athletics

I probably didn’t recognize this as much at the time but I do now, as I sit in this chair. You know, as senior associate ADs you make suggestions, and as an AD you make decisions, and that’s where the buck stops. I’d say that’s the biggest difference.

I tell my staff that as nicely as I can—I’m here to hear your suggestions and a lot of times I’ll take them. But at the end of the day, I have to be the one to make the decision. I’d say that’s the big difference. Successful strategies to handle the pressure, I’d say if you could bottle that one and sell it, there’d be a lot of people buying.

I think you have to have some harmony in your work-life balance. I don’t think it’s going to be 50-50, so I wouldn’t call it balance. But harmony there. Exercise can help with the pressure and you better have good people around you to delegate to because it’s too tough a job for one person.

Mark Alnutt – Southeast Missouri State University
Director of Athletics

I’d echo a lot of what Whit said. I agree you have to surround yourself with good people first and foremost. I don’t claim to be an expert in all the areas, I have to lean on our people in compliance, our folks in internal relations, business, whatever the case might be. To be able to empower them to help you with an issue, or make a recommendation on an issue.

But like Whit said, it’s your decision, but all-in-all we have collective buy in. That’s very important and I agree with Whit in terms of how the role has changed. And for strategies, there’s are several, but I go back to having a relationship with the boss, in this case Mike Alden. A person who is going to empower you to make decisions, and also to hold you accountable. But ultimately to prepare you for this type of role, which I think is very important.

I go back to a simple exercise, and Mike might remember this, a few years ago, he encouraged me to keep track of all my speaking engagements, whether it was interviews or public speaking in a work setting. That was very valuable. He said, you give a minimum of 24 a year. I thought that was a lot at that time. Now at Southeast I’m giving a speech once or twice a week. But that simple task helped prepare me for the many, many things you deal with when you’re in the chair.

What traits did you, Mike, see in Mark and Whit that led you to believe they were AD material?

Mike Alden – University of Missouri
Director of Athletics

I’ve always approached it from a few basic things. I think you’re always looking to surround yourself with good people, as both Whit and Mark were saying, they have the right values, the right commitment toward things on and off the job. But what are the skill-sets you’re looking for?

We identify people who have a strong anticipatory skill-set. Those people that can anticipate things that are coming up and once they do so, what kind of initiative do they show? Are they able to pick things up and run, how do they work with other people, how do they involve other people, how do they take the opportunities that are presented, and educate other people as well?

So not only doing a job, involving other people, showing initiative, but how are they training people and educating them? And to make sure they show a certain level of confidence, not cockiness, but confidence.

Those are the things that you’re looking for in successful leaders. I’ve known both Mark and Whit a long time, and those skill-sets that I mentioned and then some, are ones that they truly live on and off the job. You see that with them. And if you can identify those skill-sets, and develop them, and enhance those skill-sets, there’s no question they’re going to be successful.

They have great core values, great work ethic, certainly committed to doing things the right way, they work hard on their family life just as they do on their professional life. Those are the things that I admire in those guys and others that I’ve been fortunate enough to work with.

What lessons, themes, or principals did you, Mark and Whit, learn under Mike and have employed in your own programs? Are there aspects that didn’t make sense in the context of your new operating environment?

Mark Alnutt – Southeast Missouri State University
Director of Athletics

Mike summed it up very well. I’d go back to one of our initial discussions when I had the opportunity to be recruited by Mike and the senior athletic leadership at the University of Missouri. We were at one of our favorite eating establishments in Columbia, and we were talking about the position and the role—a quasi interview—and I was director of football operations at the time, and he asked me a question. It still sticks with me: “Mark, who do you know,on campus?”

Me being a young guy, I rattled off some names, some people who I worked with directly such as director or residential life, folks on campus dining. I hit a grand slam with my answer, but he looked at me and asked: “Do you know who Bunky Wright is?”

I had no idea who Bunky Wright was. He’s in the office of general counsel. He asked me if I knew who Jackie Jones was. She’s the chancellor, vice-chancellor for administration. It was just that conversation that made it real, just how important it is to have those relationships, not only on campus, but in the community, and inter-departmentally.

It’s important to be able maintain and grow those relationships for advancement, internally and externally, to be successful. When you talk about taking initiative, another great value that I learned under Mike and also Gary Pinkel, is attention to detail.

Whit Babcock – University of Cincinnati
Director of Athletics

The lessons and themes and principles that I learned from Mike; it’s a long list. Everything that Mike taught me has been applicable in the chair. It all makes sense, even more sense now with the position that I have. In general, what I learned from Mike is to be proactive, anticipatory thinking, being out in front of things, and strategizing. I learned meeting organization and structure. I learned how to over-communicate with coaches and with people on campus.

But the thing I try to use every day. Mike just set the bar really high, this expectation of excellent. And Mike knows everybody is not perfect, but he set this expectation of perfection and it made us all achieve more than we ever thought we could. In general, those are the lessons and themes I learned from Mike.

I learned more in five years with Mike than in the fifteen combined before that. I’m indebted to him and I use his stuff every day.

What are some of your most meaningful experience together?

Mike Alden – University of Missouri
Director of Athletics

For me there have been a couple. I’ll just pull these out—they may not be substantive, but they ring with me because they show a certain level of dealing with adversity.

We were in Austin, Texas, and we were there for a football game against the University of Texas, but the night before we were going to go see the volleyball team, who was playing Texas. Mark was our senior associate AD, he was running everything. We had all this stuff going on: Gameday was there, and so we had the President, the Chancellor. Whit, were you there with us?

Whit Babcock – University of Cincinnati
Director of Athletics

Yes, yes I was. I was jammed up in the back seat.

Mike Alden – University of Missouri
Director of Athletics

So here’s the memorable experience. We were in a medium-sized car and Mark is in charge of getting the President, the Chancellor, Whit, and myself in this car. We have people stuffed in this car going to the volleyball match. And people are just firing stuff at Mark left and right, the entire time.

But to be able to balance that, to understand what was going on, and how it was going on. We had ESPN Gameday there, we had the number one crew there, we had a big football game, big volleyball match; but how do you handle those kinds of pressures when they’re thrown at you and you have no idea where they’re coming from? Boom, they’re coming at you right now. How am I going to transport these guys from here to here, in this type of car, to navigate this whole area, with Gameday being here?

And I know that may seem simplistic, but to me that’s a great example of handling adversity thrown at you because the reality–in this business, it’s crisis management 101. Every minute, almost, every day, you have no idea what’s coming at you.

How you deal with it, how you handle it, how adjust to it, how you keep your wits about you while it’s going, it’s critical. And I remember watching that with Mark, and we laugh about it because there were some challenges that went along with that story. To me, that’s something that stood out.

Another one, we’ll pull one here with Whit. We had a guy in our ticketing operations when Whit first got here. You remember this, Whit?

Whit Babcock – University of Cincinnati
Director of Athletics

Yes.

Mike Alden – University of Missouri
Director of Athletics

So what happened is, Whit comes on board, he inherits his organization. You have to be able to analyze it right away, and look at some different things. There was an employee within our ticketing operations who had been here a long time, had been institutionalized so to speak, engrained. He wasn’t living up to our expectation in terms of setting the bar high.

And that initial part of that t would have been typically, boom, you’re out. We’re doing something different here. Now eventually that adjustment occurred, but not before Whit stood back and said: “Okay, let me figure out who I need to be talking to about this, why has this guy been here for awhile, how is he impacting the organization, who are the people that he touches, why has he been performing the way that he has, what are the expectation that have been set, and how do we move this thing forward?”

And those in two simple examples, and I could go on with many, many more. To me, those are indicative of skill-sets to be able to deal with something that day that is thrown at you, adversity that hits you, whether it’s in Austin, Texas, in a humorous setting, or here where you’re practically assuming the position right off the bat knowing that you have people that are underperforming. How are you going to do that, without pulling the trigger too quick? These are just off the top of my head, but those are the ones that resonate most for me.

Whit Babcock – University of Cincinnati
Director of Athletics

I can come up with just one. We had a lot of good times together and celebrating successes. But I think the times that drew Mike and I, or all three of us, closest were the crises. What drew us together more was the tough stuff together.

When things are going good, everybody’s with you and everybody’s your friend, but when things start going south, or you’re getting killed by the media, or a coaching hire, or what have you, hanging in there together through some hard times like that is what drew us the closest. That’s when you learn who’s really in it with you and who your friends are. Who you can lean on and trust.

Mark Alnutt – Southeast Missouri State University
Director of Athletics

I think, what I remember most is coming off the field, win or lose a game, being there to support your staff, together.

Mike Alden – University of Missouri
Director of Athletics

I’m taking some liberty here. But I want to get one more last thought here. In 2010, here at Mizzou, I was with Mark and I was with Whit, and ESPN was here we had a huge game against Oklahoma. We ended up winning that game, and it was homecoming, and it was all of these things. To be able to see the culmination of everything coming together was great.

Whether it has to do with our kids in school, selling tickets, or running games, or doing all these things, and to see the impact of that on our program, our university, and the state of Missouri–that was great. And I was with those two guys. It was the three of us and we were at the football stadium when all that was coming together. To me that’s the most memorable experiences. I’ve had a bunch of them with these guys, but that one was pretty special.

Mike how do you prepare young administrators for leadership roles? In addition to Mark and Whit, Ross Bjork at Ole Miss, Mario Moccia at S. Illinois, and Larry Tice at Texas State—and there are three other administrators that became ADs after serving as administrators under your leadership. How do you prepare these people for the future?

Mike Alden – University of Missouri
Director of Athletics

I want to mention those other three. Peter Fields at Montana State, Sandy Hatfield Clubb at Drake, and Brian Wickstrom at UC Riverside. I think the common thing with all of us together had to do with the—this is a personal thing, I’d usually say we, but this is an I—I think really giving people an opportunity to experience all the thing they possibly can while they’re here, beyond their job description. Working together to make them the best that they be at what they were hired to do, but to try and expand beyond that.

What I’ve always tried to do with these folks, and others, the opportunity to be able to experience, not only development or facilities, but also what are we trying to do in academic services, what we are trying to do in compliance and eligibility, what are we trying to do in marketing. I really try to give people a broad base of experience.

I’m always trying to put those folks in a position where they’re representing, not me, but this position. So, you say, maybe it’s Whit’s turn to sit in the Chancellor’s staff meeting and represent athletics, and sit in that chair. Now it’s Mark’s turn to do that, or to go to the rotary club and speak, as basically the Athletic Director while they’re there.

All the different ways you can put folks who have a desire to do this, and have the skill sets that I talked about, to be in a position to experience what it’s like to be in this chair. To me, that’s one of those things that probably over prepared Mario at Southern Illinois, over prepared Ross Bjork, over prepared Whit at Cincinnati, over prepared Mark at South Eastern. And all the other folks.

And I think that, in my opinion, is what we’ve done to put these guys in position, not only success here and to get those jobs—but to be successful at those jobs. And all of them are successful where they are.

To listen to NCAA experts discuss their latest research in our other podcasts, click here.

By Dr. Chad McEvoy

We have all gone online to shop for flights for an upcoming trip, put off buying for whatever reason, and then checked back a couple hours or days later to find that prices jumped by $50 or more for the same flight. Perhaps you’ve been one of the fortunate to see the price decrease considerably in that same situation. We know, of course, that this is typical in the airlines’ dynamic pricing model, where prices on flights are adjusted daily, or even more frequently, based on supply and demand conditions.

Any undergraduate microeconomics course teaches about the concepts of supply and demand, and their interrelationship with the price for products and services. In short, when supply is high and demand is low, these market conditions will drive prices lower. Conversely, when supply is low and demand is high, prices will tend to rise. The airlines, as well as other industries like hotels for example, have utilized these principles in making ongoing pricing adjustments for many years.

More recently, professional sports teams have begun to implement dynamic ticket pricing strategies. The industry leaders in this area were the San Francisco Giants, who partnered with Austin-based QCue to integrate dynamic pricing on some seating sections in 2008 and 2009. QCue, and other similar firms, use statistical algorithms to predict optimal ticket prices based not only on supply, or tickets available for a particular game, but also on factors influencing demand such as the on-field performance of both the home and visiting teams and even conditions like anticipated weather or traffic. In the few years since, more than one-half of Major League Baseball teams have also adopted dynamic pricing in at least some seating areas in their facilities.

Dynamic ticket pricing is not a completely novel concept in sport, but rather represents an evolution of variable ticket pricing, which became trendy in sports in the 1990s. With variable pricing, sports organizations were getting away from the notion of pricing all games at the same level and instead created a finite number of price points, typically ranging from two to four, based on the anticipated demand for a sporting event. Teams would keep a number of a games at a “regular” price, but then raise the price by several dollars per seat for “prime” games that were expected to have high demand, such a key rivalry game, and then lower prices for “value” games that might be weaker draws due to the day of the week or a low-profile visiting team. Many colleges have done this for years, such as raising the price of the homecoming football game by five-to-ten dollars above the price for other games.

A limitation to variable pricing is that these price levels are often established months before the season even begins and are static. They don’t fluctuate over time based on shifts in supply and demand, and thus aren’t able to adapt prices to reflect increased demand when the home team is on a winning streak. This limitation to variable pricing has brought about the rapid increase in the use of dynamic pricing recently, although it should be noted that most teams using dynamic pricing also use variable pricing as a means for establishing initial price points, which are then adjusted dynamically over time based on supply and demand.

In the past two years, college athletic programs have begun to implement dynamic pricing of tickets. QCue clients University of California-Berkeley and Georgetown University, along with Digonex clients University of South Florida and University of Washington are among the first schools to use dynamic ticket pricing in football and/or men’s basketball. David Gravenkemper, Assistant Athletic Director for Ticket Sales and Service at the University of Washington, spoke of their experiences implementing dynamic pricing at UW men’s basketball games this past season at the recent SportsBusiness Journal Ticketing Symposium in Brooklyn. According to Gravenkemper, Washington chose to partner with Digonex and adopt dynamic ticket pricing in order to not only grow revenues, but also to price their tickets more efficiently.

Pricing is one of the most challenging pieces of the marketing/sales mix for any organization. Price your product too high and it won’t sell, leaving an arena or stadium with many empty seats. Pricing too low remedies that problem, but the organization then fails to maximize revenue that could have generated. If you sell a ticket for $30 that could have sold for $100, secondary market brokers are likely to yield the $70 gap that the team should have been able to capture. In a college athletics environment where revenue generation is crucial and the secondary ticket market is more effective than ever, athletic departments need to price efficiently in an attempt to maximize revenues, as Gravenkemper discussed recently at the SportsBusiness Journal Ticketing Symposium.

Gravenkemper also noted that potential customer backlash, both among season ticketholders and donors, as well as the general public and media, is a key barrier holding many athletic departments from beginning to use dynamic pricing. He said, however, that Washington did not receive as much negative feedback as some expected. With season ticketholders and donors, a primary concern is price integrity. Organizations want to be careful to not alienate these loyal customers by dynamically reducing prices below what season ticketholders pay. Athletic departments considering using dynamic pricing should note that third-party vendors like Digonex and QCue can accommodate price floors in their pricing recommendations should schools choose not to drop prices below certain thresholds. The limitation in doing so, however, is that it restricts the ability to sell more tickets at a lower price to yield more revenue in situations when supply outpaces demand for a particular game.

Gravenkemper indicated Washington was pleased with the success of their first season using dynamic ticket pricing and that the school would implement it for both football and men’s basketball in the upcoming year. Similarly, a recent QCue press release noted that Georgetown “generated hundreds of thousands of dollars in new revenues” from using dynamic pricing with their men’s basketball program this past season. Based on the recent successes of Washington and Georgetown, as well as the continuing importance of revenue generation in college athletics, I anticipate seeing dozens of other Division I athletic programs beginning to implement dynamic ticket pricing over the next couple years. By comparison, the growth of outbound ticket sales programs exploded from just a few schools in the middle of the last decade to well over one hundred schools at present, despite being far costlier to develop based on staffing and other resource needs. As dynamic pricing can be adopted with far fewer resources, look for this trend to grow at an even faster rate.

Dr. Chad McEvoy is a Research Advisor for Winthrop Intelligence and Professor of Sport Management in the David B. Falk College of Sport and Human Dynamics at Syracuse University.

Specifically, we analyzed home attendance numbers for the NBA and NCAA Division I Men’s Basketball from 2006-07 to 2011-12, excluding preseason, playoff, and tournament games. Here’s what we found:

As in the NFL and NCAA football, the numbers have remained relatively similar over the last seven years. The 30 NBA teams—only 1/11th the total size of NCAA D-I men’s basketball (330 teams)—play 41 home games per season, while the NCAA teams play an average of just under 15. The math works out to 1,230 home games per NBA season, and between 4,735 and 5,069 NCAA D-I games per season. (Interestingly, the number of NCAA games has increased steadily each year over the past six seasons, an average of 1.4%, or 67 games per season.) This is why we see the discrepancy between the per-game averages and a similarity in the total attendance numbers.

If we examine just the top 30 NCAA D-I teams by average attendance each season, the numbers look a little better when compared to the pros, but the NBA is still more popular.

So the NBA on average is 11.5% more popular than the top 30 NCAA D-I teams each season, and around 277% more popular than the average NCAA D-I team. Compare this to the NFL and NCAA Football, in which the NFL is 14.3% less popular than the top 32 NCAA Football teams, but 54.6% more popular than the average NCAA Football team, and we can see that the NBA holds a distinct advantage over the NFL when it comes to drawing more fans than their collegiate counterparts.

If we break things down by individual teams, we again can see more interesting details, but with some caveats.

*These two percentages do not equal 100% because there was one team which has averaged the same attendance for the last six seasons: Duke, at 9,314 per game per season.

Using percentages in this case is fine for the NBA and the number of teams that saw an increase or decrease in attendance. The numbers are roughly equal, with just over 40% of both the NBA and NCAA D-I MBB teams showing an increase in average game attendance from 2006-2012. This is better than the NFL (just 34.4% increase attendance), but not as good as NCAA Football (52.1% increased attendance). And the average amount of increase or decrease, in the NBA the numbers are roughly equal at 8.6% and -8.3%, accounting for their decrease of just 238 fans per game over the last six seasons.

However, when we look at the average increase or decrease in NCAA D-I MBB, the fact that the teams that increased attendance did so by 41.5% per team, and the teams that decreased attendance did so by just -19.4% per team, doesn’t really add up to the total of 201 lost fans per game. These percentages look askew because there are some attendance figures that ended up very high for smaller teams that substantially boosted their attendance.

For instance, Arkansas-Pine Bluff has seen their attendance go up 433.9% in the past six seasons. Of course, they started the 2006-07 season drawing just 605 fans per game, while in 2011-12 drew 3,230, still over a thousand below the NCAA D-I MBB average. There were twelve teams that increased attendance over 100% in the last six seasons, and they averaged just 2,058 fans per game over that time. At the other end of the spectrum, only one team lost more than 60% of its fans since 2006: Bethune-Cookman went from averaging 2,092 in 2006-07, to just 801 in 2011-12.

The main takeaway from the NCAA D-I MBB attendance figures is that overall attendance is staying steady. Even though the per game average is dropping slightly, the overall regular season attendance figures are holding firm. In the NBA, the story is much the same.

Of the 150 team seasons in the NBA over the last six seasons, 75—or exactly 50%—saw a decrease in average attendance the following season. Additionally, there wasn’t a single team that experienced only increases or only decreases. (One, the L.A. Lakers, saw increases from 2006-2008, but has held at 0% for the last three seasons, while another, the Detroit Pistons, held at 0% from 2006-2008, but has seen decreases for the last three seasons.)

Since our focus in the football piece was the possibility of new technology and home comforts keeping fans away from stadiums, it’s worthwhile to examine how these aspects impact basketball as well.

First off, there was a substantial attendance boost to NFL teams which opened new stadiums, but that metric isn’t really available to explore within the NBA: only Orlando in 2010 opened a new arena within the years examined in this study, and while their attendance has gone up, it had been increasing for the last three years, at about the same pace as that of their old arena.

Other factors which are more difficult to quantify might come into play as well, such as the facts that:

• Basketball games are shorter than football games.
• There isn’t nearly the level of fan interest in fantasy leagues associated with basketball.
• Basketball teams charge cheaper ticket prices.
• Fans are physically closer to the action at a basketball arena than they are in a football stadium.
• The weather is never a comfort issue in a basketball area, whereas it might be at an outdoor football stadium.

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The outsourcing of ticket operations is a growing trend within college athletics. In exchange for fixed fees, commissions, and other considerations, schools expect to realize revenue growth through increased attendance for various sports.

Our report examines twenty-four current agreements (twenty-three that have been signed within the last two years) across each level of Division I athletics to provide readers a current, informed view of this growing market. Our report details key financial elements of agreements—fixed fee amounts and revenue sharing terms. The report also reveals important market trends, for example:

• Clients of Aspire appear least likely to pay fixed fees.
• Commissions charged by vendors on ticket revenue are generally higher for schools with relatively lower football and men’s basketball attendance.
• The vast majority of agreements last three years or less.

We created our report by examining current, publically-available outsourced ticketing contractual agreements in the Win AD database and utilized school-specific attendance and financial data. The result is a report that will allow readers to better understand their current or potential standing within this market, while providing insight to assist in deriving maximum value in future negotiations.

The Winthrop Report, which includes the full view of the outsourced ticketing market in DI college athletics, will be published in June.

DI schools have an inherent advantage in the sense that they can gain more money from guarantees and student fees. The one exceedingly sizeable difference between the two sets of schools is the revenue brought in from guarantees. On average, the DI athletic departments of these schools have a revenue total of $541,640 from guarantees. However, the DII schools are only at an average of $11,887. Moreover, three of the DII schools – Southern Connecticut State University, University of Massachusetts Lowell, and Valdosta State University – have no revenue at all from guarantees. Furthermore, the DI schools’ revenue from student fees is almost three times as large as that of the DII schools, as the following numbers suggest:

DII schools compensate for those disparities in revenue by receiving more money from their respective universities as well as branding, donations, and rights. For example, the St. Cloud State University athletic department receives $4.7 million from the university; $734,277 from branding; $684,306 from donations; and $41,000 from rights. This table articulates the discrepancy between the DI and DII schools in those areas:

One cannot not find many differences when comparing the expense column of these DI athletic departments with the corresponding numbers for DII. They only vary in that DI spends a little more on games, tuition and travel, as depicted below:

While the disparities have been expressed above, the expenses are similar in many ways. The main areas are coaching, recruiting and marketing, as seen below:

Win AD is a subscription database service for Division-II ADs to save time and money with the right information. Need better financial data, but do not have the budget? Schedule a demo to learn more about Win AD’s flexible pricing options, including our pro-rated Bridge Contract for mid-year implementations. Contact Kevin Barefoot: 800-218-2280, Kevin@WinthropIntelligence.com.

Adam Lowenstein is also interested in the NBA and MLB. More of his statistical analysis can be found at: http://statsadam.blogspot.com/ — Follow him on Twitter: @StatsAdam

Two ADs whose programs have made the jump to FBS were good enough to sit down with us to discuss the transition, Dr. Joel Erdmann of the University of South Alabama, and Charlie Cobb of Appalachian State University.

In light of this NY Times story, can you share what’s not understood (or less understood) about the decision to make a move, since the media narrative is somewhat negative generally around the costs associated with football? Help us understand the gap between the reporting and reality in your operating environment of rational actors.

Joel Erdmann – South Alabama
Director of Athletics

College football at the FBS level is expensive. The costs are substantial. At South Alabama, though, we feel the benefits far outweigh the associated costs, and therefore, moving up to FBS-level football made sense for us. Each school is in a unique situation, and from that perspective, it’s imperative to examine the individual, school-specific factors when assessing a move to FBS-level football. Additionally, there are many tangible, yet qualitative ramifications of FBS-level football which don’t appear in a simple revenue/expense breakdown because they can’t easily be valued. Therefore, a lot of reporting tends to focus around just the cost side because they are the easiest to assess and measure.

Charlie Cobb – Appalachian State
Director of Athletics

Our most important recommendation was that any FBS move would positively impact the academic mission of our University. The academic profile of incoming freshmen is one of the highest in the UNC system. Appalachian State has over 105,000 alumni, yet the average age is 32, so we are also an evolving institution in every sense of the word. Our goal through any realignment process is for athletics to continue its part in positively impacting the Appalachian Family.

When looking at our attendance, ticket sales, and fundraising support, we enjoy tremendous support from alumni, friends, and students. We also enjoy great competitive success at the FCS level. Our second biggest challenge is to continue this support and success through our efforts. Because our campus is limited in terms of student growth, we cannot and will not grow athletics through large increases in student fees or university assessments.

How long in the making was your decision to move up to FBS? Discuss what you needed to do, tactically and strategically, in order to facilitate a move up?

Joel Erdmann – South Alabama
Director of Athletics

The decision to add football goes back several years. In the late 90’s, club football at South Alabama drew quite a bit of interest, and while the idea of adding football had been around before that time, this served as a catalyst for eventually adding varsity football. Really the process of implementing varsity football began among the students, specifically the student government association. While they operated in conjunction with proper faculty and school leadership all along the way, it was the students who gathered the signatures signifying they not only wanted varsity football, but most importantly, would also be willing to support the program through annual fees. Once enough signatures were obtained, a formal initiative was presented before the Board of Trustees and in 2007-08, South Alabama made the formal announcement declaring the goal to have an FBS-level football program competing in the Sun Belt conference. In all, it was a very collaborative effort between student and school leadership, not necessarily demanding either side operate tactically or strategically, per se.

Charlie Cobb – Appalachian State
Director of Athletics

In 1998, Appalachian commenced a campus-wide study to look at playing IA football. At that time, the determination was made that the University was not ready to “move up.” After 3 FCS national championships (2005-2007), the 2007 Michigan win and the changing landscape, it became obvious that we needed to revisit that recommendation.

Initially, we looked at the four recommendations from the 1998 study that dealt with increased ticket sales and attendance, growth in the fan base, competitive success, and university support for athletics and determined that we had more than met the stated goals. We then commissioned an external study of our facilities and operating budget as compared with aspirational FBS schools. We found that we were more than comparable to most. As a result, we commissioned a study involving many stakeholders over a period of one year.

Who were the key constituents, both internally and externally, you had to consult and get ‘on-board’ during the process?

Joel Erdmann – South Alabama
Director of Athletics

The students were the constituency driving the process. Without their willingness to add football, and most importantly support it through fees, it never would have happened. And as mentioned previously, the students were working in conjunction with faculty and school leadership throughout the process, so everyone was ‘on-board’ and informed throughout. Beyond students and faculty, other key constituencies included alumni, members of the community, and all citizens of Mobile. And like students and faculty, these groups were generally excited about the prospect of South Alabama football, with a consensus feeling this was a very good thing. People recognized this process transcended simply adding football, and would unquestionably have a tremendous impact on the community going forward.

Charlie Cobb – Appalachian State
Director of Athletics

With acknowledgement to Sandy Barbour and a presentation she did several years ago at NACDA, the best way to answer this is to attach a stakeholders chart that we developed as part of our study. We held over 40 presentations with all groups during our study. Our president and Board of Trustees chair were emphatic that this would be a very public discussion for our University.

In analyzing the costs and benefits of moving up, what factors most contributed to each side of that equation? What was the process of performing your analysis like? How did you obtain the needed information?

Joel Erdmann – South Alabama
Director of Athletics

The cost-benefit analysis related to adding varsity football, and specifically FBS-level football, involves both quantitative and qualitative elements. From a numbers standpoint, we were able to examine football-specific financial data from Sun Belt and Conference USA institutions to get a firm understanding of the costs FBS-level football would entail, down to the line by line level of a budget. There was no doubt the cost was substantial—it’s an expensive sport. And the last thing we wanted to do was tip-toe through. If we were to commit, we had to make certain, through our analysis of funding sources and projected revenues/expenses, football would be sustainable. In the end, South Alabama was able to build a solid, logical plan to implement and sustain FBS-level football based on a firm financial structure not overly dependent on highly-fluid revenue streams.

Equally important as the quantitative elements, though, were (and are) the qualitative ones. Football, particularly at the collegiate level, is woven into the fabric of life in Alabama. Being in Mobile and not having college football really went against the grain culturally. Since announcing our intent to add FBS football, the current of support has been tremendous. The pride and awareness for not just USA football, but the whole school has increased greatly. Those are things which are hard to attach specific dollar amounts to. Each football game is a gathering of thousands of USA students, alumni and supporters—the most in one place, at one time, the school has ever seen.

Parallel to the implementation of the football program was the creation of the Jaguar marching band. The marching band, now two hundred and fifty strong, is the reason renowned conductors and music professors have come to South Alabama. It’s a great story of an athletic program’s growth occurring simultaneously with an academic (in this case fine arts) program. Additionally, we’ve seen a significant impact on fundraising; we’re able to make more contact with alumni and non-alumni both than ever before. Lastly, having an FBS-level football program has an effect on the students. While a football program isn’t the factor for potential students, it certainly can be a deciding factor between two like institutions where one possesses football and the other does not.

Charlie Cobb – Appalachian State
Director of Athletics

We did multiple financial analyses of projected budgets that projected growth in expenses and revenues that we felt would make us competitive at the FBS level. Only time will tell the accuracy of those projections.

How often do you re-visit initial projections and assumptions about moving up? Have you generally found these initial projections to be accurate? If not, why and what revised strategies are you developing and deploying?

Joel Erdmann – South Alabama
Director of Athletics

Admittedly, the projection and planning process occurred prior to my arrival at South Alabama, but by and large the cost projections have proved to be accurate. This goes back to the original planning performed, and most notably being able to examine the football-related costs of programs in the Sun Belt and CUSA. That’s not to say, though, there haven’t been surprises along the way—there have, particularly unforeseen costs. Our department, however, is able to manage these fluctuations, and with each passing year we gain more experience and are better able to understand how the football operating environment works.

Charlie Cobb – Appalachian State
Director of Athletics

Like most campuses, the realignment of athletics is a constant conversation. We review our data constantly and are content with the projections at this point.

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