University of Michigan athletics budget remains solid, despite shaky economy
In theory, Bill Martin should have been quivering when he walked into a meeting last month to discuss the athletic department’s budget with the University of Michigan’s Board of Regents. On the agenda was the question of how the university could cope with a bleak financial picture - a 3 percent reduction in state appropriations, deeper cuts ahead in future budgets and a proposal to increase student tuition 5.6 percent.
Only a few weeks earlier, the Knight Commission, a college sports think-tank of which U-M regent Andrea Fischer Newman is a member, sounded the alarm bells on overspending in college athletics, saying revenues cannot sustain the “runaway train of spending.” Add the two circumstances together, and it sure seemed like a can’t-miss proposition that Martin, Michigan’s athletic director, would face an uphill battle or at least some tough questions. In reality, Martin didn’t break a sweat. Like he always does at these meetings, he answered a few innocuous queries, told a few jokes and walked away a happy man. Without so much as a pause, Michigan’s regents approved the athletic department’s budget, which projected expenses of $85.6 million, a number up $5.5 million from the previous year. Maybe the lack of examination came because any real wrangling occurred prior to the meeting. But that didn’t seem to be the case, not with the fervor with which the regents debated the tuition increase and general fund budget. No, the oversight came simply because the regents understood the athletic budget was one area they didn’t need to worry about, a confidence that underscores the health of the Martin’s department. Southeast Michigan may be at the epicenter of our national recession and college budgets may be under siege elsewhere, but the Wolverines have been not only been impervious to the brutal climates, but arguably have never been more stable. That's a credit to Martin, who inherited a undisciplined department losing money and turned it into one of the most profitable in college athletics.
Michigan’s athletic department is one of just six in the country to show a budgetary surplus in each of the past five years. In fact, it has finished nine straight years with a surplus and anticipates an $8.8 million surplus next year. Most other schools’ athletic departments run in the red and bleed funds from the overall school budget. Not only is Michigan’s athletic department self-sufficient, it expects to transfer $1.6 million to the general fund next year. Expenses may have risen in U-M’s athletic budget, but so have revenues, which are expected to climb from $90.4 million to $94.4 million in the upcoming fiscal year. Football accounts for more than half that total, but before you think the profits - about $35 million on football alone - fluctuate with the team’s success, consider that not even the worst season in recent memory could dent the dollar figures. Despite last year’s 3-9 season, Martin told the regents that 95 percent of people involved in preferred seat donations renewed. And looking ahead to the reinvention of Michigan Stadium in the 2010 season, 70 percent of the premium seating available has already been sold, according to senior associate athletic director Joe Parker, who also said 57 of 82 available suites are committed to interested parties. Whether any of those committed are forced to walk away from their deposits because of the economy remains to be seen, but there’s no arguing that athletic department is off to a very good start selling seating and suites in a very bad economy. Elsewhere, the news isn’t nearly as rosy. According to the NCAA’s annual Sports Participation Report, college athletic departments have dropped 227 teams since the winter of 2007. As general funds at schools across the country lose state funding, athletics increasingly are a luxury most cannot afford. That’s why organizations like the Knight Commission are worrying about the ice cracking beneath the economic landscape of college sports and issue proclamations about the dangers of runaway spending. Michigan’s case, though, shows why a one-size-fits-all approach to alleviating whatever problems ail the economic backbone of college sports is impractical. Because despite the odds, Michigan is doing just fine.