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Editor's Note: The following is Part 1 in our "Hidden on the Hilltop: SMU's Culture of Secrecy" series, which examines the secretive nature of various operations at SMU. For the rest of the series: Part 2a, Part 2b, Part 3, Part 4
On the same day that head coach June Jones and the football team strode aboard a chartered 767 bound for Hawaii and the university's first bowl game in 25 years, SMU President R. Gerald Turner glumly reported college football was in crisis. Worse yet, Turner wrote in a Dec. 19 Washington Post editorial, the business of college athletics "is on a path toward meltdown."
Turner said he and other college presidents could avert financial catastrophe only if they went public with athletic budget information. In Turner's words, "The first step will need to be true transparency regarding athletic spending."
SMU officials have yet to fulfill this promise.
Despite repeated attempts by The Daily Campus in late January to get basic revenues and expenses for the SMU Athletic Department for the past five years, officials declined to release any information. Brad Sutton, assistant athletic director for media relations, said,
"The department does not do that." Travis Wolther, the department's manager of financial reporting, called the budget "confidential information."
Turner told The Daily Campus athletic officials should give budget information to campus groups with what he called "leadership responsibilities."
"If you're writing an article, we'd have it available," he said. "Whether it's just out to be wallpaper somewhere, I don't have any desire to do that."
Some students have a problem with the restricted access to the budget.
"I think it should be available to all students since we pay so much to go here," sophomore Jenny Pender said.
Other students questioned why SMU wants to keep the information so quiet.
"Anything that's kept so confidential seems strange," senior Courtney Jones said.
Using the SMU Faculty Senate Web site, The Daily Campus independently obtained athletic department records for the past six years. They show that during those years the SMU Athletic Department lost more than $93 million. This is equal to 40 percent of all tuition and fees paid by students in 2009.
Some students said they were stunned by the losses. "That's shocking," freshman Alex Williamson said.
It wasn't supposed to be like this. When Turner hired Steve Orsini as athletic director in 2006, one of his main goals was to improve the financial situation of the athletic department, Orsini recalled in an interview. Orsini, a former CPA, had the "business expertise that will help us build resources and fan support," Turner said. Since then, the financial situation of the department has changed – for the worse.
From 2004 to 2006, before Orsini was hired, the department's annual deficit ranged between $12 and $13 million. Since Orsini's first full year at SMU in 2007, annual athletic department losses have ballooned to $18 million annually – a 50 percent increase. This jump in losses is something Orsini says he can't explain.
"I can't answer that," he said. "I don't know."
Most college athletic programs lose money, primarily because of football. What's different about SMU is that the athletic department loses a lot more money than most.
A 2009 NCAA report looked at SMU and 118 other Football Bowl Subdivision (FBS) schools. Ninety-four lost money. The median deficit for these 94 colleges was $7.27 million in 2006, $7.53 million in 2007 and $8.09 in 2008. By comparison, the SMU Athletic Department lost $12.97 million in 2006, $17.95 million in 2007 and $18.18 million in 2008—more than twice the median deficit for the 94 schools.
Despite the athletic department's refusal to provide this information, Turner said the figures are readily available for interested parties such as SMU students and their parents.
"The issue on transparency is, ‘Are the basic components of the operation of your athletic program made available to the constituents of your campus?' And our answer is yes here," he said.
A search of the SMU Web site suggests otherwise. The athletic department site contains no budget information. A search of SMU using "athletic deficit" turns up scattered references to the department's losses. But in virtually every case, these figures—reported by SMU administrators to the Faculty Senate—are significantly lower than the department's actual losses.
Orsini and other officials told the Faculty Senate in October 2008 the athletic deficit for the past year was $7.4 million, not $17.95 million. In April 2009, the athletic department told a Senate panel its 2008 deficit was $7.2 million, not $18.18 million. That same month, the department told the Faculty Senate its estimated 2009 deficit was $6.3 million, not $18.6 million as reported on university budget documents.
How do Orsini and other administrators come up with these figures? At SMU, athletic scholarships count for roughly a third of the athletic department's expenses due to the high cost of tuition. Orsini, with the support of top SMU administrators, does not count athletic scholarships as an expense for his department. "What the university says is: ‘We're not burdening the athletic department with that,' " Orsini said.
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The following day, this paper published a letter written by three faculty members concerning the deficit story. The letter attempted to clarify some points of the article.
We wish to address their clarifications here and explain how we arrived at the numbers we reported.
To the issue of characterizing budgeted expenses as “losses,” the 2009-10 university budget provides information about the revenue the department took in and how much it spent. In 2008, the department’s revenue less expenses was approximately -$18 million.
This means that the department spent $18 million more than it earned. In 2007, the department spent $17 million more than it earned.
This document is available on both the Faculty Senate and The Daily Campus Web site.
To the issue of including scholarships as part of the deficit: They make up a large part of the deficit and the inclusion of scholarships is the standard way of looking at any athletic department’s expenses. As reporter Steven R. Thompson wrote:
The NCAA includes scholarships, or grants-in-aid, as an athletic department expense. So does the Knight Commission on Intercollegiate Athletics, a national watchdog group seeking to reform college athletics. Experts who have spent years studying the business of college athletics—including Dan Fulks, a Transylvania University accounting professor and research consultant for the NCAA, and Jay Weiner, a sports journalist and author of a recent Knight Commission report—said scholarships should be included when calculating the bottom line for athletic programs.
“Grants-in-aid are an expense, indeed,” Weiner said. “Across the Football Bowl Subdivision they account for 16 percent of athletic departments’ costs.”
The NCAA included scholarships when considering losses in its 2009 report on Football Bowl Subdivision schools. Thompson’s article even quotes SMU President and co-chair of the Knight Commission R. Gerald Turner as saying that it is fair to count scholarships as an expense.
One can argue whether to characterize scholarships as a loss or investment, and we acknowledge that they provide wonderful opportunities for students who might otherwise be unable to attend SMU. We are certainly not advocating that those scholarships be taken away from deserving students. But scholarships are an expense, nonetheless, which adds to the athletic department’s deficit.
SMU athletics provide a vital service to the university by attracting and energizing a quality student population. This aspect is not to be brushed aside, because it is true that a school’s athletic program brings students and revenue to the university.
As Athletic Director Steve Orsini is quoted in Thompson’s article, “Athletics is like a front porch to a home. You don’t have to have a front porch to have a nice home, but if you’re going to have a front porch, have it look attractive so people will want to check out your home. In this case, having an athletic program that’s attractive to potential students that may want to come to SMU,” Orsini said. “Universities are willing to invest in that aspect to get a return, which is more people wanting to come to your school.”
But a deficit is a deficit no matter how you view it.
how SMU is administered (“$93 million and counting”).The Faculty Senate takes as one of its tasks the overseeing of all
aspects of the University that affect the academic mission. The
question of athletics financing has, as a consequence, been one the
Faculty Senate has devoted much time to over the years.Since one of our documents formed the basis of the reporting in
Wednesday’s story, we would have liked the opportunity to discuss the
budget issues with your reporter. Not having had that conversation,
we wish, for the moment, to comment on two aspects of the story.First, the spending characterized as “losses” are in fact mostly
budgeted expenses for the maintenance of our athletics programs.Second, two thirds of those expenses are for scholarships that provide
for the academic careers of athletes.While there may be disagreement over the level of funding for the
athletic programs, calling these expenses “losses” does not
accurately reflect SMU’s decision to provide that funding. A
reasonable discussion of athletics at SMU demands clarity about the
various categories as a complement to transparency.
Sincerely,Dennis Foster, Ex-President, Faculty SenateFredrick Olness, President, Faculty SenateMatthew Wilson, Member, Athletics Policy Committe, Faculty Senate
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