In keeping with my usual method of trying to maintain stories with information on finances, here is a story from the Indianapolis Business Journal that deals with Butler and the risk involved in the Catholic 7 / Big East they have moved to. It goes to show just how big the difference is between the big boys and the Horizon League, etc.
http://www.ibj.com/keyword/111/Butler%20University/RPARAMS/taxonomyId/769From afar, Butler University’s decision to leapfrog from bigger conference to bigger conference looks like a no-brainer.
Abandoning the Horizon League last year for the Atlantic 10, and now after one year jumping to the newly formed Big East, certainly has major upside.
Officials for Butler, Creighton and Xavier announced today they will join Georgetown, St. John’s, Villanova, Seton Hall, Providence, Marquette and DePaul to form a new league for next season.
The excitement on Butler’s campus should be tempered with caution.
President James Danko told me for a story in this week’s IBJ, “The move to the A10 was not a money-maker.”
Like the move to the A10, the risks in this most recent jump are considerable and the costs—at least initially—will most certainly outweigh any financial gains.
Whether this makes sense in the long term depends on how the schools of this new conference share athletic revenue, how big a broadcast deal the league can broker, and how much Butler will have to spend to keep up with relative hoops powerhouses such as Georgetown and Marquette.
Chief among the advantages of joining the new league is exposure in key markets, especially those on the East Coast. The exposure helps Butler attract a more diverse—and potentially richer—student body.
A student body from wealthier parts of the country eventually turns into a wealthier alumni base, and that can have a big impact on fundraising. But that lift could take years to realize.
The plan to pump up the men’s basketball team and use it as a key marketing tool was hatched in 1989 by then-President Geoffrey Bannister. That plan has been carried on by Bobby Fong and Danko.
And who can argue with the results? Butler’s student body has more than doubled, to 4,200, since 1990 and admissions have jumped about 50 percent since 2010, after the first of the school’s two Final Four runs.
Fundraising for the athletic department has jumped, too, from $635,000 in 2008 to $1.45 million last year and a projected $1.5 million this year. That doesn’t include $13.3 million in donations collected since June 2010 for Hinkle Fieldhouse renovations.
That kind of fundraising would have seemed preposterous a decade ago.
But the costs of jumping to a new conference loom large, and Butler supporters have to wonder where the money will come from.
First, there’s a $2 million exit fee owed to the A10. But that’s small potatoes compared to the ongoing expenses of running with this new crowd.
Last week, Danko told me the school’s athletic department operates at a deficit. That means money must be pulled from elsewhere to feed sports.
Of course, Butler is not alone. The vast majority of NCAA Division I schools operate their athletic department at a loss.
But that doesn’t make it an easy issue for Danko. Given the school’s small size and Indianapolis’ penchant for fiscal conservatism, the expense of such a move is a pressing one for Butler’s president. That’s why he said he has been involved in conference realignment talks “every step of the way.”
Butler has seen the salary of its basketball coach triple in the last five years. Brad Stevens’ $1 million salary is nearly 10 times what Barry Collier earned when he started coaching the team in 1989.
Stevens was by far the highest-paid coach in the Horizon League. Now, he makes only a fraction of what other coaches in this high-octane league earn, and that will test his allegiance. He makes about one-third as much as Marquette’s Buzz Williams. Williams signed an extension last year that will pay him $2.82 million annually through 2018.
Schools like St. John’s, Georgetown and Villanova also pay their coaches big bucks. If the Stevens-led Bulldogs can compete with those schools, the market will dictate his pay be commensurate.
Just look at the Big Ten. The schools at the top of the conference have the highest-paid coaches. That’s not coincidental. And that’s not just because the best teams hire the best coaches. Of course, that’s partly the case. But with each passing year, big-time college basketball is becoming more of a pay-for-performance system where winning coaches demand higher salaries.
Increased travel expenses also concern Danko. In the Horizon League, Butler could charter a bus to many away games. And if Butler weren’t so concerned about its athletes being in the classroom, I suppose they could still use buses.
But Danko explained that the school decided this year to have the team travel primarily by air so the players would miss less classroom time.
Butler will spend $800,000 more for travel this year than it did last year in the Horizon League, Danko said. Since it’s doubtful airline fees are going down, that’s an expense that could pile up quickly.
Butler is in the midst of a $16 million renovation campaign for Hinkle Fieldhouse. But if the university is going to keep up with facilities of its new brethren, the Bulldogs will have to put more money into Hinkle and other training facilities. A charming campus and storied venue get you only so far these days.
And since Butler has a considerably smaller student body—and alumni base—from which to draw financially than the likes of DePaul, Marquette, St. John’s, Georgetown and Villanova, keeping up won’t be easy. That could put a heavier burden on the entire school to support the juiced-up athletic department.
When I asked Danko about jumping to a bigger, better conference last week, he replied, “We have to take advantage of the opportunities that help us become the school we want to be. We have high aspirations.”
With high aspirations come big risks. Really big risks.
