Moving Athletics Outside the University

Forum Post

I am the Faculty Senator for the School of Economic Sciences, but I am writing only as a constituent, on my own behalf.

In response to the cash flow crisis at the University of Arizona, UA President Robert Robbins has been quoted in media reports as telling UA’s Faculty Senators that he is considering an option which would “move athletics out of the university and have it be run by a board but with the president still making decisions about who the athletic director is.” My question: is the WSU administration and/or the Athletics Budget Oversight Committee (mentioned in Pres. Schulz’s 9/19/23 message) considering a similar option here at WSU in response to Athletics’ budget problems?

I am unaware of any detailed plans that UA’s President might be considering, and UA may ultimately choose a different approach to managing their financial crisis. But a similar plan here at WSU is worth considering. I offer below my own thoughts on how such a plan might work.

WSU Athletics could be spun off as a new not-for-profit organization, wholly separate from WSU. The Athletic Director would become the Executive Director of this new entity, which I will call the WSU Athletics Foundation (WSUAF). WSU Athletics coaches, staff and administrators would all become employees of WSUAF, ceasing their employment contracts with WSU. WSUAF would be granted a time-limited, exclusive right to field and manage athletic teams with the WSU brand. To balance the priorities of the state and the university, WSUAF’s Board of Directors might consist of members appointed by the Executive Director, by WSU, and by the Governor.

How would WSUAF survive and thrive? Although revenues from ticket sales, TV-rights and apparel licensing would still be collected by the University, WSU would agree to pass all *net* revenues onwards to WSUAF. From gross revenues, the University would deduct costs such as the operations and maintenance costs of Athletics facilities and, crucially, the cost of servicing any current external debt associated with Athletics. WSUAF might be granted decision-making authority in negotiating TV deals and setting ticket prices (provided a certain allowance of low- or no-cost tickets were made available for students). Any endowments held at the WSU Foundation in the name of Athletics (e.g. by donor restriction) would be transferred to WSUAF, and WSUAF could proceed in building its now-separate endowment fund with donations from alumni and fans. The University would issue no new external debt tied to Athletics (e.g. facilities) until the existing debt service costs fell to a pre-specified percent of net revenues.

WSU would commit to maintaining all existing staff and programs designed to help student athletes succeed academically. The University could, during a negotiated transition period, fully cover the cost of tuition waivers for student-athletes, with WSUAF covering a larger share over time. WSUAF would be responsible for ensuring compliance with Title IX and other NCAA rules. If WSUAF violated these rules and brought sanctions on the university, the exclusive contract with WSUAF would be paused for a period and/or potentially terminated.

What might WSU lose and gain? I think WSU, like many universities, has stuck by a money-losing athletics department because of the perceived boost in student applications that come from having a nationally-recognized sports program. But I suspect it also harbored the hope that someday things might “turn around”, with Athletics overall (not just a single sport) turning a profit and cross-subsidizing other parts of the university. This proposal would abandon that upside possibility for the university. The upside would instead now belong to WSUAF. If WSUAF is successful and builds winning teams, those net revenues would likely go to increased salaries for WSUAF staff and coaches, not the University’s coffers. But WSU would still gain the name recognition, alumni support, and pride in having a winning team. Pullman would still gain from visitors during game weekends.

In exchange for giving away the upside, however, WSU limits the downside risk. If WSUAF is not able to right the ship, the cuts would need to come from WSUAF salaries and staff, not from the academic enterprise of the university. As student-athletes rightfully demand their fair share of the net revenues they create via their name, image and likeness (NIL), those negotiations would be between the athletes’ representatives and WSUAF administrators, not the University. Because everyone realizes how challenging this will be, WSU could help WSUAF in the short-run by simply forgiving the ~$100 million of “internal” debt owed by Athletics to the University. In my view, this money is never going to be repaid, and it would be better for the University to acknowledge this, write it off now and move forward with a focus on repaying its external debt.

Whichever path the University of Arizona chooses, I believe WSU has the opportunity to be innovative nationally and chart a new path for financing collegiate athletics. I hope the Administration and Oversight Committee are considering something along these lines.

Joe Cook, WSU Faculty
School of Economic Sciences, CAHNRS

Response

The Faculty Senate Executive Officers have been notified of this forum post and will respond back once more information becomes available.

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