Rutgers Athletics Spends Most To Stay Afloat

Also last year, Rutgers said it would withhold scheduled negotiated raises for its employees because of state funding cuts, a move expected to save $30 million.

The battle between academics and athletics is brewing nationally. Subsidies account for $1 of every $3 spent on athletics at NCAA Division I schools. Since 2006, athletics budgets at 219 Division I public schools have increased 22%, and subsidies — the part of the budget that comes from student fees and university money — have increased 26%.

But no athletics program has matched Rutgers’ subsidies; $115 million is the highest for any public school and nearly twice the subsidy of the next highest school among the power conferences — those whose football champions automatically qualify for the Bowl Championship Series.

The university is trying to close the gap. In October, it launched a seven-year, $1 billion fundraising campaign that includes a goal of raising $100 million for athletics. Last week, it sold the naming rights to its football stadium to a New Jersey-based computer services company for about $6.5 million over 10 years. Athletics director Tim Pernetti, a former sports television executive, declares he is “as bullish as anybody” about the windfall the athletics department hopes to receive when its conference, the Big East, negotiates new media rights deals to replace those that expire in 2013.

Meanwhile, Rutgers’ employee unions are awaiting arbitration rulings concerning the raises, which they had voluntarily deferred but that the university maintains it was not obligated to pay because of inadequate funding, after the state cut funding by tens of millions of dollars.

“A student doesn’t come to Rutgers to attend a football game. They come here to get an education — and then maybe attend a football game,” says Patrick Nowlan, executive director of the Rutgers teachers’ union.

“From our perspective, the core mission of the university is to teach, do research and then provide service to the public of the state of New Jersey, and ancillary enterprises such as athletics should not be the top priorities. They should not be priorities when you, as a university administration, are arguing that you don’t have resources, you don’t have enough funding from the state.”

His union, the Rutgers American Association of University Professors-American Federation of Teachers, represents faculty and teaching and graduate assistants, including more than 3,500 on the university’s main campus in New Brunswick where total enrollment is nearly 40,000.

Rutgers has reduced the proportion of its athletics budget that depends on subsidies since 2006. But even with six teams eliminated after the 2006-07 school year, the budget has grown so much in the past five years that the actual subsidy has increased from $21.7 million to $26.9 million, after adjusting for inflation to 2010 dollars.

Still, Rutgers’ percentage of total revenue coming from subsidies in 2010 (42%) was the highest among BCS public schools. Two other Big East schools had the next-highest percentages of revenue coming from subsidies: South Florida (36%) and Cincinnati (33%).

Rutgers declined to make executives of its central financial office available for an interview. In response to a question from USA TODAY about how the university determines the amount of institutional and student-fee money that goes to athletics, Rutgers’ media relations office said via e-mail:

“Requests for funding for the Rutgers athletics department, whether through student fees or other institutional resources, are reviewed annually by the university’s administration. These requests, along with those from other units throughout the institution, are considered in the development of a comprehensive working budget for the university, traditionally adopted in July by the Board of Governors. … Members of the Rutgers community are invited to comment on budgetary matters at a number of meetings and public forums throughout the year, including an annual open hearing on tuition and fees, usually held in April.”

Pernetti says that in fiscal 2010, the amount of student fee money allotted to the athletics program (a little more than $8.4 million) remained fixed throughout the budget cycle. He says that, for university-wide budget reasons, determining institutional support was “a constant, ongoing process” and the amount was “modified several times during year.” In the end, Pernetti says, because of “revenue not meeting certain expectations, what we did was university support (was) increased in order to balance the budget.”

“The view of what that is can be several different things,” he adds. “With athletics being the big window into everything we do here at Rutgers, and being that we’ve been able to do it in a positive way, it is an investment in the branding and marketing of the entire place, not just the athletic department.”

Pernetti focusing on new revenues

Even at 24 teams, Rutgers is robust in its sports offerings — five teams more than the median for schools in the NCAA’s Football Bowl Subdivision, according to the NCAA. Among FBS football teams, Rutgers’ was ranked No. 1 in 2009 and No. 2 in 2010 in the NCAA Academic Percentage Rating, a measure of classroom performance.

The football team also has made bowl appearances in five of the past six seasons. The women’s basketball team has made the NCAA tournament each of the past nine seasons, finishing as national runner-up in 2007, when Hall of Fame coach C. Vivian Stringer guided the team through racially charged comments about the team by national radio personality Don Imus.

The program also has had its share of controversy. In the summer of 2008 The (Newark, N.J.) Star-Ledger reported finding hundreds of thousands of dollars in athletics spending that didn’t appear in the budget, as well as previously undisclosed enhancements to football coach Greg Schiano’s contract.

(Schiano was the Big East’s highest-paid football coach in 2010 with university compensation of $1.9 million, according to a USA TODAY survey of coaches’ pay. Stringer, with university compensation of just less than $1 million in 2010-11, was No. 4 in the nation among coaches in her sport whose schools have appeared in at least four of the past five NCAA tournaments; she is due a $50,000 increase, beginning July 1. Pernetti said Stringer is covered by school president Richard L. McCormick’s announcement Sept. 3, 2010 that, amid its pay freeze, the school would proceed with increases for a range of employees, including those with “individual, non-union contracts.”)

The Star-Ledger’s reports prompted an examination of the athletics program by a university special review committee and an audit by the state comptroller of Rutgers’ contracting and selected management practices. The university committee issued a report in November 2008 that was critical of McCormick’s oversight and some of then-athletics director Robert Mulcahy’s actions. Three weeks later, McCormick dismissed Mulcahy. The comptroller’s report, in January 2011, was not limited to athletics and included 18 recommendations, most of which the university agreed with.

Meanwhile, the school made a $102 million renovation to Rutgers Stadium. Part of the project was to be financed with private funds, but the school was left with the entire bill. This will require millions in debt service payments annually by the athletics department.

To replace Mulcahy, the university hired Pernetti, 40, a former Scarlet Knights football player who had been an executive for ABC Sports and then CBS College Sports Network. Pernetti, also the color commentator on Rutgers football radio broadcasts from 2001 to ’08, began the new job April 1, 2009.

Asked whether he senses tension on campus about the subsidy, he said: “The answer is I don’t see it. At the same time, I think that general tension on our campus and I think other campuses across the country has been there for decades. … What I can tell you is that there is a — I wouldn’t say concern — but a focus on this item within our business and I work closely with our president and his administration and our board … We’ve made clear that it’s our No. 1 priority to generate new revenues and figure out a way to stabilize and reduce university support.”

‘An ultimately destructive cycle’

To some, the race for new revenue occurs on a track for only a select few college athletics programs — and on a relentless treadmill for the rest. In 2010, 22 Division I public school athletics departments generated enough money to cover expenses.

“On the one hand, some schools may brag about the fact that they’re self-sufficient and generating all this revenue, but to me it exposes another troubling aspect of all of this … That just means we’re going to keep increasing expenditures,” says University of Maryland System Chancellor William E. Kirwan, co-chair of the Knight Commission on Intercollegiate Athletics. “Coaches are going to be paid more. Assistant coaches are going to be paid more. Fancier facilities are going to be built, etcetera, etcetera, and it just absolutely continues what I think is an ultimately destructive cycle.”

For now, with the end of another fiscal year near, Rutgers and Pernetti are trying to total how 2011 will end.

“I anticipate that we will be running a deficit this year in athletics,” Pernetti says. “The magnitude is not something I can really say yet because there’s a lot of variables in place.”

Does “running a deficit this year in athletics” mean the university will need to provide late-fiscal-year assistance to balance the books?

“If you’re saying, ’Is it similar to ’09-10 where there was an increase in university support?’ The answer would be yes.”