The Dollars and Cents of Iowa Football, Part 2

I’m going to apologize right now. This is a topic that gets me a little pissed off heated. Not so much the facts surrounding it, but the condescending tone people with absolutely no inside knowledge seem to take when discussing it. Anyone that lives and works in this state seems to have an opinion on the topic of university coaches’ pay and for whatever reason the loudest ones are the ones who seem to have no idea what they’re talking about. Such is life.

So bear with me as I vent rant opine a little and remember that just like 99% of the people out there ripping into the athletic department, I have basically no inside knowledge and my opinion should be taken with a grain of salt (and perhaps a lime and some tequila).

Last week we looked at Iowa Football strength and conditioning coach Greg Doyle, his salary and the value he provides to his employer. There was a lot of faux outrage on the interwebz when we learned Doyle’s salary is approaching $600,000 a year. Shocking absolutely nobody, that news has stirred up the usual questions around coaches’ pay and the use of revenues generated by the athletic department.

So let’s take a deeper look at why criticism of any of Iowa’s coaches salaries is ridiculous. We start, as everyone not named Tarantino must, at the beginning: dollars in the door. As you’ll recall from last week, Iowa athletics brought in just shy of $106 million dollars in the last year data was made publicly available. That’s a lot. Like, 20th in the country, a lot. Unfortunately, the state Board of Regents hasn’t made public the detailed budget breakdowns for that same time period, so we’ll need to look at the prior year to get a better idea of where the money comes from.

In the fiscal year 2015 (July 1 2014-June 30 2015), Iowa athletics brought in just north of $92 million. Of that, more than $22 million came from football, just under $4 million came from men’s basketball, and everything else combined to bring in a little less than $1 million. Football was the only sport to break even. I know, I know, all you guys with your calculators out are all like, “but JP, that doesn’t add up to $92 million!” Good eye. The biggest chunk missing is money from the Big Ten. Just north of $31 million as Iowa’s cut of the TV revenue, bowl payouts, etc. Nice. Then there’s $11 million in “Foundation Support”, otherwise known as private donations, and just under $9 million from “Foundation Premium Seat Revenue”, aka those fun per seat donations for the press box seats. Rounding out the income side of things is more than $6 million from the media contract with Learfield, $3 million from bookstore sales and $3.3 million from “General Income”, whatever that means (concessions are thrown in there, but I couldn’t tell you what else it encompasses).

There is also $700k in interest (read: income generated from the cash on hand) and $650k in Student Fees. But, JP, you said Iowa athletics was totally self-sufficient! Don’t get your panties in a bunch. That “student fee” is charged to all Iowa students for the fancy new rec facility downtown. That’s not an athletics facility, but guess what, athletes use it (looking at you, swim team). So it’s a student fee funding athletics. Sure.

So that’s where the money comes from. Now, where does it go? Look for yourself:

As you can see, the biggest line item is football. Next up, debt service. Ouch. Then Administrative and General Expenses, Buildings and Grounds and Other Sports. At the end of the day, all but $1 million is spent on the goings on of the various sports programs and the athletic department broadly.

And for good reason. If you want to have a top notch program, you have to invest in it and re-invest in it. You want a coach that can create a winning culture? That costs money. You want facilities that will woo the top recruits in the country? That costs money. You want a bag man who can secure any player in the world? That costs... Wait, this isn’t the SEC. Iowa athletics makes really good money, but it needs to spend that money to stay competitive.

But in the grand scheme of things, those numbers are all drops in the proverbial bucket. For the same time period, the UI’s general operating fund (which excludes both the hospital and athletics) had revenues of more than $716 million. The biggest source? Tuition. Mom and dad paid more than $424 million in tuition and fees in FY15. Uncle Sam (or maybe Terry?) spent $245 million. And the good news is that number ain’t going up (that’s sarcasm, that’s not good news).

We’re at a point in our state where funding for higher education will either continue to decline, as it has done by 22% over the last eight years, or increase at a rate much lower than higher education inflation. The Board of Regents has made it no secret they are looking for alternative funding sources for Iowa’s three state schools. They’ve also made it pretty clear they don’t care who they piss off in Iowa City to get what they want.

You may recall, the BoR got input from anyone and everyone around Iowa City and the UI in their search for a new president. The results from that process were clear: any of the candidates would be great, except Bruce Harreld, who would be terrible. Naturally, the BoR chose Harreld. Since then, Mr. H has been quite vocal in his efforts to find alternative sources of funding the UI in a world where the state legislature wants to spend less on education and the BoR wants to give as much of that money to ISU and UNI as possible.

FWIW, I’ve met Bruce and listened to him on the topic of funding. I don’t think he’s nearly as bad as we’ve been led to believe. I think he is genuinely open to listening to input and honestly just wants to help the UI succeed in this tough new funding world. That said, he has been turning over a lot of rocks looking for dollar bills. In April, he let it slip that he may have found a few in the athletic department.

Photo by Matthew Holst/Getty Images

Here’s where we disagree, Bruce (and the rest of you who think the football program should be funding the music department). The athletic department runs on a totally separate budget. It is self-sufficient and self-funded. Despite that ridiculous $650k in “student fees”, not a dollar from the general operating fund or the state legislature finds its way into the athletic department. Kirk Ferentz might be the “highest paid state employee”, but he’s not paid by the state or anyone’s tax dollars. People complaining about coaches pay have no leg to stand on when the dollars for those salaries are entirely coming from within the department.

As we’ve discussed already, athletics can pay those high salaries because they make a lot of money and they pay what the market requires to keep the talent they want. What they don’t spend each year they put in a reserve for years, like last year, when trips to the Rose Bowl come up, so they can cover the added expenses. What happens when that extra money goes to the liberal arts program instead of a reserve? Where does the money for that bowl trip come from? With no reserve built up, one can only assume it would come from the general operating budget. I wonder if any taxpayers who happen to root for ISU would be upset by that?

“Pay them less and build the reserve!” you say. Sure, we can always just pay the coaches less. Hey, that’s what ISU does! And it works so well. Maybe while we are at it, we can pay the top surgeons over and University of Iowa Hospitals and Clinics less too, that way UIHC can start pumping some of their profits into the art department instead of wasting it on those bloated salaries and facility upgrades.

Photo by Darren McCollester/Getty Images for Boston Children's Hospital

What do you mean we “have” to pay top dollar for quality doctors and facilities if we want the hospital to stay one of the best? Don’t we also, then, “have” to pay top dollar for our athletic coaches to keep them as quality programs? What if we just went out and got replacement level coaches? Sure we might have a few less wins, but that doesn’t mean there would be less money coming in, would it?

You tell me. Maybe just as many people would buy tickets if Iowa was consistently mediocre/not good as do when Iowa has a record year. Maybe people would donate just as much money, buy just as many jerseys and grow up wanting to go to the University of Iowa over either of the other two state schools. Or maybe they wouldn’t (they don’t, look no further than ticket sales leading in to last year vs. this year).

So what’s an athletic department to do when all of a sudden, they find themselves in the red because they’re losing all the time with their new, cheap coaches they brought in to replace their “overpaid” coaches so they could start funneling their profits back to the university?

It’s never as simple as just paying a coach less or just taking that little extra income from one department and shifting it to another that doesn’t make as much. The University of Iowa is a massive, complex educational system and employer. There are major headwinds facing the U from the state legislature, the Board of Regents and elsewhere. There needs to be some serious thought around new ways to help provide funding. But it’s pretty clear the answer is not simply to divert athletics dollars from coaches and facilities into the general operating budget. That is a recipe for disaster.

Jeffrey Becker-USA TODAY Sports

One final, parting thought: how does this conversation change if we ever get to the point of actually paying student athletes for their efforts outside the classroom? Does that money come from taxpayer dollars? If it would come from the athletics budget, how can you argue to divert funds from athletics back to the general budget? How would you decide how much each player is worth? Part 3 to follow.