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Jan 15, 2010 7:50:05 AM

 

The 2010 NCAA State of the Association speech, as delivered by NCAA Interim President Jim Isch. 

This is a bittersweet moment for me personally. I am pleased to spend time with the NCAA delegates and guests this afternoon. It is an honor to stand before you as interim president of the NCAA.

On the other hand, this is a time when our late president and great friend, Myles Brand, would normally have been addressing you and providing you with his comments on the state of the Association.

We were fortunate to have the opportunity to honor the many and significant contributions Myles made to intercollegiate athletics and to pay respect to a life immersed in the academy and in service to higher education.

But now I want to take a few moments to comment on the condition of the enterprise Myles touched and upon which he left his imprint and to challenge us all with regard to the year that lies ahead.

While the bulk of my remarks will address broad concerns on the fiscal model for intercollegiate athletics, I would be remiss if I did not note the progress that has been made in two other areas – academic reform and diversity hiring.

If Myles came into the NCAA presidency with a mandate, it was to confront concerns with the academic success of student-athletes in some sports and especially in Division I. Despite a number of reform efforts over the previous 15 years or so and even with some indicators that student-athletes were doing as well or better than other students, the graduation success of certain student-athletes in key sports was lagging behind.

Divisions II and III had their own concerns.

What has transpired over the last seven years is remarkable. New standards for initial eligibility and progress-toward-degree have been put in place. New metrics – such as APR and GSR in Division I and ASR in Division II – have become well-established. And the trends in terms of improved graduation rates are all up.

With the last reporting period in November, the Graduation Success Rate for the cohort that entered Division I institutions in 2002 is 79 percent – one percentage point from the aspirational 80 percent goal Myles set a few years ago. And in Division II, the Academic Success Rate stands at 71 percent.

The trend lines are all significantly improved. Division I men's basketball has seen a 10 percentage point increase over the last eight years; baseball is up five points and football is up three points.

Next year's graduating cohort – those who entered in 2003 – will be the first that had to meet increased progress­-toward-degree standards. That is, they had to make 20 percent progress each year toward their bachelor's degree.

Division II has its Life in the Balance initiative designed to address issues around student-athlete well-being but that will also impact academic success. Under consideration at this Convention are legislative proposals intended to provide more time for student-athletes to be students and to fully embrace the campus experience.

Division III is beginning a pilot baseline study to measure the graduation success of student-athletes in that division. This is a critical step for Division III in its efforts to ensure that academic success remains paramount.

The undeniable facts are that most student-athletes come to college to get an education; most are doing better than their counterparts in the general student body; and most are graduating on time in the major of their choosing.

Despite these successes, there are critical issues still to confront. With next spring's APR announcement in Division I, there will likely be increased penalties, including the loss of postseason championship opportunities.

There may also be increased pressure to roll back academic reform.

That must not happen.

It has been gratifying to see college and universities presidents remain strong in their commitment to reform and I know that will not change.

The Division I Committee on Academic Performance is appropriately undertaking a critical examination of that committee's efforts over the last five years. Central to that examination are three questions:

• Are the original goals of the program being achieved?
• Are the current APR penalty benchmarks useful in motivating improved academic performance?
• Is the current system of penalty filters and waiver directives working as intended?

Data will drive future decisions regarding academic reform as they have in the past. Our target in all this is to modify behavior, to do that in a manner that is fair but that insists on improvement, and critically to graduate student-athletes.

That is the promise of academic reform and nothing less is acceptable.

One of the most frustrating issues in America and in American college sports for decades has been those around diversity hiring. While there has been some success over time in some sports, especially men's basketball, college football head coaching positions have remained stubbornly difficult for individuals of color.

This was an important issue for Myles and one about which he committed considerable time and effort. Rarely did he speak about intercollegiate athletics without touching on his concern with the lack of progress.

He believed that if the hiring process could be affected, the results could be improved; and he worked toward that end. A year ago, he was encouraged by the fact that nearly every search for a new head football coach in Division I included an African-American. It was a good sign.

Myles would be particularly gratified – as am I – with the hiring decisions made this fall. There were 21 head coaching vacancies in Division I football, and more than a third of those – eight – have been filled with African-American coaches. Six of those were in FBS institutions.

This brings the total number of coaches of color in Division I to 21 – 14 in FBS and seven in FCS schools. Obviously, these are all-time high numbers.

But they are still numbers. When the totals have been as low as they have for as long as they have, numbers continue to be important.

Ultimately, however, numbers will not be where success comes. We must not settle for reaching some numerical plateau and declare that we have achieved diversity.

Real diversity is about inclusion. It is about understanding the power of a process that seeks out differences, embraces a variety of points of view and hammers out better decisions because a range of perspectives has been considered. The next great frontier in our progress toward diversity in college sports is setting out on a course that avoids assimilation and encourages differences in the process of achieving excellence.

When we have done this, we can stop patting ourselves on the back for improving the numbers.

Finally, I want to spend a few minutes with you, discussing the fiscal model for intercollegiate athletics.

Now, I'm sure you would expect nothing less from a long-time chief financial officer. I wouldn't want to disappoint you.

Just three years ago, a group of 50 college and university presidents – mostly from Division I – concluded that given the rate of growth in athletics budgets compared to the growth rate elsewhere on campuses, the fiscal model for athletics was not sustainable over time. The task force agreed that while there was no financial crisis either in college sports or higher education, the system was experiencing stress.

That was 2007…times were good and the economy, we thought, was stable.

However, the task force report foreshadowed what might be in store if the economy took a turn for the worse. It said: "In truth, higher education has monetized the anticipated growth potential of athletics for short-term gratification while mortgaging the long-term financial security of the university if there is a downturn in the fortunes of college sports."

Just three years later, we have experienced a downturn of fortunes that has moved well beyond college sports. And while there are some encouraging signs for recovery, it is too early to declare that crisis has been averted. Unemployment and national-and-individual-debt continue to present challenges to the confidence so critical to fueling the economic engine of a nation and a world.

Almost certainly we know that some revenue streams that helped higher education flourish in the past have been diverted to other segments of the economy. After years of gradually diminishing state funding, public universities across the nation have experienced multiple budget cuts over the last year. And the expectation is for more cuts in the next year.

In the midst of these economic uncertainties, intercollegiate athletics continues to be funded – in many instances – at rates that give concern to both critics and supporters.

And this is a concern not confined to Division I. While Divisions II and III may be more practiced at doing more with less, a struggling economy and nervous markets have little respect for levels of spending. Truth be told, the same financial characteristics that ensure good fortune will raise all ships will likely run all ships aground when the economy falters.

Earlier this fall, the Knight Commission released both quantitative and qualitative results from a survey of presidents in the Football Bowl Subdivision of Division I. The commission focused on the FBS because it is the one that spends the most, generates the most television interests, is most often the target of criticism about excesses in intercollegiate athletics, and is able to generate more revenue than any other group of NCAA institutions.

Here are the most interesting points, in my view, from the report:

• Two-thirds of FBS presidents expressed confidence that, considering current trends in athletics revenues and expenses, athletics operations are sustainable in their current form on their campuses. But less than half believe athletics programs on other institutions in their conferences are sustainable.
• An overwhelming majority (85 percent) indicated they felt compensation was excessive in the context of higher education for football and basketball coaches. But they are pessimistic about their ability to control these costs.
• Presidents see the "arms race" as divisive – steadily widening the gulf between the haves and have-nots.
• Presidents would like serious change, but the report noted that they do not see themselves as the force for the needed change.

What was prevalent throughout was a sense among presidents that intercollegiate athletics is spending more than it should, generating more revenue than is good for it, and that the values of higher education are being damaged.

Those are concerns expressed by many within higher education and more broadly.

It will be helpful to provide some perspective to costs of intercollegiate athletics in Division I within all three subdivisions and the impact on their institutions.

The NCAA research staff released its revenue and expenses report for 2008 a couple of months ago and reported to the Division I Board of Directors some trends over the last five years. Here are the key findings from that analysis:

• Over the last five years, generated revenues – those revenues generated by the athletics department – grew by a little more than 33 percent. Total expenses grew by just under 43 percent. Expenses outpaced generated revenue by nine percentage points.
• However, over the past two years, generated revenues grew by 15 percent and total expenses by 16 percent, indicating a lessening in the growth gap between revenues and expenses.
• Five years ago, athletics expenses were growing at rates that were up to 5 percent faster than institutional expenses. In the most recent year of data, however, that gap has closed to almost zero. It will be interesting to follow this trend, and especially so from the perspective of a down economy.

But here is the really fascinating finding: The median level of institutional subsidization in Division I for athletics – regardless of subdivision – is approximately $8 million. That is to say, there may be emerging a consensus on the monetary value to institutions of supporting a Division I athletics program.

That $8 million at the FBS level represents roughly 1 percent of total institutional budgets, and it is 4 to 4.5 percent for the other two subdivisions. Of course, the range of spending within Division I is significant – from $2.7 million to $123 million. Such disparities suggest a growing lack of financial homogeny among a group of institutions all attempting to fly the same banner.

Even among the 120 FBS institutions, the largest budgets are 13 times larger than the smallest budgets.

Taken at face value, these aggregate statistics still do not suggest that intercollegiate athletics is in financial crisis or that athletics budgets present a crisis to the broader security of higher education. But the impact on individual campuses, especially in an oppressive economy, may be very different.

We also must be certain we understand this: At a time when institutions and their faculty are fighting to save positions, 3 to 5 percent of an institutional budget could make the difference between keeping a program alive or seeing it perish.

So, the data can be confusing and conclusions illusive.

To borrow a phrase, what higher education is confronting – and will be for the foreseeable future – is much more than an "academic exercise." The gap between those relatively few programs that can afford – even in a down economy – a lifestyle born in financial prosperity is widening. And the exertion required for some to sustain spending behaviors beyond their means in an effort to preserve their position in their athletics community will likely become too exhaustive to maintain.

Furthermore, these findings also suggest that the sustainability of athletics programs is very much an institutional issue. Institutions, on their own, must find the appropriate value level of supporting athletics on campus.

That was articulated in the task force report in 2007. "The reality," the report said, "for effective reform of spending and revenue generating behaviors for intercollegiate athletics is this: Each college and university must hold itself accountable for exercising its independent will as an institution of higher education. And it will do that best through well-informed, value driven and courageous presidential leadership."

And that sentiment was the basis for the dashboard indicators initiative in Division I that is in its third year.

Division II is also in the process of creating financial dashboard indicators for use by presidents in that division.

Are better management tools and greater transparency enough? They may not be when external forces in both reality and perception have the upper hand.

It is difficult if not impossible to address financial issues with catch-phrase solutions. Intercollegiate athletics at all levels – and certainly more so at some – have the advantage of popularity to drive revenue.

But with that must come the discipline to ensure that entertainment is not the guiding principle for how athletics budgets are developed. And I am more convinced than ever that central to remodeling the financial structure for intercollegiate athletics is a process of value-based decision making.

If we have learned anything from our current economic downturn it should be that financial prosperity does not immune us from rapid and disastrous fiscal crisis. And the best approach is for individual institutions to determine the value of athletics to a campus that comports with the values of the institution itself.

But the critical question is whether there is both the will and the practical opportunity for institutions to manage their financial destiny with regard to athletics? If not, what then?

Can institutional discipline be accomplished through national policy? I find it difficult to believe it can. Can we develop a normative approach that establishes some parameters? Perhaps, and I will work with our governance bodies over the next few months to engage a discussion along those lines.

We must take advantage of the difficult times to inform us about financial behaviors that should guide us all the time.

Again, I must tell you that I am honored and humbled to serve as your interim president. I take this role seriously and understand that while it will not be of long duration, the time must be well spent.

The search for the next president is well underway. Our target is to have that person on board by fall. We in the national office are blessed to have had a clear plan of action set out for us by Myles Brand.

I take as the most important contribution I can make in preparation for the next president is to ensure that the path is as clear of obstacles as possible and the ground is ready for new growth.

We cannot flag in our devotion to academic reform, our commitment to financial stability, our efforts to ensure student-athlete well-being, or our pursuit of fairness and inclusion for all.

Thanks to each of you for your support of the national office over the last year and for your confidence that we can and will move forward on all these fronts. I have come to understand that time and travails have no respect for temporary circumstances. Our job is to make progress, and we will do so.