A Self-Sustaining Athletics Program

A number of you have commented on Coach Mack Brown’s salary, especially in these difficult economic times. Feedback like this is one of the reasons for Tower Talk, so I hope you will continue.

First, what did we do on his salary?  In 2007, when many organizations were interested in our coach, I worked with the Board of Regents on a plan to bring his guaranteed compensation in line with other top coaches. To do this, we increased his compensation from $3 million in 2007 to $4 million in 2008 and to $5 million in 2009.  The most recent action was an agreement to continue the 2009 guaranteed salary into the future, along with already existing $100,000 annual raises.  All of this comes from athletics revenues.  None of it comes from state funding or tuition.

Why now? The 2007 agreement was coming to an end.  If we did nothing, Coach Brown’s compensation would revert back to the 2007 level and would no longer be competitive in the marketplace.  And while Mack and Sally are happy here and not going anywhere, major institutions and organizations continue heavily to court them. Mack is the best coach in the country, not just because of winning–more victories in his 12 years than any program in the country–but also because he represents UT with integrity, class, and compliance. 

But the main reason to take action now was a business decision. When Mack came to UT, our program was in disarray.  It had not yet recovered from an uneven transition from Coach Royal to a new era.  The stadium was not full. Athletics could not be sustained by athletics revenue alone, so it had to receive a subsidy from the academic budget.  In Mack’s 12 years, he has changed all of that, going from $21 million to $87.5 million in football revenue, more than a four-fold increase, and building by far the most successful program in the country. This allows athletics—men’s and women’s sports—to be totally self-funding and self-sufficient.  In an era of budget cuts in higher education across the country, I am one of very few presidents who does not also have to bail out athletics with subsidies and loans.

Athletics also contributes more than $12 million to the UT economy in the form of service payments, such as for parking, administrative services, and interest on fund balances.  In the last three years they have made direct payments of $6.6 million to support academic programs such as undergraduate curriculum reform.  With our success this year, more payments are on the way.  And athletics is a key way we connect donors to the University and our academic programs.  (Less than 10% of total gifts go to athletics today).

Coach Brown is a critical component in this business model, which has been very successful.  It is important from a purely business perspective that we protect this asset and ensure a smooth transition into the Muschamp era, whenever that takes place.  We simply cannot afford another experience like our break in continuity between Coach Royal and Coach Brown.  All of this is to protect our academic budget in these difficult economic times, not at its expense.  Just ask any other major university president if he or she would trade places with me or our athletics business model.

Again, thank you for your input.  Dialogue is what this blog is all about.

Celebrating Exceptional Students, Faculty, and Staff

Most of you have heard me extol our talented, accomplished, and dedicated students, faculty, and staff.  The video linked below will make every member of the UT family proud. We prepared the video to honor...

Comments

  1. superb

  2. Truth E .Ness says:

    It’s been said that there are three kinds of lies. Lies, damn lies, and statistics. When Bill Powers says that only 10% of gifts to the university go to Athletics, that is true and not true. 10% of gifts go to Athletics, but those 10% of gifts make up almost 35% of all MONEY given to UT. The plain fact is, UT has ceased to care about staff, and more importantly, about undergraduate education. Undergraduate education does not bring in Corporate Research money which is the main business of the The University. Raising money is #1 and education follows far behind.

  3. TexasSucks says:

    Instead of paying that old man more money they should have invested in academics. I cant believe they would even let Texas play ina bowl game with a 35 percent grad rate of its players.

    Alabama is going to Kill Texas, and I will be one happy navy Fan.

  4. Toni Harris says:

    My question: Why would we risk “another experience like our break in continuity between Coach Royal and Coach Brown” when Muschamp is in place–and being paid very well already? In all due respect to you and the difficult decisions needed in this economic downturn, I want to go on record as one of the many individuals who thinks Coach Brown’s salary is outrageous, inappropriate and unseemly. Thank you for asking for feedback.

  5. Maria Rosa A. Delgado says:

    “All of this is to protect our academic budget…” Really?

  6. I would like to respond to Pierce Gradone’s comment (December 24, 2009 at 12:16 am). It is the case that Forbes calculated Texas’ program to be the most valuable in the country, with Notre Dame coming in second. Also, note however that Notre Dame’s program feeds $20+ million a year to academics. In contrast, while Texas has a more valuable program, it only contributes (depending on how you count) between $1 and $2 million a year to academics.

    Maybe, President Powers (or Coach Brown or Deloss Dodds) could explain to the many of us who have commented on this issue, why it is acceptable that athletics contributes such a small fraction of their revenues (in comparison to other universities) to academics.

  7. As a current graduate student at UT, recent graduate in Mechanical Engineering, and native Austinite, I would like to say I stand behind Mack Brown’s salary. Coach Brown has done an amazing job with our football team, and it is something we should all be proud of. I’m happy to hear that the sports programs are self-sustaining and contribute the the University’s general funds.

    Football isn’t everything, but so many of us derive pride from our athletics program. We are lucky to have a university that excels in both sports and academics. Hook ‘Em!

  8. As a current graduate student at UT, a recent graduate in Mechanical Engineering, and native Austinite, I would like to say I stand behind Mack Brown’s salary. Coach Brown has done an amazing job with our football team, and it is something we should all be proud of. I’m happy to hear that the sports programs are self-sustaining and contribute the the University’s general funds.

    Football isn’t everything, but so many of us, derive pride from our athletics program. We are lucky to have a university that excels in both sports and academics. Hook ‘Em!

  9. President Powers,

    First of all I must say that I am very pleasantly surprised–and impressed, sir–that blunt comments such as mine have been allowed to stand. If that continues (and I hope it does), perhaps the era that might be summed up in Frank Erwin’s words about The Daily Texan (“We do not fund what we do not control”) are over. For your Tower Talk blog to be viable, we cannot ignore harsh realities. . .and many of those exist at UT.

    I understand that unlike Prince Hal in Shakespeare, you cannot go out among the people unrecognized to gather real grass-roots opinions and judge the vibe on campus. People are careful how they talk to you, and how often do you deal with anyone who is not a subordinate? I’m here to tell you that among the rank and file, you have a terrible underlying morale problem at UT; many people do their best despite no support from management, working to their own personal standards; lots of others do the bare minimum to keep their backsides covered. That is a terrible waste.

    The University is a great place but fundamental inequities in power and recompense pervade the entire system. Everybody recognizes that, and only the folks with the power to cash in on it fail to resent it. This is a shame because it means so much good effort goes untapped; people basically feel like “What’s the use?”

    Examining the raw data in individual salary increases at UT (kindly provided in a handy online link at http://tinyurl.com/ybfkl6w by another respondent to your blog) illustrates that the long-standing trend for employees such as directors who possess the prerogative to assign raises invariably take quite good care of themselves, thank you, while others equally or more deserving get little or nothing. People bridle at being misled about the apportionment of monetary incentives; the word is always that there’s just no money, but the figures indicate that in reality there’s plenty of money for high-ranking officials who crowd up to the trough and take the lion’s share for themselves. And when anyone has the nerve to point out this disparity, the knee-jerk response from on high is that these people who finagle generous raises for themselves have to get paid lavishly because otherwise UT would lose them.

    Well, let those people walk away and see how well they could actually do elsewhere. That’s the basic message UT workers get if they complain and refuse to accept puffy generalities and long-term stalling tactics: The door is over there.

    Mack Brown and the football program are merely the most glaringly conspicuous sign at UT of the rich getting richer (and you know what happens to the poor; that has not changed since biblical times). Any fool can see that a tremendous amount of money and other resources (many of them intangible; some, like the $175 million on renovation of the north end of the stadium, followed by ripping out one of the nicest real grass fields in the country so that the Longhorns can play on that long-bladed fake turf that the Cowboys have in their stadium, far more egregious) are allotted the football program. And the notion that football pays its own way does not hold water when we compare that to other units at UT which obtain their own funding.

    Here is just one example: As you are well aware, sir, research arms at UT such as Applied Research Labs, the Bureau of Economic Geology, the Institute for Applied Technology, the Center for Electromechanics, IC2, Computational Engineering and Sciences (to name a few groups off the top of my head) plus many individual professors secure the vast majority of their funding with so-called “soft money” in the form of grants earned through competitive proposals. The present overhead rate UT claims from nearly all these grants is 52%.

    Does the football program share anywhere near 52% of its funding with the University? I doubt it. Why do they get to keep almost all the money they make when other UT units which secure their own funding have to give away more than half of what they earn?

    Can you see how the sacrosanct status granted football might raise a few hackles?

    I have some questions about your second entry.

    When you write that “Athletics also contributes more than $12 million to the UT economy in the form of service payments, such as for parking, administrative services, and interest on fund balances,” over what period does this $12 million come in, how does it arrive, and who determines how it is spent?

    When you write that this comes to “the UT economy,” what does that mean? Does it go into the general operating budget, and if so, where is that contribution listed?

    When you write that athletics pays for parking, what does that mean? Whom do they pay, where is that revenue deposited, and who decides how to spend it? Is it public record or hidden somewhere? On the weekends when people who work at UT have to get their cars out of garages or surface spaces for which we have paid to avoid getting our cars towed away, why are we not compensated accordingly?

    When you write that “In the last three years they [Athletics] have made direct payments of $6.6 million to support academic programs such as undergraduate curriculum reform,” should we be impressed? That’s an average of $2.2 million a year (no small potatoes); however, $2.2 million out of $87.5 million is a paltry 2.5 per cent (again, compare this to the 52% overhead rate the University exacts right off the top of grants earned through competitive proposals).

    Thanks again for giving us a place to ask such questions as these. The taxpayers and the entire University community deserve answers, too.

  10. Thank you Mr. Powers for putting this site together. I intend to use it more to keep in touch with what is currently going on. As a former student, and my wife currently attending, I must say that most likely a majority of the students are just not very well educated when it comes down to how the budget process works. I believe that is the reason for this post. So naturally when you talk about a coach as prestigious as Mack Brown making making one of the highest salaries in the nation, mixing in a bad year for the economy when education costs are increasing and the financial burden on students is mounting, I can understand why there would be a little bit of uproar.

    On the other side, I also understand the business aspect of wanting to keep the athletics department independent of academics and wanting to keep the top talent around.

    I would like to know if there is a place (website or article) that students (and other regular people like myself) have access to, to keep track of where the money injected into academics by the athletics department goes. If there is a means to do this, then I believe students would be more educated on how the process works, where money is being spent and so forth. Just like getting a child involved in household finances and analyzing the impact of certain spending at an early age is important, I believe it is the responsibility of the University to engage students in the same manner.

  11. Elizabeth,

    I take it you are a member of the classified staff. Be careful in expressing your opinion, because if you are a staff member, you do not enjoy the sort of protection faculty members have. I have seen (and to a degree, also felt) how UT’s HR can effectively blacklist employees on behalf of Administration. (That is why I choose to use a pseudonym.) They hold grudges. And of course if they keep anyone under a magnifying glass long enough, they can find reasons to railroad them, coaching “witnesses” as to exactly what they should say and making it abundantly clear to co-workers who might speak on someone’s behalf that to do so imperils that person’s own livelihood.

    If you have a gripe, don’t bother taking that to HR’s Dispute Resolution people because they work for Administration suppressing complaints and getting people back in line. After perhaps trying to cast you as a malcontent or implying that you are the problem, it’s likely that the DR flack will be on the phone to your boss before you even leave HR’s building.

    If you would like to see exactly how level (or how out of kilter) the playing field is in your department regarding salaries, hit this website (which J Pujols kindly posted in a comment responding to President Powers’ holiday wish to all when people started fussing about Mack’s millions):

    http://tinyurl.com/ybfkl6w

    Plug in “all years” and you can trace the financial advances (or lack thereof) for individuals by name. If Administration starts flapping around about these figures being inaccurate, you (or any other taxpayer) can go to the Budget Office, where by law all UT salaries are published. But again be careful, because they will probably ask to see your i.d. card, they will at least take your name, and they might even give you some bogus excuse about how the person who handles that information–public information, mind you–is out sick or on break or something.

    It may work differently in your office, but quite plainly in most UT departments there is a lot of noise about no money for raises because the poor little University is about to go bust, don’t you understand, while those who control the pursestrings manage to do very well indeed. This putative salary freeze Administration announced for themselves a while back was all a smokescreen, in that they had been getting progressively bigger slices of the pie–after all, they control the slicing–every year. The numbers do not lie. Check them out.

    Is it not ironic that it’s easiest (and safest) to get the truth about UT salaries off a website out of state? That reminds me of the Larry Burt fiasco; that mean old Yankee the Attorney General of New York came poking around in our business, and to this date most administrators (and the Regents, no doubt) believe that the real problem was not Burt’s questionable practices, but the negative publicity that ensued. Why did the Texas Attorney General neither catch that nor prosecute Burt? Because the Attorney General in Texas doesn’t police such matters on behalf of the people. File an open records request and the Texas Attorney General can deny it if they think you might be about to sue the state (or a state agency like UT). Why did UT’s own officers not catch on to Burt? Because there is essentially no oversight of high-ranking UT administrators. It is an exclusive club up there in those luxury boxes with the Regents. Surely people in Burt’s office knew what was going on, but if any of them had gone on record, guess how long they would have lasted? Whistleblowers at UT get branded, then canned. That so-called Compliance Office is just another means of keeping the lid on. Tight.

  12. Frankly, it’s ridiculous that this country and this society so obviously values athletics and entertainment above education and the support of staff. Rather than giving one person $2 million, regardless of how deserved the money is, it seems like that money could be better used for scholarships for athletes to contribute to their education, which is, after all, why Universities exist in the first place.

    I attended a University with no football team. The focus was entirely on academics and that University has a huge endowment (larger than UT’s with far fewer students) and is not suffering because of the recession. They are able to retain faculty and staff, as well as enticing the best students, because they use their endowment to give huge amounts of financial aid to students, for research for faculty, and to support staff.

    As a staff member, the fact that we didn’t even receive a cost of living raise while the football coach is getting a $2 million raise is a slap in the face, and clearly shows exactly how little the University values its staff, not to mention academics.

    If staff do not receive at the very least a COLA raise next year, I know that I, for one, will have to begin looking for a different job. I love working at the University and I love my department, but with rising health care costs and rising everything costs, I can’t afford to stay with an employer who doesn’t value staff, nor a job that actually begins to cost me.

  13. Pat Roeling says:

    I am grateful and fully support Mack Brown’s salary. After all, the success of the football program has certainly lowered the price of season tickets . . . tuition costs are down . . . and the success of the program has guaranteed that I have no problem whatsoever purchasing tickets for any sort of national championship game that I have supported through financial contributions over the last twenty-five years, instead of purchasing a vacation home for myself. Better yet, my years of devotion to the University nearly GUARANTEE that my son will be able to attend college there in 2017. Yes, my rewards are obvious, and I support every decision that you make Bill. You are obviously in close touch with your alumni, and I am proud to support this program.

  14. Fully agree Coach Mack Brown has turned the program around, and being an avid U T sports fan it has been quite a fun filled ride. Attending the previous Rose Bowls with my sons has been a memory we will never forget. Hopefully the football team can prevail again against Alabama.

    Very impressed you have addressed his salary issue, and although the timing has very bad optics understand the Athletic Departmetnt is quasi self funded. The stadium is on State property – rent free, the Athletic Department utilized the U T infrastructure – I T services, payroll, retirement benefits, etc so they are not a stand alone operation, so let’s not wave the self-sustaining flag too much; although I am sure they could be if pressed.

    My concern is the LOW graduation rate for the football team as reported by the NCAA stats. It is one of the lowest in the nation, and the Big 12, and nothing us Burnt Orange loyalists can be excited to share with anyone. Where is the accountability for this failur in the Athletic Department? Is it only the Win / Loss column that matters ? Certainly this doesn’t support the ” We are TEXAS ” attitude so others should mimic us. It would be nice to see you take some action to give a warning to Coach Mack Brown that being a laggard in graducation rates is UNacceptable ! At $ 5 million / year maybe Coach Mack Brown can help sponsor some extra tutors for those falling behind the progress towards graduation.

    Hook ‘em Horns !

    Michael

  15. Question: What about answers to M Anderson’s questions (tagged onto your Christmas wish as comments)? Are they not valid?

  16. Lisa Crider says:

    Thanks for commenting on the coach salary issue. I have a further question – while I’m thrilled for the success of our athletics program and I’m happy it’s self funding, can you tell us what will happen with the windfall from the TV revenues from the championship game?

    Where do those millions go? do they stay with athletics or do they come back to the University?

  17. Craig Cooper says:

    Coach Brown is a class act…..and an outstanding public role model. He, his staff and program have enhanced the university’s reputation which, in turn, have created great additional opportunities for the entire university student body and teaching staff. I concur with President Powers’ explanation and agree with others’ comments to date.

  18. Bill Underwood says:

    Thank you for the comment, President Powers. I agree wholeheartedly with the sentiments expressed in it. We have a great thing going with athletics at UT in general, and football is the piece that pays for all the others. I can recall when we couldn’t sell out a smaller stadium but we have people standing in line waiting for tickets (and suites) today. A hearty thank you to Coach Brown for the contributions he has made to UT and its alumni.

  19. Presidet Powers,

    Thank you for addressing this important issue. With all respect, your response skirted many important aspects of the debate. While no one can contest that Mack Brown has done a good job on the football field, I still see fail to see how Brown’s salary is justified as a business decision.

    While the market is paying huge salary’s to college coaches, we should remember, as current events should teach us, the market is not always right. We shouldn’t increase salaries just because our peer institutions are doing so. There are many faculty members at UT who are here in spite of market forces, not because of them. For example, many faculty members at the law school could make many times their current compensation as a partner at prestigious law firms. However, we pay no one in the law school even close to this market rate.

    You point to the $86.5 million in revenue as a justification for Brown’s salary. As I have pointed our previously, this sets Brown’s compensation at $1 for every $18 of revenue. In comparison, most Fortune 500 CEO’s are compensated at a rate of $1 per $3,000 of revenue. If you don’t think that this is a fair comparison, also consider that this recent pay bump puts Brown’s compensation higher than Wade Phillips, the head coach of the Dallas Cowboys. In comparison however, the Cowboys generated almost THREE TIMES the revenue that Longhorn football does. (source: http://tinyurl.com/y9xqej5)

    Of course, at least from a business perspective, profit (not revenue) generation is a more accurate metric. While longhorn football does bring in a lot of cash, remarkably little of it makes it way to the classroom. Over the past 5 years UT football has passed on only $6.5 million (or an average of $1.3 million a year) to UT academics. At this rate, UT academics get less than $1 for every $4 we paid to Brown. This certainly isn’t a ratio that many shareholders would permit of a corporate CEO.

    In contrast to this, Oklahoma’s football program brings in only a fraction of the revenue that the UT football program does, they pay their coach less, yet contribute $7 million a year to academics. This is to say Oklahoma manages to contribute FIVE TIMES as much to academics from a smaller revenue stream! (source: http://tinyurl.com/y8arnqb)

    The football program does raise UT’s profile, however so does our academic programs. One of our most successful departments is the Computer Science department. This department counts among its (approximately) 37 tenured faculty members Allen Emerson, a Turing prize (often refereed to as the Nobel prize of computing) winner. According to the NSF website, the faculty of this department have brought more than $13.5 million in NSF grant awards to UT in the past 2 years (source: http://tinyurl.com/y8w923j). Because of the department’s research excellence it has also recently attracted a $30 million dollar gift from the Gates Foundation. This is to say, not counting tuition from students and non-NSF funds, CS has attracted over $43 million dollars during the past two years (not to mention having produced a Turing prize winner, and making several significant breakthroughs elevating the reputation of UT). Despite this remarkable success in both fundraising and research excellence, UT has decided to pay Mack Brown more than all 35+ tenured CS faculty members combined! It is one thing to say Mack Brown is a crucial member of the UT community. It is quite another to say he alone is more valuable than one of our flagship academic departments. (source: http://tinyurl.com/ycdhrgk)

  20. Michele Schwartz says:

    I agree with all the other comments too! But, most of all I agree with what Bill Powers said about Mack. He represents our university with integrity, pride and compliance! As a student athlete who was at UT during the less than stellar football years; I can say from being within the program what a difference a winning program has on the other sports! The environment around TX Sports has changed–look at how well our other sports are doing too! Let’s not forget Deloss Dodds influence on all of this–I hope we’re protecting that winning asset too (and planning for a successful transition when he retires!)

  21. Kliff Kuehl says:

    I agree with other comments. Proud of program and all of the above makes good business sense. Hook ‘ em!

  22. I agree! I recently read a report in Forbes describing how our football program is the most valuable in the country, bringing in far more revenue than even the second ranked school (Notre Dame). For what he has done to the prestige of our athletics department, and the notoriety of our school in general, I think Coach Brown is adequately compensated. By the way, this is a great blog! As a graduate student, I felt that I would be somewhat alienated from the campus spirit that an undergraduate experience at a sports school brings, but I have been pleasantly surprised to have become a huge Texas fan in a matter of months! Hook ‘em Horns!

  23. President Powers: great to see your quick second blog post and it directly addressed comments from your first post. Thank you. Great interaction!

    Hook ‘em Horns!

  24. I think the criticism that UT officials receive about funding football is absolutely ridiculous and I’m glad that UT has implemented a financially successful athletics program. A lot of the positive attention that Texas gets around the country is because of our sports (football in particular). Having such good athletics programs only highlights what a great academic institution UT is!

  25. Steve Scheffler says:

    As a UT student from 1986-90, I can tell you that the athletic (particularly football) struggles had a definite influence on campus morale. Football isn’t everything, but it is the centerpiece of the institution in terms of national visibility and prestige. I wouldn’t trade my UT academic experience for anything, but I’d be interested in exchanging a few of those 5-6 and 4-7 seasons for any of Mack Brown’s recent teams. Hook ‘em Horns in Pasadena!