This season, the University of Massachusetts completed its second season at the Football Bowl Subdivision level, college football's highest classification. It was an important season because it was the Minutemen's last chance to escape probation for low attendance. While UMass did manage to exceed the 15,000 in average attendance per game required by the NCAA, it did so by a small margin (15,830). Unfortunately, it's not the end of the problems at UMass.
An FBS football program like the one in Amherst can only be successful financially if it can generate revenue from ticket sales and contributions. Between the one-win team on the field and a home schedule that had the Minutemen traveling 95 miles to Gillette Stadium for home games, UMass has struggled to generate the revenue it initially projected when it decided to make the move to FBS. Next season, it will attempt to remedy the problem by playing half of its home schedule at the on-campus McGuirk Stadium.
Last week, the UMass Faculty Senate was presented with a report from the Ad Hoc Committee on FBS Football that revealed football expenses continue to outpace projections, leaving the university on the hook for more than originally envisioned. The committee was formed two years ago to keep an eye on the football program's move to FBS and consists of 17 members, including faculty, staff, and students.
The most recent report by the committee highlights just how quickly football expenses are growing beyond initial projections. Those initial projections were made by the athletic department prior to the move to top tier of college football and attempted to project football budgets through fiscal year 2020. Here's a look at how each year has played out for UMass:
FY 2011 - last year before the move to FBS (2010 season)
- Expenses: $4,379,889
- Institutional support: $3,157,800 (direct support, student fees, and out-of-state tuition waivers)
FY2012 - first year in FBS transition
- Projected expenses: $5,428,581
- Projected institutional support: $4,273,764
- Actual expenses: $5,983,990 (10% higher than projected)
- Actual institutional support: $4,967,638 (16% higher than projected)
- Projected expenses: $6,468,373
- Projected institutional support: $4,178,794
- Actual expenses: $6,897,021 (7% higher than projected)
- Actual institutional support: $4,489,764 (7% higher than projected)
Projections from the athletic department also predicted revenues would exceed expenses beginning with FY2013 and continuing through FY2020. Unfortunately, that hasn't been the case.
- Actual revenue: $1,995,633 (primarily from two guarantees: Wisconsin -- $900,000, and Kansas State -- $750,000)
FY2014 - includes the 2013 season
- Projected expenses: $6,918,966
- Projected institutional support: $4,509,084
- Actual expenses (based on Nov. 2013 projections): $7,781,217 (12% higher than projected)
- Actual institutional support (based on Nov. 2013 projections): $5,106,548 (13% higher than projected)
- Actual revenue (from guarantees and ticket sales): $2,674,669
The football budget portion of the report concluded by saying that the football budget has grown $3.4 million in three years, with financial support from the university and the state growing by $2 million (to a total of $5.1 million when added to support previously provided).
However, the expenses don't end there. The committee pointed out that other expenses have been incurred as a direct result of the move to FBS for football.
Gender equity: In addition to the expense incurred under the football budget for funding 22 additional scholarships (FBS requires 85, while FCS required just 63), the athletic department had to add additional scholarships for women's sports in order to meet gender equity requirements. Those scholarships for women added $208,470 in fiscal year 2013, is projected to grow to $427,196 this year (when all 85 scholarships for football were phased in), and is predicted to rise to $1.2 million by fiscal year 2020.
Marketing: The office of external relations spent $534,242 on marketing in fiscal year 2013 in addition to the football program's marketing expenses. No doubt much of that was used to try and boost attendance to avoid probation.
McGuirk Stadium improvements: UMass splits its home schedule between the on-campus McGuirk Stadium and Gillette Stadium in Foxboro. The report notes that McGuirk has had little renovation since its construction in 1965. The contract UMass signed when it joined the MAC included a provision about renovations, which were initially estimated to cost $30 million. The current estimate is $36.8 million. The estimated annual debt service, which will be shouldered by the university, is $2.2 million. The university will also pay for annual operating costs once improvements are finished in 2014, which is estimated to be an additional $1 million annually. Accordingly, the committee suggested any analysis of the true cost of football should include an additional $3.2 million per year.
Total cost to the university
The report from the Ad Hoc Committee on FBS Football concludes that the total amount spent on football in the current fiscal year will be $9 million, including the football budget, marketing, student buses, and gender equity scholarships. The football program is projecting revenue of $2.7 million this year from ticket sales, guarantees, contributions, and other generated revenue, leaving the total cost to the university at $6.3 million -- more than double what it spent in the final year of FCS play.
All that expense could be worth it to the university, however, if playing in the FBS provides some of the indirect benefits experienced by other programs over the years. The report says, "there remains great uncertainty about intangible benefits or costs associated with fielding an FBS program." Indeed, it is early in the process to estimate the impact playing at the FBS level will have on UMass as a university.
In my book on the business of college football, Saturday Millionaires, I devoted an entire chapter to the dozens of studies I read on the impact a football program can have on a university. While many studies as recently as 15 to 20 years ago found no direct correlation, studies conducted over the past decade increasingly find a football program can have a positive impact on the university in a number of ways, including increased applications, better quality applicants, larger enrollment, greater state appropriations, and even a higher ranking in US News and World Report.
However, most of those studies focused on programs participating in bowl games on national television, finishing in the Top 20 of the AP Poll, or competing for a national title. The Minutemen have just one win in each of the past two seasons.
Historically, schools who've transitioned from FCS to FBS have not seen their on-the-field performance improve. Nineteen teams reclassified from 1978-2010. Those programs experienced a winning season in 64.4% of their seasons in FCS. That number plummeted to 37.2% when they transitioned to FBS.
Based on those numbers, and what we've seen from the Minutemen on the field so far, it's tough to believe UMass will be getting a return on its investment any time soon.
The Fool's champion stock
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!