Athletic Director or CFO? The Change From an Athletic Department to a Business
Sports Management programs are attracting more applicants now than ever before. The majority of the applicants are applying in the hopes of pursuing a career in collegiate athletics. In the past, athletics was an industry lead by the top payers turned to coaches. Today, primarily people with a business background lead athletics, especially upper level administration. Expectations of athletic departments have changed. They are expected to generate revenue in addition to winning. The best way to generate revenue is to not only win but also have a solid business plan that will produce revenue. If schools did not have this they would become €bottom feeders€ in their conference. While having a Sports Management degree is respectable, having a business degree is more attractive because you have the knowledge on how to make a program generate revenue. Although, there are situations where the athletic director has a degree in sports administration they are, however, expected to have a background in fundraising to accommodate the business aspect.
In addition, University of Michigan hired David Brandon, the former Chairman and Chief Executive Officer of Domino's Pizza, Inc. in January of 2010. Brandon has little experience overseeing an athletic department. The only experience he really has is his career as a football player at Michigan, where he was letterman in 1973. One of the key statistics that helped him garner this position was his impressive history as the CEO of Domino's Pizza. While this is an impressive job for one to hold, does this grant him the knowledge needed to operate an athletic department? He is still young in his position but only time will tell.
When observing the construct of college athletics today compared to the past, is having a CEO, Entrepreneur, or a Chief Executive Officer oversee an athletic department imperative? If you look at the 22 self-sustaining Division I public institutions according to Kristi Dosh of The Business of College Sports, you will gather, it is imperative. These programs have successful business leaders overseeing their athletic department. The University of Michigan is one of those listed schools.
Furthermore, in June 2011 it was reported, the University of Oregon was listed as the number one self-sustaining athletic department in the country on the USA Today: Most Big-Time Schools Winning the Profit Game chart (Berkowitz). The chart shows they generate $122,394,483 in revenue and only $77,856,232 in total expenses with a $44,538,251 profit margin. As mentioned before, there are only 22 of more than 300 NCAA Division I athletic departments in the country that are self-sustaining. The Athletic Director at the University of Oregon previously served as Deputy Director of Athletics at the University of Kentucky. He has a background in accounting and auditing which is another example of a business background in athletics.
Not only are the leaders of athletic departments obtaining these positions with experience in business, but even the focus of athletic departments are switching to more business oriented goals. The key revenue source in athletic departments is television contracts and ticket sales because of the tax breaks colleges get from them (Eichelberger). To produce the necessary sales needed to increase revenue, the athletic department must have money to advertise to help fill the seats of the arenas. Advertising is a very familiar concept for business leaders of America. They understand that to get people's attention you must market yourself in an appealing way which leads to people to purchasing the service or product. Presidents of universities are starting to seek out business leaders who have a passion for athletics to head their athletic departments expecting them to utilize their resources and even get more to help sell out arenas. This type of excitement could help acquire TV contracts that will put the university's name in the homes of audiences across their region or even the country.
As mentioned previously, these directors not only have to manage the employees of the department, but they must also manage TV contracts. These contracts are the driving forces for the super conferences of NCAA Division I athletics. It is forcing loyal institutions like Maryland University to leave the ACC, where it was one of the founding members of the ACC, to join other conferences like Big 10 (Wolken)
In recent years, the NCAA signed a TV contract, worth nearly $11 billion dollars, with CBS sports to cover its NCAA tournament (O'Toole). There is no university able to sign a contract of this magnitude anytime soon, but this is just an example of just how valuable athletics are to our country. Although there aren't any universities who are able to sign a contract like this one, they still need experts who can work out blockbuster contracts to put them in position to out-fundraise their competition.
Not only do these directors have to have the skills to accumulate money through contracts, but also they have to have the skill to negotiate contracts with institutions from the Football Championship Subdivision (FCS) of NCAA Division I. In the Football Bowl Subdivision (FBS) or €big school€ athletics, you have to play your guarantee games. Guarantee games are games where a FBS institution like Alabama, Oregon, Florida, etc. has to play FCS institutions like James Madison University, Appalachian State, Sam Houston State etc. These games are used to fill the arenas guaranteeing a win for the home FBS institution and guaranteeing money for the traveling FCS opponent. These contracts in the sport of football can accumulate to over $300,000 easily, and in some cases have even eclipsed the million-dollar mark compared to basketball where the number will be in the range of tens of thousands of dollars.
Although this is an area that calls for a business-minded director, they must have some knowledge of athletics when creating schedules. When scheduling competitions, the athletic director must be knowledgeable of the dynamics of their teams and how they stack up against their opponent to ensure that you don't schedule a team built to stop your home team.
One could argue this was the problem with the great debacle of the Appalachian State Mountaineers beating the University of Michigan Wolverines in football in 2007. Appalachian State is a team who plays a fast paced spread offense in comparison to Michigan who played a power game in which they ran the ball a lot and played in a traditional defense. Appalachian's offense worked to their strength of being a smaller institution with smaller players than an FBS institution like Michigan. If an institution loses a guarantee game, this cannot only cause uproar from your fans but also from donors. This could cause a drastic decrease in revenue. This is one problem with hiring an athletic director that solely has their background in business, they can make a scheduling mistake like this and cost the program millions of dollars.
Another useful aspect of hiring people with experience in business is the ability to establish a promising donor base and expand the current base for an athletic department. It is one of the highlights of a business leader because they are almost always trying to secure a deal with a client and win their business for an extended period of time. This is the same process senior level administrators must go through to court donors and persuade them to donate their money. They must also possess the ability to sell their teams in a professional manner to sell the strengths of their department. By formulating the perfect blend of an athletic director who is passionate about sports with an executive level business background of some sort, you will have a successful athletic program.
Former CEO's of companies, in particular, but also entrepreneurs are heading more athletic departments than ever before. People of this caliber possess the ability to build bottom tier teams to the level of elite programs. Most of them did the same thing with
In addition, University of Michigan hired David Brandon, the former Chairman and Chief Executive Officer of Domino's Pizza, Inc. in January of 2010. Brandon has little experience overseeing an athletic department. The only experience he really has is his career as a football player at Michigan, where he was letterman in 1973. One of the key statistics that helped him garner this position was his impressive history as the CEO of Domino's Pizza. While this is an impressive job for one to hold, does this grant him the knowledge needed to operate an athletic department? He is still young in his position but only time will tell.
When observing the construct of college athletics today compared to the past, is having a CEO, Entrepreneur, or a Chief Executive Officer oversee an athletic department imperative? If you look at the 22 self-sustaining Division I public institutions according to Kristi Dosh of The Business of College Sports, you will gather, it is imperative. These programs have successful business leaders overseeing their athletic department. The University of Michigan is one of those listed schools.
Furthermore, in June 2011 it was reported, the University of Oregon was listed as the number one self-sustaining athletic department in the country on the USA Today: Most Big-Time Schools Winning the Profit Game chart (Berkowitz). The chart shows they generate $122,394,483 in revenue and only $77,856,232 in total expenses with a $44,538,251 profit margin. As mentioned before, there are only 22 of more than 300 NCAA Division I athletic departments in the country that are self-sustaining. The Athletic Director at the University of Oregon previously served as Deputy Director of Athletics at the University of Kentucky. He has a background in accounting and auditing which is another example of a business background in athletics.
Not only are the leaders of athletic departments obtaining these positions with experience in business, but even the focus of athletic departments are switching to more business oriented goals. The key revenue source in athletic departments is television contracts and ticket sales because of the tax breaks colleges get from them (Eichelberger). To produce the necessary sales needed to increase revenue, the athletic department must have money to advertise to help fill the seats of the arenas. Advertising is a very familiar concept for business leaders of America. They understand that to get people's attention you must market yourself in an appealing way which leads to people to purchasing the service or product. Presidents of universities are starting to seek out business leaders who have a passion for athletics to head their athletic departments expecting them to utilize their resources and even get more to help sell out arenas. This type of excitement could help acquire TV contracts that will put the university's name in the homes of audiences across their region or even the country.
As mentioned previously, these directors not only have to manage the employees of the department, but they must also manage TV contracts. These contracts are the driving forces for the super conferences of NCAA Division I athletics. It is forcing loyal institutions like Maryland University to leave the ACC, where it was one of the founding members of the ACC, to join other conferences like Big 10 (Wolken)
In recent years, the NCAA signed a TV contract, worth nearly $11 billion dollars, with CBS sports to cover its NCAA tournament (O'Toole). There is no university able to sign a contract of this magnitude anytime soon, but this is just an example of just how valuable athletics are to our country. Although there aren't any universities who are able to sign a contract like this one, they still need experts who can work out blockbuster contracts to put them in position to out-fundraise their competition.
Not only do these directors have to have the skills to accumulate money through contracts, but also they have to have the skill to negotiate contracts with institutions from the Football Championship Subdivision (FCS) of NCAA Division I. In the Football Bowl Subdivision (FBS) or €big school€ athletics, you have to play your guarantee games. Guarantee games are games where a FBS institution like Alabama, Oregon, Florida, etc. has to play FCS institutions like James Madison University, Appalachian State, Sam Houston State etc. These games are used to fill the arenas guaranteeing a win for the home FBS institution and guaranteeing money for the traveling FCS opponent. These contracts in the sport of football can accumulate to over $300,000 easily, and in some cases have even eclipsed the million-dollar mark compared to basketball where the number will be in the range of tens of thousands of dollars.
Although this is an area that calls for a business-minded director, they must have some knowledge of athletics when creating schedules. When scheduling competitions, the athletic director must be knowledgeable of the dynamics of their teams and how they stack up against their opponent to ensure that you don't schedule a team built to stop your home team.
One could argue this was the problem with the great debacle of the Appalachian State Mountaineers beating the University of Michigan Wolverines in football in 2007. Appalachian State is a team who plays a fast paced spread offense in comparison to Michigan who played a power game in which they ran the ball a lot and played in a traditional defense. Appalachian's offense worked to their strength of being a smaller institution with smaller players than an FBS institution like Michigan. If an institution loses a guarantee game, this cannot only cause uproar from your fans but also from donors. This could cause a drastic decrease in revenue. This is one problem with hiring an athletic director that solely has their background in business, they can make a scheduling mistake like this and cost the program millions of dollars.
Another useful aspect of hiring people with experience in business is the ability to establish a promising donor base and expand the current base for an athletic department. It is one of the highlights of a business leader because they are almost always trying to secure a deal with a client and win their business for an extended period of time. This is the same process senior level administrators must go through to court donors and persuade them to donate their money. They must also possess the ability to sell their teams in a professional manner to sell the strengths of their department. By formulating the perfect blend of an athletic director who is passionate about sports with an executive level business background of some sort, you will have a successful athletic program.
Former CEO's of companies, in particular, but also entrepreneurs are heading more athletic departments than ever before. People of this caliber possess the ability to build bottom tier teams to the level of elite programs. Most of them did the same thing with
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