What The Hell Is UofM Athletics Doing?

[emu steve]

Not sure this qualifies as Detroit, but I did see it in Crains Detroit.

http://www.crainsdetroit.com/article...a-heavier-lift

Here is the first sentence from Bill Shea's article:

"The University of Michigan athletic department sits atop $240 million in debt at a time when several major college athletics programs are grappling with enormous and potentially crippling debt loads.'

I think UofM athletics is 'needy' its needs [[wants) are so far out of line to what it really 'needs.'

And they continue to spend and spend and spend on athletic facilities.

[[BTW, I do NOT favor unlimited spending on athletic facilities. I have NO problem with Comerica, Ford Field, LCA, etc. they seem reasonable and were needed [[and hopefully will last say 50 years). UofM seems to be on a spending spree devoid of reality).

[emu steve]

BTW, as someone suggested, folks do not need to worry about UofM, but other schools like Rutgers, Indiana, Northwestern, etc. they have to play 'keep up with the Joneses.

[Scottathew]

I've always been an outsider on topics like this. I do not care about college athletics. If I had a chance for a college scholarship or professional athletics career I would care. However, at a very young age it was apparent athletics did not hold a future for me.

When I see U of M spending so much time and money on athletics I don't get why. When I see my friends get into silly U of M vs State arguments I don't get that either.

I am a fan of Detroit sports, but it was natural to pick those teams because I live in the Detroit area. Also, even with Detroit sports I don't get too emotional about it. When it comes to college sports there are multiple teams that could be an obvious choice, I never got how people picked one and became so emotional about it.

But if it makes other people happy, that's cool. It is fun for some to have a team to cheer for and take some interest, I guess.

[Honky Tonk]

When it comes to college sports there are multiple teams that could be an obvious choice, I never got how people picked one and became so emotional about it.

But if it makes other people happy, that's cool. It is fun for some to have a team to cheer for and take some interest, I guess.

It gives some people purpose and meaning to their lives.

[Zacha341]

Or a way to win or loose money ......!

[Lowell]

I wish it were otherwise and college students played sports, like I did, for fun and passion, but that cat is out of the bag and it's a business pure and simple. UofM is a huge brand, probably worth billions. Football in particular generates immense revenues. Try sitting on a $75 butt-pinching bare bleacher in the Big House on a freezing day to understand the power of that math.

I doubt if that debt is out of proportion to their earning potential. It wouldn't have been loaned if not. Much of it has to be due to the big expansion of both sides of the Big House with suite seating and night lights, just starting to yield its value. Harbaugh's multi year contract could be in there too. Add to that the cash cows of swag franchising and broadcast rights, no corporate taxes and it makes sense. All they have to do is stay top ranked.

This, in turn, ties into and drives alumni donations in all fields and ups the reputation of the university in many ways that allows them to earn even more.

[Jason]

U of M makes tons of money off of it's football. The way that college football and sports in general work is that a handful of universities are able to make a lot of money off of merchandising and things like that while most universities the sports are a money sink. U of M is a big winner in this category [[at the expense of other universities). I think Michigan State does well too.

I was once against big spending on college sports too but when I read an analysis and learned that it's not a problem here [[and that we're actually benefiting from it) I stopped worrying about it.

[BankruptcyGuy]

It's not really a direct comparison, because while the Athletic Department has all that debt, the university has an endowment valued at right around $10 billion. Much of the endowment comes from donors very connected to the athletic department.

On the other hand, the part about ESPN and subscriber erosion is very, very real. I think I read a calculation where, in about 3 years, ESPN will be losing money on just the sport contracts [[i.e. even if admin/personalities, etc. were $0). You are likely going to have a resizing in the NBA and MLB, at least. The NHL already went through it. The NFL has more diverse sources. Something to consider when thinking about funding stadia.

[313WX]

One reason get into College Sports around here is because the Lions suck.

I mean, you have no choice but to root for MSU's or U of M's football if you actually want to support a local sports team that wins.

[eliboyer]

Not sure this qualifies as Detroit, but I did see it in Crains Detroit.

http://www.crainsdetroit.com/article...a-heavier-lift

Here is the first sentence from Bill Shea's article:

"The University of Michigan athletic department sits atop $240 million in debt at a time when several major college athletics programs are grappling with enormous and potentially crippling debt loads.'

I think UofM athletics is 'needy' its needs [[wants) are so far out of line to what it really 'needs.'

And they continue to spend and spend and spend on athletic facilities.

[[BTW, I do NOT favor unlimited spending on athletic facilities. I have NO problem with Comerica, Ford Field, LCA, etc. they seem reasonable and were needed [[and hopefully will last say 50 years). UofM seems to be on a spending spree devoid of reality).

Did you even read the article? It's financing for stadiums/facilities that were just built, so of course there is scheduled debt to be paid off and they are doing so. They operate in a surplus annually and the debt is factored in the budget, so what's the issue? The headline is super misleading. It's like me being able to save from my income but I still have a mortgage. No difference, just bigger numbers.

[emu steve]

Did you even read the article? It's financing for stadiums/facilities that were just built, so of course there is scheduled debt to be paid off and they are doing so. They operate in a surplus annually and the debt is factored in the budget, so what's the issue? The headline is super misleading. It's like me being able to save from my income but I still have a mortgage. No difference, just bigger numbers.

I did read the article and do understand the concept of debt service as a percentage of income [[this is the same as any homeowner deals).

I just believe UofM [[and many other athletic cash cow schools) spend huge dollars on extravagance.

I often thought they stay up late at night dreaming how to spend the extra money [[their operating surplus).

Every so often I read something that UofM is going to drop another 10M on something sports related. Trump inspired golden bowling lanes? Lol.

P.S. I DO agree the headline is misleading. I don't think if media income levels off that it threatens their financial well being.

My point was more about extravagance and that is subject to debate and individual tastes. Some say it is a good investment - do it!!

[emu steve]

BTW, I do not worry about UofM. They have great wants and great income streams.

There are many power conference schools in financial hurt. I know of Maryland here in D.C. the article discussed Cal Berkley who is in deep trouble.

[ABetterDetroit]

One reason get into College Sports around here is because the Lions suck.

I mean, you have no choice but to root for MSU's or U of M's football if you actually want to support a local sports team that wins.

Give me a break. Lions indeed do suck bad but there are no Rutgers, Maryland, Purdue and Illinois, Indiana, Eastern this or South West that every year in the NFL to feed the ego of the delirious into believing they are actually "winners" of anything other than a soft schedule.

Look at the final scores when both State and Michigan played Bama last time around for a dose of reality.

[EastsideAl]

This is all part of the massive arms race in college football right now. A war that's been sent into overdrive after the advent of conference realignment, the BCS/playoff, and the huge TV money driving all of it. The Big 10 schools are mostly behind the SEC schools in this race, and the biggest and most profitable schools in the Big 10 feel a burning need to keep up with those southerners and darlings of ESPN.

As the Bankruptcy Guy notes, in a long-term sense this may be a big, and very expensive, race to nowhere for many of the schools involved. Interest in college football, and indeed in all sports, is slipping out there, particularly with young people. ESPN is losing ratings, and more importantly losing subscribers as cable declines. As noted in the case of Berkeley, some schools with smaller fanbases and less interest in football are sinking deep into debt to pay for this madness. Schools that came into the big conferences expecting a windfall, like Maryland and Rutgers in the Big 10, are instead finding themselves having to spend millions more than before just to try to keep up.

The endgame here is, I think, the looming possibility of a breakaway super-conference [[or two) for the most successful football programs. A sort of NFL of college football. The schools that will make up that conference stand to make billions, not only from TV, ticket sales, merchandising, etc., but also from increased alumni 'interest'. From the Big 10, Michigan and Ohio State are reasonably certain to be in such a conference, so their spending is probably quite economically rational. MSU, Wisconsin, and Penn State may be right there too. Everyone else will be a loser and is terrified of this coming to pass. Scared of missing that boat and finding their football programs essentially reduced to the MAC level, with giant half-empty stadiums, much reduced TV contracts, and alumni sitting on their money.

But it's also clear that for most schools the arms race, and this descent into fiscal insanity over football, is not sustainable and can't continue.

[3WC]

Anybody interested in this stuff will enjoy Dan Jenkin's latest book, "Stick a Fork In Me."

Jenkins of course is one of the most lauded sportswriters in the country, who wrote for years for Sports Illustrated and Golf Digest. Three of his best-selling books include "Semi-Tough," "Dead Solid Perfect," and "Baja Oklahoma," all of which were made into movies. There are many more.

The latest is about the Athletic Director of a fictional Ohio University. his philosophy is: "Fortunately, there's still a large segment of young men and women in America who go to college for the right reasons -- to get drunk, get laid, and root for the football team."

Along with the hilarity there's a good explanation of the economics of rev and non-rev sports. Football and basketball pay the bills for all the non-revenue sports including all the required Title IX sports for women. Sounds boring but it's not. It's hilarious.

[emu steve]

The Freep has an article that EMU plans to spend 35M on their football stadium, football building, etc. [[improve a lot of sports at their west campus athletic facility).

http://www.freep.com/story/news/loca...ades/98533930/

Looks like they'll need to finance about 25M more [[have about 9M in private pledges).

Go Green!!!

[Lowell]

The Freep has an article that EMU plans to spend 35M on their football stadium, football building, etc. [[improve a lot of sports at their west campus athletic facility).

http://www.freep.com/story/news/loca...ades/98533930/

Looks like they'll need to finance about 25M more [[have about 9M in private pledges).

Go Green!!!

I think you may need to change that cheer to Go Red!!!

[emu steve]

I think you may need to change that cheer to Go Red!!!

Yep, they need about 25M more. So there is some red there.