Businesses everywhere are shedding costs through layoffs, furloughs, hiring freezes, pay cuts.
That economic pain is about to broadside college athletics, nationally and in Virginia. To what degree is unknown. Also unknown: Who will share in the sacrifices?
For many enterprises, the sharing starts at the top.
Texas Roadhouse founder and CEO Kent Taylor, Disney executive chairman Bob Iger and Stanford president Marc Tessier-Lavigne are among those accepting reduced or, in Taylor’s case, suspended compensation. College sports administrators such as NCAA president Mark Emmert, Iowa State athletics director Jamie Pollard and Pacific 12 commissioner Larry Scott have trimmed their pay, the latter news broken Monday by the San Jose Mercury-News’ Jon Wilner.
It’s the embodiment of teamwork, valuing the group more than individuals.
So during this global pandemic, can athletic departments and conferences in our region afford to reward their highest-compensated employees at current levels? Might some of those coaches and administrators volunteer for stopgap salary cuts?
Conducted by LEAD1, the association of Football Bowl Subdivision athletics directors, and partner Teamworks, a new survey of ADs underscores the challenges created by COVID-19.
More than 60% of the 110 polled say they are bracing for at least 20% less revenue in 2020-21. About one-third say they are preparing for at least 30% less revenue.
Two-thirds of the athletics directors believe “collegiate athletics should find a way to collectively contain costs and limit current compensation, if legally possible.”
“We need to make wise choices now,” one AD said in the survey, “in order to support a sustainable model.”
Left unanswered was why it’s taken a health crisis and economic downturn to make athletics directors realize the excesses they’ve overseen were not sustainable, even in good times.
Lawyers and/or politicians may one day be inclined to explore the legal, antitrust and logistical implications of capping salaries and other expenses, but that day isn’t now. Far greater priorities beckon, leaving short-term remedies to the schools and conferences.
Given the sports world’s shutdown, those remedies need to happen fast.
For example, the NCAA’s annual distribution to Division I conferences will be $225 million instead of the projected $600 million, a slashing that Miami athletics director Blake James told WQAM radio will cost each ACC school $2.3 million.
Rising unemployment, not to mention falling wages and financial markets, likely will translate to fewer donations and ticket purchases. Those trends would force some to delay college, and lower enrollments would mean less money in student athletics fees, which are the lifeblood of sports programs at schools such as VCU, James Madison and William & Mary.
And heaven help Power Five programs such as Virginia and Virginia Tech if football season is abbreviated or canceled. The loss of ticket revenue and television rights fees would cripple the 65 schools in those conferences, where football produces more than half the revenue and bankrolls the entire operation.
Which brings us back to shared sacrifice.
Virginia’s athletic department payroll in 2019 was $44.6 million, including a $1 million retention bonus to basketball coach Tony Bennett. Virginia Tech’s payroll was $34 million, meaning an across-the-board 10% cut in 2020, presuming similar numbers, would save the schools north of $4 million and $3 million, respectively.
Now consider the Hokies’ and Cavaliers’ top earners.
At Tech, football coach Justin Fuente is guaranteed $4.25 million in 2020, basketball coach Mike Young $2 million and athletics director Whit Babcock $1.1 million. At UVA, football coach Bronco Mendenhall is assured $3.85 million, Bennett $3.8 million — he declined a raise after the Cavaliers’ 2019 national title — and baseball coach Brian O’Connor approximately $1 million.
Those numbers are within market norms, but if each took a one-year, 10% reduction, their departments would save more than $700,000. That might spare a handful, or more, of staffers who make modest salaries.
Also within market norms: VCU basketball coach Mike Rhoades is set to receive $1.6 million annually starting in July, while his Richmond counterpart, Chris Mooney, earns more than $1 million. The ACC’s most recent tax return, for fiscal 2017-18, shows commissioner John Swofford made $3.4 million.
I suspect each of the aforementioned gentlemen is a generous community benefactor, and as contracted employees, none is obligated to take a temporary pay cut. But any who volunteered would send an unmistakable message:
We’re all in this together.