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Business Officer Magazine

Insights: Mark Emmert's Love of the Game

By Andrew Paluf

Mark EmmertApproaching his first full year in the job, NCAA President Mark Emmert notes three key challenges facing intercollegiate athletics: financial sustainability of campus programs, academic performance of student athletes, and compliance in program governance and oversight. Yet, despite shrinking institution budgets, Emmert is upbeat about the core role that college sports will continue to play in the educational experience for students. In this interview with Business Officer, Emmert cheers the headway the association has made in helping leaders assess program viability and address industrywide concerns.

What changes do you see ahead for athletics programs and departments as a result of recent economic pressures?

Virtually every university in the country has had to deal with some level of financial difficulty, ranging from challenging to almost existential in the degree to which they've been impacted. There is no reason to believe the situation will improve overnight. It will remain a long, hard road for every facet of these institutions-including athletic departments. When I was president at the University of Washington, we had to cut several million dollars from athletics and eliminate one of our sports programs. I know firsthand what it's like to make those hard choices. And yet, I don't see these current financial challenges as changing the core role of athletics on campuses. They simply make it more difficult to fulfill the mission.

Some have questioned the tax-exempt status of the athletic revenue that colleges and universities receive, or even the tax-exempt status of the NCAA. How do you see this debate unfolding?

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What is most important to recognize is that athletic programs and intercollegiate athletics are an integral part of the education system in the United States. They aren't self-serving independent or ancillary bodies that sit on the edges of their institutions. All but a small handful of schools contribute significant amounts of money to the operation of their athletic departments. There are a variety of legal arguments for preserving the tax-exempt status of college athletics, but at the core is the fact that involvement in athletics programming is an inherent part of the educational experience for many students.

Over the past decade, the NCAA has devoted significant time and energy to improving accountability and financial transparency, in part by developing the dashboard indicators tool, allowing institutions to compare current and historical data against peer groups. As a former university president and now as president of the NCAA, how do you view the success of the dashboard?

I'm extremely impressed with how the dashboard has evolved as a decision-making and analytical tool. I was on one of the original committees discussing how we should look at cost issues and the financial sustainability of intercollegiate athletics. Something on which we all agreed was the need for good data beyond anecdotal evidence that would allow presidents, chief financial officers, and athletic directors to have thoughtful debate and make intelligent decisions. Especially within Division I, use of the tool has been moving up sharply. Approximately two thirds of our members are utilizing the data in those dashboards to assess their athletics programs, including determining their viability for program expansion.

How do you envision NACUBO members becoming more engaged and involved with the tool?

Chief business officers are easily the most sophisticated users of the dashboard, so we need to hear from NACUBO's membership with feedback about how this tool can be even more effective. The fact that we now have longitudinal as well as cross-sectional data makes it a particularly robust tool. While many remain critical of athletics for not being as transparent as they would like, I think athletic departments, through the use of this kind of tool, are arguably more transparent with their finances than any other part of the academy.

In recent years we've seen greater transparency involving academic performance indicators. What are your thoughts on keeping this at the forefront of college athletics?

This is a front-of-mind issue for me. If you turn back the clock 10 years, there was no such thing as an academic progress rate [APR] or a graduation success rate [GSR]. We paid attention to academic success, but we didn't have any standardized indices, so there was no score to report. Today, sports reporters are asking institutions about their APRs and GSRs. All of a sudden, the conversation is not only about wins and losses, but also about academic performance. That represents a huge shift in the way we look at Division I athletics in particular and marks significant progress in establishing academic performance indicators as an inherent part of intercollegiate athletics.

Something we still have to review is the APR targets set six or eight years ago. These were predicated on producing a 50 percent graduation rate as a benchmark. It turns out the current APR measures and benchmark levels aren't high enough to produce that 50 percent level across all sports. In the coming months and years we must determine how to get back on track with that as a core target, and we need to keep moving toward that academic performance expectation until it is fully embedded in what it means to conduct intercollegiate athletics.

From an administrative standpoint, it appears that the more integrated an athletics business office is with other business offices on campus, the better the opportunity for enhanced efficiencies. For some institutions this may be a difficult shift culturally. Has the NCAA been able to offer a best-practices model for developing effective athletics business offices?

I can only describe my own approach as a university president. In that role, I always worked hard to integrate my athletic departments into the broader university. I made sure I began that integration at the top, with my athletic director attending cabinet meetings alongside our CFO and provost, so that everyone understood each other's business models and financial circumstances. That broader understanding began to filter through the organization. So, for example, as we made capital funding decisions, I made sure my CFO was involved in providing advice about where we should go with an athletic facility the same way as for a classroom building or a residence hall. While every campus is going to have a slightly different model, I think the most successful approach includes bringing together the budgeting and the finance people from all arenas to form strong working relationships and share information and data.

There has been a wave of Division I conference realignments within the past year. Are you concerned we may end up with one or two mega conferences at the expense of many other conferences, which could be viewed as less attractive to the public? And do you foresee a scenario where the rich get richer with others being forced to make difficult decisions around preserving versus reducing athletic programs or the sports offered?

First, it's worth noting that conference realignment has always been part of intercollegiate athletics. When I began my career as a professor, there was the Big Eight and the PAC-8. It wasn't so long ago that we saw significant realignment changes with the Big East and the Atlantic Coast Conference. We've witnessed the collapse of the old Southwest Conference and the rise of the Big 12. What is accelerating realignments today is the interest in and pursuit of very large media contracts, especially surrounding football.

In general, I'm for anything that brings significant resources to institutions, so I'm not opposed to big media contracts as long as the dollars are being used for the right things. I think it's unlikely that we'll wind up with one or two mega conferences. What I worry about is that we find a way to keep institutions from becoming too nearsighted in their view of intercollegiate athletics. Every conference is trying to figure out what's in their best self-interest. And yet, we have to make sure that the entire enterprise stays successful and viable. Part of my job is to continue to remind university leaders of that greater good.

How would you characterize the critical challenges currently facing the NCAA?

We held a presidential retreat in August 2011 to address a number of key issues for Division I institutions in particular. We have three broad concerns: first, increasing our success around academic performance. Second is addressing a number of the integrity and compliance issues surrounding the way in which we oversee and govern the games, so that people conduct them in a fashion consistent with NCAA values. Third-and probably most germane to NACUBO's audience-is the issue of financial sustainability of intercollegiate athletics.

With regard to that third item, we have some pretty self-evident challenges. Inside Division I, we have universities with athletic departments where budgets range from $5 million to $145 million. The sources of revenue that drive those $145 million budgets are, ironically, more sustainable than the forces that drive the $5 million budgets. Whereas the great big budgets are driven by ticket revenue, donations, and media contracts, the lower-resourced institutions are much more dependent upon university-based support, whether that is tuition dollars, state dollars, or reallocation of general fund dollars inside the institution. At the same time the big budgets continue to grow, support for those smaller budgets remains stressed.

The notion that the rich may get richer is not only a concern, it's a reality, and it's likely to continue if not accelerate. So, how can we take advantage of the resources flowing into the highly resourced schools to allow us to address the problems and opportunities for intercollegiate athletics as a whole? That's a huge challenge for us all going forward. 

ANDREW PALUF is associate vice president for finance and controller, University of Notre Dame, Indiana.