Re: Scholarship cost

[Mattthew Dunham]

Hello, I am a long-time lurker from the Class of '02. 
I wasn't going to post this, but it is relevant to the
thread and it makes for some good reading.  Maybe O$U
pays their atheletes too much!

-Matt

Paying to play 

Ohio State leads nation with $203 million in sports
debt 

Wednesday, December 01, 2004

Curtis Eichelberger 

BLOOMBERG NEWS 

Ohio State University has the country's largest
athletics program - and a debt to match. 

OSU carries $202.7 million in athletics-related bond
debt, according to a survey of 87 public schools with
major sports programs. The figure eclipses the debt
held by the secondplace school, the University of
Wisconsin, in Madison, which owes $90.8 million. 

Other schools carrying large debt include the
University of Virginia, in Charlottesville, $88
million, and Virginia Tech, in Blacksburg, $81.7
million. 

Private institutions aren't required to disclose the
information and were excluded from the survey. 

The number of universities facing big bills is likely
to grow. 

At the University of Washington, for example,
Athletics Director Todd Turner is facing a financial
crisis. With football-ticket sales sagging, he's
drawing from a reserve fund and said he may need as
much as $150 million, partly through a bond sale, to
renovate the Huskies' 84-year-old stadium in Seattle. 

It's the kind of budget crunch that Myles Brand,
president of the National Collegiate Athletic
Association, indicated may be looming at schools in
the NCAA's top division, I-A. 

He said athletics expenses, including debt service,
have risen so dramatically that any unexpected
shortfall could derail some departments. The survey of
87 Division I-A schools shows total bond indebtedness
at more than $1 billion. 

"Where do we get the money to fix the stadium? That's
the challenge," Turner said. "It's not millions. It's
tens to hundreds of millions. You can only borrow so
much. How do you pay the debt service?" 

Average athletics expenses have grown at 7 percent to
8 percent annually in the past six years, Brand said.
That's double the 3.7 percent average annual increase
in university costs as a whole during the same period,
according to the Higher Education Price Index
published by Wilton, Conn.-based Commonfund, which
manages endowments for nonprofit organizations. 

"The growth we've seen in college athletics can't be
sustained," Brand said. 

Tom McMillen, a former National Basketball Association
player who represented Maryland in Congress for six
years, said the priorities of universities that spend
heavily on sports may be askew. 

"We have to wonder if, as a country, we've lost our
senses on all these public-funded stadiums," said
McMillen, chairman of Washington Capital Advisors, a
merchant bank based in Landover, Md. "If we could do
it all over again, I don't think this is the model of
college sports that we would choose." 

A turning point may not arrive, he said, until a
university faces bankruptcy. 

"Without it, the spending and borrowing will
continue." 

Twenty state-supported universities are carrying more
than $40 million each in athletics debt, according to
documents obtained by Bloomberg News. The average
annual athletics budget in Division I-A is $27
million, the Indianapolisbased NCAA said. 

At Ohio State, the sports debt does not include bonds
for the $115 million Jerome Schottenstein Center,
which was part of the athletics department when it
opened in 1998 but was later switched to the Office of
Student Affairs. 

OSU financed its $200 million renovation of Ohio
Stadium and the construction of other athletics venues
by selling bonds in 1999 and 2002. 

The Buckeyes' stadium opened in 1922, and in recent
years the concrete began to disintegrate, Athletics
Director Andy Geiger said. The repair bill, he said,
was $55 million, and the sports program didn't have
the money. 

So the university lowered the field to add
higher-priced club seats, built luxury suites to lease
and added other amenities. The $15 million in
additional annual revenues generated by the project
paid for repairs, a new home for the displaced track
and debt service. 

Should revenues run short, OSU's athletics department
would have to find more donors or cut teams, said Bill
Shkurti, OSU's senior vice president for business and
finance. "We would not permit a default." 

At the University of Michigan, Athletics Director Bill
Martin is facing the same kind of difficult choices
that Geiger encountered. 

Michigan Stadium, built in 1927, needs repairs to its
concrete structure, plumbing and electrical systems,
Martin said. Its seats are too narrow, and it lacks
ample restrooms and concession stands. 

Martin said he was embarrassed two years ago when
Wisconsin lost to Michigan and the visitors had to fly
home without showering because the plumbing was
broken. 

"Michigan's stadium is functionally and economically
obsolete," he said. 

Brand said schools that find creative ways to expand
programs and fund debt are an asset to collegiate
sports - as long as they don't become too commercial. 

He recently lauded Michigan and Ohio State for
eventually rejecting an offer by SBC Communications
Inc. to buy naming rights to the schools' annual
football game for $1.1 million over two years. 

Dispatch reporter Barnet D . Wolf contributed to this
story 




> > --- bob <address@hidden> wrote:
> >
> > > "cost" is a littl bit of a misnomer - The
> university isn't paying
> > > anyone (well, maybe if it's Ohio State ;-) - so
> UC isn't out that
> > > money - they're not refusing to admit some
> paying student to allow
> > > the scholarship athlete to get in - traveling
> expenses aren't that
> > > great for 1 more person - they're going there
> anyway - the cost is
> > > fairly minimal really



		
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