Education & Workforce Development and Media & Marketing and Sports Business

Brand balances big bucks and books: NCAA chief: Boosting revenue not out of sync with education

April 3, 2006

Which of those constituent groups is most important to Brand is open to debate.

Since Brand stepped down as Indiana University president to take over at the NCAA in January 2003, the association's annual revenue has grown from $433.2 million to $521.1 million.

The increase is driven largely by an 11-year, $6 billion TV contract with CBS that took effect during the 2002-2003 sports season. Under Brand's watch, the NCAA has ushered in new sponsors, including Sirius Satellite Radio, Direct TV, Lowe's Home Improvement Stores and Monster.com, and it struck a deal to bring the revenue-generating NIT post-season basketball tournament under the NCAA umbrella.

Though CBS has primary control over TV sponsors during its broadcasts, if the network reaches an undisclosed revenue threshold, the NCAA gets more than $6 billion. Observers said Brand has enhanced the NCAA's cadre of corporate partners by offering special incentives, such as the right to use the NCAA logo or to participate in its hospitality program at the Final Four.

"He has used his position as a former university president as a facade for academic reform while enhancing commerce in the long run and undermining the relationship between athletics and academics," said Andrew Zimbalist, a professor at Smith College in Northampton, Mass., and a noted sports economist.

In an interview with IBJ, Brand made no apologies for maximizing the NCAA's revenue, about 95 percent of which flows back to member colleges and universities.

"The [college] programs that are most at risk for academic failure are the ones that are under-funded and under-resourced," Brand said. "The [institutions] with large revenue streams provide academic support, tutors, advisers, study rooms and other study aid."

David Carter, who teaches sports business classes at the University of Southern California and analyzes Brand's State of the Association speeches in-depth as part of his curriculum, said Brand's approach has strengthened college athletics.

"When he took over, Myles Brand was idealistic, but rather quickly balanced commercialization with matriculating students," said Carter, who is also principal of Los Angeles-based Sports Business Group. "He has been much more pragmatic in the way to handle collegiate sports. That hasn't been done before."

David Ridpath, professor of sport administration at Mississippi State University, disagrees.

"When your only emphasis is expanding revenue, but do nothing to control costs, that's a terrible business model," said Ridpath, also director of The Drake Group, a not-for-profit whose mission includes "defending academic integrity in the face of commercialized college sport."

Academic reforms

Those within NCAA circles say Brand has pushed landmark reforms governing academics, revenue generation and violation enforcement. But critics say he's been pushed off his platform by business pressures surrounding big-time college athletics.

Brand's detractors say his fat salary and directives from NCAA member schools have driven him further off his reformer's course. His annual salary of $863,337 is more generous than that of most not-for-profit CEOs. Brand's pay eclipses even that of the chief of the United Way of America, who makes $765,581, and of the head of American Red Cross, who makes $468,599, according to federal filings.

He seems unfazed by his critics. Brand, who is entering the fourth year of his original five-year contract, said he has no plans to step aside. He recently signed a two-year contract extension with a rollover clause that essentially allows him to stay at the NCAA indefinitely.

And he has his fair share of supporters.

"I think not only has he raised the profile and increased the business side of the NCAA, he has reined it in to get better control of it," said David Morton, principal of Sunrise Sports Group, a locally based sports marketing consultancy.

Brand, who turns 64 in May, took over for Cedric Dempsey, former University of Arizona athletic director. Before Dempsey, the NCAA was led by Dick Schultz, former University of Virginia athletic director.

Brand is the first former university president to head the NCAA, which he and others said gives him a unique perspective as a reformer.

"There has been a dramatic change in the way people view and talk about intercollegiate athletics since Myles Brand took over," said Wally Renfro, a 30-plusyear NCAA employee who is now Brand's top assistant. "The emphasis now is on academics and weaving athletics into academics. The reforms put in place in the last two years have been the biggest thing done by the NCAA in decades."

While at IU, Brand lobbied the NCAA for academic reform among the association's members. When he became NCAA president, he began to work in earnest on the Academic Performance Rate, a system designed to reward schools that keep athlete graduation rates above 50 percent and to punish those that don't. The APR system was enacted 18 months ago, replacing a formula that did not consider the graduation rates of athletes who move from one school to another.

"We've had our doubters, but after only two years, we're seeing GPAs and graduation rates going up," Brand said. "Among coaches and athletic directors, there's a lot of conversation about the APR. Those conversations didn't take place a couple of years ago. It was only about winning and losing."

Brand said the new system is improving academic achievement among NCAA athletes, but that it's too early to draw long-term conclusions.

When Brand took over as NCAA president, federal data collected over six years showed an average of 43 of 65 schools in the NCAA men's basketball tournament had graduation rates below 50 percent. Under the new APR, only one marquee Division I program, the University of Arizona, has been in serious violation. Brand said the improvement in graduation rates is due in part to an emphasis on recruiting more academically prepared athletes out of high school.

Money matters

Brand also said the newest graduation data shows money matters-not just in paying coaches and launching capital projects, but in providing students the support they need to succeed.

"One of the most important accomplishments is showing America [that college athletics] is a part of higher education," Brand said.

Ridpath said Brand, a former professor of philosophy and president at the University of Oregon before taking the reins at IU, is a respected academic but that as NCAA president he has proven to be more of a businessman and actor.

"He's given a virtuoso performance, but it's mainly smoke and mirrors," said Ridpath, who was formerly an assistant wrestling coach at Ohio University and assistant athletic director at Marshall University. "He's advanced the agenda of revenue generation, commercialization and winning at all costs."

Instead, Ridpath said, he could be pursuing academic reform more vigorously by forcing member institutions to disclose the classes students take, their majors and grade-point averages.

"Dr. Brand would say there are too many privacy issues involved," Ridpath said. "But you can do it in a way that assures anonymity for individual students. The APR doesn't change what universities do behind the scenes. You have to expose what universities are doing."

Brand is under tremendous pressure from many interests, including the NCAA's broadcast and other corporate partners, university athletic directors and the public, who "love the perception that these are ordinary students," said Murray Sperber, who taught at IU for 33 years and in 2000 wrote the book "Beer and Circus: How Big-Time College Sports is Crippling Undergraduate Education."

"Myles Brand is trying to square an impossible circle," Sperber said. "You bring in young people and tell them they have to perform athletics at the highest level, and perform academically at the highest level. Not many students can square that. Some can, but most are forced into Mickey Mouse curriculums.

"Brand has reached his goals from a public relations standpoint, but that doesn't make it real that these students are graduating with a meaningful education."

Chasing revenue

Brand insists his business model benefits a wider range of students than ever.

"On the revenue side, we act much like a for-profit entity, trying to maximize revenue," Brand said. "But on the expense side, we act like a non-profit. We raise more money to distribute to our members to enhance their missions."

Almost 70 percent of the NCAA's revenue goes to Division I schools. Just more than 4 percent goes to Division II schools and 3 percent goes to Division III schools.

Funds from the NCAA are channeled to schools through their conferences and used primarily for scholarships and academic support programs, but can also be used for such things as facilities enhancement.

Through the NCAA last year, the Big Ten received a $121 million disbursement, based in part on the conference's performance in the men's and women's basketball tournaments. Each Big Ten school received a high-seven-figure or low-eight-figure paycheck-a nice payout but not nearly enough by itself to fund athletic department budgets.

The NCAA also makes available to student-athletes special NCAA funds for things such as basic clothing and medical and dental care or travel expenses to a family member's funeral.

Brand also has encouraged schools to make sure the millions of dollars they raise from football and basketball benefits all student-athletes, including women and athletes who participate in non-revenue-generating sports.

"We think athletics is a big part of higher education, and should be weaved into the mission of the school," Brand said.

Some critics think too much of the money schools raise is funneled into an arms race for new facilities and higher coaching salaries. But Brand counters that the NCAA has no control over members' athletic department budgets or the salaries paid coaches.

"It's called anti-trust," Brand said.

In 1998, a federal court handed down a $66.7 million class action judgment against the NCAA after it tried to cap certain assistant coach salaries.

"If Brand was serious about reform, he'd go to Congress and ask for [an] anti-trust exemption to limit coaches' salaries," Smith College's Zimbalist said. "There is absolutely no benefit to anyone but the coaches to paying a coach $1 million or $2 million a year. It certainly does nothing to improve gradepoint averages and graduation rates."

Brand countered that there are only three dozen coaches nationwide who make seven figures.

"There are three dozen IU faculty members making seven figures," Brand said. "Nobody says anything when those in health sciences make outside income through consulting or private practice. In coaching, it's different because there's public reporting."

A brewing controversy

Even some of Brand's supporters worry how far the NCAA has gone in its efforts to generate revenue

Butler University Athletic Director John Parry thinks Brand should use more caution when pairing the NCAA and its members with corporate partners. Beer ads during the broadcast of NCAA events, its basketball tournaments in particular, are one troubling association.

"Beer is a reality on college campuses, but I'm not sure the NCAA should be benefiting from advertising that product," Parry said. "Butler has corporate sponsors, as does almost every college. But you have to be careful about those relationships."

Brand says the NCAA limits the number of beer ads during its broadcasts, and he doesn't think they increase oncampus drinking. NCAA officials say beer companies are charged more than other advertisers, which could deter them from advertising. Critics say the premium pricing is just a ploy to boost revenue.

Brand makes no bones about his plan to keep increasing NCAA income by exploring options in new media and other revenue streams.

But sports marketer Carter doesn't think Brand has let his appetite for revenue taint his agenda.

He said Brand has made the NCAA more nimble, reducing the time it takes to investigate and hand down penalties for rules violations from 18 months to eight months.

Carter thinks Brand has used the bully pulpit effectively to stress the importance of academics.

Still, Carter said Brand remains in a difficult position.

"There are a lot of interests in collegiate athletics, and not all those interests align," he said. "Even among NCAA members, the gap between the haves and the have-nots is growing, and that makes it difficult to build consensus. If the fracture continues to grow or if outside interests get too involved, that could spell the death of the NCAA."
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