Butler fights with small athletic budget to keep coaches

April 16, 2007

Butler University is running with the big dogs these days in men's NCAA Division I college basketball--at least on the court.

Financially, though, the Bulldogs face a difficult dilemma in chasing after programs with bigger budgetary bones.

A 2006-2007 season that saw Butler beat Indiana University, Purdue University and the University of Notre Dame and spend most of the year ranked in the national top 25 demonstrates the program's on-court progress in the last decade.

But the recent loss of its third coach in seven years has some wondering if the Bulldogs have bitten off more than the small, private university can chew in its attempt to stake out territory among the nation's elite hoops programs.

During a four-day span this month, Butler saw its coach named national coach of the year, announced the resignation of that coach, and announced his replacement with a 30-year-old with no head-coaching experience.

"This hire could be seen as a cost-savings move," said Richard Sheehan, a University of Notre Dame economist and author of "Keeping Score: The Economics of Big-Time Sports." "But Butler is in a difficult situation. As it exists now, Butler will have a difficult time competing in this era of escalating coaches' salaries."

Butler President Bobby Fong said there's a continued commitment to excellence in the program that he calls an essential marketing tool for the larger university, which has an enrollment of just under 4,200. But he said Butler will not try to compete with Big Ten and other big-time programs in terms of coaching salaries.

Fong said he'd like instead to maintain pace with other schools in Butler's conference, the Horizon League.

But with college basketball coaching salaries increasing exponentially, many sports business experts said the Horizon League will soon feel the heat to keep pace with other NCAA programs, or face losing a successful coach every few years.

Ripple effect

"What the University of Kentucky or Ohio State does in terms of salary might seem to be comparing apples to oranges with programs like Butler, but those salaries and others put upward pressure on all the programs," Sheehan said.

Fong and new Athletic Director Barry Collier have already unleashed initiatives to improve athletic department revenue and donations. Some worry it will never be enough, while others think it could spark a salary war league-wide.

Coach Todd Lickliter made about $245,000 annually in salary and benefits at Butler, and Fong said that hasn't changed much with the hiring of Brad Stevens this month.

Lickliter, 51, signed a deal that will pay him $1.2 million a year to coach the University of Iowa. His departure, after compiling a 131-61 record at Butler, followed the 2001 exit of Thad Matta, who left for Xavier University and is now coach at Ohio State University. Matta was hired as Butler's head coach in 2000 after the departure of Collier for the University of Nebraska.

Collier, who is credited with beginning Butler's post-Tony Hinkle basketball renaissance, returned to Butler in August as athletic director. Fong is counting on Collier, a Butler graduate, to ramp up ticket sales, corporate sponsorships, and alumni and other donations.

"Most of the pressure in this situation will fall on the athletic director," Sheehan said. "In addition to everything else, he's forced to find and cultivate unproven coaching talent and mix it into a winning program. That's a difficult thing to maintain through the years."

Butler is already near the top of the Horizon League in basketball coaching pay, according to published reports, but to compete year-to-year with even small-school powerhouses like Gonzaga University in Washington, it will have to do more.

Small school, big money

Gonzaga is an example of what a successful men's basketball program can do for a small school. Since its basketball program started to excel a decade ago, enrollment has dramatically increased. In the last eight years, Gonzaga enrollment has increased 68 percent, with a student population of 4,200.

Gonzaga's president, the Rev. Robert J. Spitzer, said the academic quality of students has also dramatically increased during that period, and the school is better able to attract top-notch educators.

But Gonzaga's success has come at a cost Butler has not yet been willing to pay. From 2000 to 2006, Gonzaga saw its men's basketball coach's salary increase from $200,000 to more than $600,000, according to school records.

Sports business experts aren't sure exactly how Gonzaga is pulling off the feat. It can't rely on football revenue like Ohio State and many other large schools, and Gonzaga's basketball venue seats only 6,000, just over half of Hinkle Fieldhouse's 11,034.

"Gonzaga is an interesting case study," Sheehan said. "I'd say they've been very successful tapping into their corporate and alumni base because their actual sports revenue streams--including basketball--[are] limited."

Sheehan said it's a model Butler could follow, but doing so could imperil its conference brethren.

"Gonzaga has really tipped the scales in the West Coast Conference, and now you're seeing other schools there scrambling to compete," Sheehan said. "And in most cases, those schools really can't afford that kind of financial commitment."

Pressure on alums

With some of the nation's biggest schools, the pressure to compete is even greater.

Butler's athletic department budget of just under $10 million is dwarfed by Ohio State's, which is around $100 million. That's not far behind Butler's total school budget of $129 million.

Not only do big schools bring in millions of dollars in revenue from tickets, concession, parking and merchandise sales, they also bring in tens of millions in alumni and booster support for the program, much of which can be used for coaches' compensation.

Booster support is one reason IU can afford to pay men's basketball coach Kelvin Sampson $1.5 million annually. Annual donations to the athletic department routinely approach $10 million, according to school records.

Donations to Butler athletics still pale in comparison, but they are projected to double this year from last. Already through March, the Bulldogs have fetched $403,000 in athletic department donations, Fong said. He hopes to push that into the seven-figure realm soon.

He admits fundraising wasn't emphasized enough at Butler until recent years. He said gains in the athletic department follow gains in donations to the entire university, with record donations coming in during three of the last four years.

Butler, with 37,000 living alumni, won't ever garner the alumni support of a large school like IU, with 495,000 living alumni, but at least one Butler grad thinks the school can do more to live up to its potential.

David Morton, principal of locally based sports marketing consultancy Sunrise Sports Group, said an active local alumni group would be a good start.

Though there are mentions of Butler Alumni Association chapters in Atlanta, San Francisco, Cincinnati, Chicago, New York, Washington, D.C., and even Fort Wayne on the school's Web site, Morton said, there is no mention of an Indianapolis chapter.

"In the last 20 years, Butler has done a remarkable job integrating into the Indianapolis landscape, but with an NFL and NBA franchise, a very strong collegiate and high school sports market, and the Indianapolis Motor Speedway, they have to find even more and better ways to reach out and stand out," said Morton, a 1982 Butler graduate. "They have to find better ways specifically to reach alums because they can be a pillar to spread support and [financial] giving."

The Butler Way

Collier, who is credited with popularizing the idea of doing things "The Butler way," is undaunted by the challenges ahead.

"I think when other schools are coming after your coaches, that shows you've been successful," Collier said. "I'm confident we can keep marching forward to stay competitive with our personnel."

Collier has restructured his staff to emphasize revenue and donation generation. He is planning a beefed-up marketing campaign, and will launch for the first time next season a program that will allow alumni and boosters to snag choice seats at Hinkle Fieldhouse based on their financial contributions to the university.

Despite an aggressive approach to revenue generation, Collier said part of the Butler way is to be fiscally prudent. Though Lickliter made more than most Butler professors and provosts, it wasn't wildly out of line.

"It would be negligent on our part to go beyond our means in staffing a basketball program," Collier said. "However, we're trying to make strides so we can compete [financially]."

There's more on the line than just the basketball coach's salary. Continued success on the court means continued opportunity to raise the university's profile locally and nationally.

"Basketball is the attention-getter for Butler University, and we feel can be a shining example of our university as a whole and our students and academic programs," Fong said.

While Fong is dedicated to raising athletic department revenue and donations, he is resigned to the fact that there will always be a bigger dog. That, he said, doesn't mean he's ready to lay down arms.

"We have to face it," Fong said. "We're not the New York Yankees. We're the Oakland A's. We have to find a different way to be successful. That's the Butler way."

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