The Spartan Nation has long been a proud fan base knowing that the MSU athletics are 100% self-sufficient. They get absolutely zero tax dollars or revenue from Michigan State University. They are a stand-alone entity. That is something to be very proud of. It is something that is rare in college athletics.
Most colleges or universities have to “prop up” their athletic programs. Michigan State University is the rare exception. What makes this even more astounding is that they get no financial help from the university. The university is never shy when it comes to finances.
They are constantly dipping their hands into the athletic department finances and constantly taking more. They never ask, they just ‘do.’ They never ask Mark Hollis if he can afford to do all that the administration mandates. They just simply take more of the pie.
Considering what Mark Hollis inherited, he has done a masterful job managing the MSU Athletics program. Hollis has had to endure an administration that has largely looked at his department as a university subsidizer rather than a stand alone profitable department. It is a shame.
Let’s look at the MSU athletics model and why they are in need of the enhanced revenue. At many schools the athletic department in some part gets help financially from the university.
Here is how.
1. Student Fees: At some other colleges or universities the students are assessed a fee
each semester or quarter with their tuition that is sent to their athletic department.
This is a way for the students to help cover the costs. I don’t support this model at all,
but it does happen at many schools. MSU is not one of them. Remember whether or
not we like any model, if other school’s athletic programs are getting money this
way and MSU is not, this is what we are competing against.
2. Tuition waivers: This one astounds me. Most people are not aware that the athletic
department has to write a check to the university each semester to cover the
tuition of each athlete. Many assume that since they play for MSU the costs
are absorbed by the university. This is not true. Tuition waivers is when a student
is given a scholarship to play at a school, and he/she is not a resident of
the state the university is located in. The university charges a significantly lower
in-state tuition cost to give the athletic department a break.
According to Tom Oswald, MSU Media Communications Manager, the process is easy math. The cost per credit for a state of Michigan resident at freshman or sophomore level is $347.00. If an out of state student attends MSU the cost per credit hour is $895.75. Let me put this in perspective.
Last year when MSU kicked off the football season against Montana State, they had 42 non-Michigan resident players. If each of them took 15 credit hours for the fall and winter terms (the average according to Oswald) that would be a total of 630 credit hours. At the out of state rate that would be a check in the sum of $564,322.50 that Mark Hollis would have given to the University. If MSU had a tuition waiver system like MANY schools do (and in my opinion it is an embarrassment they don’t) they would have had to pay $216,610 at a savings of $345,712.50 or 62%. Now remember most of the players attend summer school and there are 24 OTHER varsity sports at MSU. The numbers are astounding. I know there is support on the Board of Trustees to pass tuition waivers to help Hollis, because I have spoken with members of the board who told me they would support it.
Many other schools use tuition waivers to help their athletic programs that like MSU athletics are the single largest revenue stream for a university. Once again MSU athletics loses as do you the fan.
Do you want your coaches to question whether they take a player from Ohio or do they a Michigander who is less talented because it will save the program money? I know of one former MSU coach who felt like that and he told me he, “Had to take that into account. It is sad, but sometimes it did come down to dollars and that shouldn’t be that way.”
Izzo and Dantonio both take a Michigan first mentality for the right reason. Not for this coach, but I don’t want them or any other coach to ever consider that on a recruit. Remember folks. Each year the athletics department (the largest revenue source) gives the university a check for $11,000,000. Eleven million. I realize that capitalism isn’t as widely respected as it once was (by some), but come on.
Athletics is their biggest source and they can’t even treat them like a valued customer?
If any business treated their best customer like the university did athletics they would be out of business. Saying the right thing at a press conference DOES NOT make you a supporter of the athletic program. Actions do.
3. Subsidies: This is the last way the other schools help their athletic departments out and MSU does not. Like the first option of student fees, I do not support this one and think it is absurd. This is exactly what it says. It is a check written from the school to the athletic department out of their general fund to help defray the costs. Sadly in a few moments I will show you where not only is this very common way of financing athletics at other schools, but in the Spartan Nation the reverse is going on. Athletics is giving money back to the school. Not for tuition, actually giving them back money essentially giving them a subsidy.
Spartan athletics subsidizes the university. I can tell you that the heading I just wrote is going to infuriate some people. Frankly I don’t care. Not because I am flippant, but because athletics is in a constant state of flux trying to raise more money (obviously from the fans) while the university takes more and more.
Mark Hollis can’t cut, but has to balance rising costs and a university that is taking more from him. Imagine with your own expenses. If things are tight the average American family or business (certainly not the Government) cuts their costs. Hollis isn’t allowed to cut, and the university just keeps on taking. Let’s look at four areas that will shock the average MSU fan. MSU once again has to deal with an administration that takes from them and gives very little back in return.
Think about this. When you go to the Breslin Center or the High Cathedral of the
Spartan Nation (Spartan Stadium), how often to you buy a hot dog? Most people would
think that all of that money goes to athletics.
WRONG. Let me break it down for you.
For the sake of this discussion let’s say that a hot dog at the Breslin or Spartan Stadiumcosts you $3. For the sake of argument once again lets say that the cost of the dog, wrapper, condiments and distribution and all expenses that they can tag (because internally the MSU ADMIN dictates the cost) on means the true profit is $1. Athletics only gets fifty cents. $.50. The other $.50 goes to the University. So out of that $3 hot dog only $.50 goes to athletics because the university sets the cost and then takes half of the net. Remember they set the cost so there is profit in the cost before they “Split it” with athletics.
My niece is a brilliant veterinarian. She is smart (beautiful by the way) and did well at MSU and is now successful in her practice. I love her and adore both her intelligence and skill. I can also tell you that the vet school doesn’t drive shirt and souvenir sales like athletics.
The Dubai campus doesn’t drive sales like an Izzo march to yet another Final Four. It doesn’t do what a bowl trip and a successful football program do. When you go buy your MSU football hoodie how does that money get split? Surely the athletic department gets all of the money from their apparel sales. Certainly when you buy that Final Four hoodie they at least make the profit right? No.
For the sake of this argument lets say the hoodie you bought proclaiming the success of the Spartan Nation’s Final Four costs $50. Again for the sake of the argument let’s assume the vendor had to pay MSU a licensing fee of $10 to sell it with their logo and name. You would assume that the $10 would go to Hollis since it was because of athletics. You would assume wrong.
Here is how MSU breaks up that $10. MSU takes 10% or $1 for expenses. They then give $4.50 to the general scholarship fund. Athletics gets the other $4.50. Forget that the revenue was raised because of athletics. Once again athletics kicks in revenue to non-athletic endeavors. If they were supported by the school it would make sense, but being a stand alone is simply amazing.
So it is a beautiful fall day and you have your parking spot. You bought a pass for all
the home football games. Let’s assume for arguments sake it cost you $100 for the year.
Sure athletics is what brought you to campus.
You are parking, but only a slight percentage goes to athletics. Think about this. One senior administrator told me, “It is only a slight amount. Minimal. Almost nothing when you look at the percentage that is given to athletics compared to what is taken in.”
They “Give” athletics $100,000 dollars of the millions generated by parking. You are going to see athletics, but athletics doesn’t prosper from it. So you go and buy a hot dog, grab a hoodie and park to support your football or men’s basketball team and very little goes to athletics.
What a sham!!
The Breslin Center
Most fans would be shocked to find out that this building is not owned by athletics. Each and every home game the athletics department has to rent the facility. Not only that, but if Coach Izzo wants to have a practice in the Breslin, remember it would be empty without men’s basketball, athletics has to rent it. There would be no Breslin without MSU basketball and this is in my opinion not a good way to do business.
Here is another example surrounding Breslin and how it has hurt athletics in the past. In the center of the very best seats in the building is an eyesore concrete box for the sound system. Multiple times athletics begged the Breslin to let them pay to move it so they could have the estimated 32 extra high dollar seats. Their pleas were literally ignored…for years!
Thankfully there has been a change of leadership at Breslin and they are moving it to help in the reseating process. Why was there even an argument? Are you kidding me? Without Izzo and athletics the Breslin is a dream, yet once again athletics had to beat their heads against a wall fighting bureaucracy until someone came along who got it.
Why was this even allowed to happen? Why didn’t the administration step in and remind past people at Breslin who the cash cow is. According to AD Mark Hollis ONLY two sports at MSU actually make money: men’s basketball and football. Sorry people, but when they ask for something they should get it…yesterday.
Excuse me Mr. Hollis we are taking more. My father is proud of his service in the Navy and he served our nation admirably. He jokes about while in the military being ordered to volunteer for things. It is a funny concept, but it goes on and Hollis can’t do anything about it.
I was with Mark Hollis at a lunch recently when he talked about all of these issues being raised in this article. He also informed us of another development that is an absolute outrage.
Spartan fans are not going to like this one In the midst of a recession where revenue is struggling to meet expenses here is a kicker. Not only does athletics get no help from the university, they also lose revenue in many areas as noted above and subsidize the university.
Many university athletic programs aren’t self-sufficient and they are struggling. MSU athletics fails to get much of the revenue or help mentioned above that they raise and has to give 1% off the top back to the university of their general non-donation funds. Not only do they get no help, they also don’t receive any breaks. Not only does Hollis masterfully keep the department in the black he ALSO has to cut a check to the university. They see it as another revenue stream. When is enough, enough?
With the recession and the financial woes, and without Board of Trustee approval, Mark Hollis was informed last year that starting this 2010-2011 season, he will have to pay 2%. $1.5 million dollars (based on the latest numbers) out of his budget as a stand-alone entity that gives millions in other areas. They simply raised by 100% WITHOUT BOARD APPROVAL his donation to the schools coffers.
He gets no help, doesn’t get all the revenue he raises and as a parting gift has to pay an additional 2% of his funds. He is getting essentially double and triple taxed. I understand and I believe that without an MSU there is no Michigan State athletics. They should stand alone. They shouldn’t get any money from the University.
It is also fair to say that in doing that the University can’t keep getting blood out of a radish. Each time they take more from athletics, it is essentially a tax on you the consumer. Athletics runs tight financially. For every additional dollar the university takes, they have to make it up. Who makes it up? The fan.
Remember fans, this is essentially a tax on you. You may not like reseating. You may not like it when ticket prices go up, but that isn’t Hollis’ fault. That is on the administration. Let me say this. Each time your costs go up, don’t blame Hollis. Don’t blame Izzo. This department is masterfully run.
Mark Dantonio has made choices to bus his team to games to save Hollis money. I know for a fact that at least one Big Ten team has used it against him in recruiting, but Dantonio knows that saving Hollis every dime is an extra way for him to help.
Who do you blame? Do you blame an administration that won’t stop taking your money? Or do we continue to let the athletics department take the fall for something that is clearly not their fault? The administration won’t cut the amount of money they take. They won’t stop spending (sound familiar) they keep taking. Reseating is tough. It is necessary and if you don’t like it, blame the administration and send a sympathy card to Mark Hollis.
The Big Ten expansion will bring more dollars. It is the only reason to do it. Every extra dollar counts. The athletics department has to pay increases in fuel and other rising costs every day like you do, and they have to do it with the weight of a university that sees them as a cash cow. Recently the university announced tuition hikes from the numbers mentioned previously above, that means even more from athletics.
I want to make one thing clear. There will be those (not all) in the administration that don’t want this out there. Mark Hollis has NEVER once complained. He understands MSU and he loves it. He also needs help and isn’t getting it. It has to be frustrating for him.
Why is the Big Ten expansion necessary? Because costs are going up and without it, the tapped out fan will have to pay more and at some point the system will implode. I have outlined the many ways Hollis hasn’t gotten any help, he isn’t allowed to cut anything and athletics needs the revenue. If MSU was given the tuition waiver which I think is reasonable and the administration stopped taking the 2% that they so graciously took from his check book, the department could retire debt quicker and be in great shape.
We are not talking about student fees, subsidies, raising the concession, parking or licensing budget. Just two simple things could bring some relief to the fan and the department.
None of those two is even unreasonable or out of bounds compared to other schools. They are common sense approaches. Why the Big Ten expansion? Because in Michigan State’s case they are not getting any help at home. Here is the sad part. At some point even expansion money hits the ceiling.
Sooner rather than later, MSU is going to have to make changes to support the athletics department. Not financially. I never want to see that. I simply mean they have to get off the back of their single biggest customer.
Hopefully, they don’t bankrupt it before they are able to fix the problem. It’s just like social security now. We all know it is essentially bankrupt and neither political party will deal with it.
Athletics revenue and how this university deals with it are coming to a head. This administration has to get real and recognize the job that Hollis has done and is doing and help him. Athletics should never get one DIME of university money, but how much more will they take?
It is critical for the long-term sustainability for the sports that the fans love that MSU get off of Hollis’ back. This is outrageous and you the fan pays for it. Sadly it is Hollis that takes the heat for reseating and costs. Hollis is the single most important figure in MSU athletics since John A. Hannah was President of the University. Hannah led MSU into big time athletics because he saw what it could do to grow his beloved university. Hollis is entrusted to make sure it continues for generations.
Sadly he needs help, not from the fans who have given unbelievably. He needs help from his own administration.
This article is a reprint from the June 2010 Spartan Nation Magazine