Athletics—excellent athletics—are central to the Duke “brand.” And that brand is pretty successful judging by the fact that more than 26,000 people applied for admission to the Class of 2014. Our athletic department, too, is gearing up for a round of investment in the brand. The Triangle Business Journal reported in February that Duke Athletics is set to launch a $100 million fundraising campaign this spring. The money will be used mainly to renovate Wallace Wade, adding 10,500 seats, including 24 suites and 700 to 800 club seats. These additions obviously will generate revenue themselves.... Did you know donors who sit right above the student section in Cameron donate about $25,000 per year?
After the announcement of the fundraising campaign by the athletic department, there were predictable calls to reduce the athletics “subsidy.” The subsidy to athletics, $14.6 million this past year, is routinely criticized by members of the faculty. Last January in a meeting of the Academic Council, mathematics professor Richard Hain questioned whether the subsidy was a wise use of scarce resources. He was quoted in The Chronicle Jan. 22 as saying, “Various long-term employees are losing their jobs and Arts and Sciences are being asked to cut $100,000 in each department, yet the athletics department is growing at a staggering rate.” Hain particularly took exception to the construction of a new field house.
The Academic Council revisited the issue this past December. Charles Clotfelter, Z. Smith Reynolds professor of public policy, economics and law, whose book on athletics and universities was published this month, noted that students at schools without major sports programs spend more time in their labs and classrooms, while students at Division I institutions spend more time binge drinking. After Clotfelter’s presentation, Hain led the faculty in another discussion about the University subsidy of athletics, this time highlighting the costs of coaching salaries at Duke which run about $14 million annually. Duke is the ACC leader in head and assistant coaching salaries.
Athletic departments are not, contrary to popular belief, cash cows. Only seven universities have had profitable athletic programs in each of the past five years. Only 14 athletic departments turned a profit last year (one of which is UNC, making a paltry $238,644 in 2009-2010). Duke Athletics does not turn a profit, so there is no question that it will require a University subsidy. Almost all athletic programs have a structural deficit. The question is not, “How do we make the athletic department turn a profit?” but rather, “How do we responsibly manage the subsidy?”
Athletics used to receive a subsidy only out of the funds of the Trinity College of Arts and Sciences and the Pratt School of Engineering. The subsidy back in 2008 was only $7.2 million. But that subsidy was deceptively low. It failed to account for the maintenance and operation costs of ever-expanding facilities, the growth of the athletics staff, the increase in financial aid to student athletes attending summer school and the cost of support services for student athletes. Because of these rising costs, the University doubled its commitment and spread responsibility around—no longer would supporting athletics be only the duty of the undergraduate schools.
The 2008 strategic plan for Duke Athletics, “Unrivaled Ambition,” never intended the subsidy to be a permanent part of the budget: “Increasing the yearly subsidy from central funds to $15 million—while a viable short-term solution—is undesirable in the long term.” The athletic department outlined plans to establish a $300 million endowment, half of which will come from the University. Athletics looked to the next major capital campaign (presumably more similar in size, duration and purpose to Keohane’s Campaign for Duke than to Brodhead’s Financial Aid Initiative) to contribute half of that sum for the endowment.
It’s only been three years since the 2008 subsidy increase. We are still well within the “short term.” It’s much too soon to be crying foul.
The other $150 million for the endowment was to be raised by the athletic department’s own development team. Indeed, the field house which so raised Hain’s ire was largely paid for by a $6 million directed gift from Bob Pascal, Trinity ’56. Steve Brooks, Trinity ’70, also donated $4 million to athletics at the same time.
Enter our $100 million campaign starting this spring. The Bostock Group, a set of donors and alumni including Roy Bostock, Trinity ’62, have been thinking about renovating Wallace Wade for a long time. They probably set the $100 million target. It wouldn’t surprise me if this group has not only committed to donate themselves, but has also committed to lead the campaign.
Now that athletics has begun a large development campaign to renovate facilities, we can envision a date in the not too distant future when athletics will kick off a second campaign that will found an endowment. The athletics subsidy will no doubt disappear when the University finishes its not-yet-started major capital campaign, completing the inaugural fundraising for the $300 million endowment for Duke Athletics.
Gregory Morrison is a Trinity senior and the former executive vice president of DSG. His column runs every Tuesday.
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