The cost of coaches
A look at how salaries have escalated in college football.
DALLAS – Braced for financial trouble, college athletic directors are talking about the possibility of cutting virtually everything in their budgets with the exception of one big-ticket item: coaching salaries.
Specifically, the escalating salaries of football coaches.
While gas prices continue to rise almost unabated, so has compensation for top division football head coaches, who now on average make more than $1 million a year, according to a USA Today analysis.
"It's crazy," said Ted Leland, former athletic director at Stanford University. “… These coaches get big salaries and people see it as part of winning. I never did. I always liked what I call young up-and-comers."
So far, even with dire economic forecasts prompting concern across the college sports industry, few schools seem willing to adopt that strategy. But several athletic directors gathered in Texas for an annual convention said they're grappling with the reality of those skyrocketing salaries contributing to a budget crunch.
Fewer than 10 of the 120 Division I athletic programs that play top-tier football operate at a profit, and that means schools continue to subsidize sports while football coaches continue to pad their wallets. Moreover, schools might have tapped out of money from sources of outside income such as sponsorship deals and ticket surcharges that have helped drive up salaries.
Rutgers football coach Greg Schiano's salary was raised to $1.5 million from $1 million.
(AP Photo/Mike Derer)
"I do believe that we're at a critical juncture financially," said Kevin White, who recently took over as athletic director at Duke after serving in the same capacity at Notre Dame since 2000. "We've harvested the low hanging fruit. We've done the seat licenses. We've done a lot of the philanthropic activity, the corporate relationships and the rest of it.
"I don't know what the next financial iteration is going to look like, but it does concern me."
Some schools already have taken drastic action, albeit action that has spared football programs and highly paid coaches.
Last month, for example, Arizona State dropped three sports teams – men's swimming, men's track and wrestling – with the stated goal of saving $1 million annually. That move came about a year after the school approved a five-year contract for newly hired football coach Dennis Erickson that guarantees him $5.6 million.
In 2006, Rutgers eliminated six sports and projected it would save the school $2 million annually. Less than a year later, Rutgers awarded football coach Greg Schiano a four-year contract extension that raised his salary to $1.5 million from about $1 million.
"I think that there's tremendous pressure on all of us to be successful," Rutgers athletic director Bob Mulcahy said. "The market sets the rate, and you've got to make some tough determinations about what your priorities are going to be and where you're going to go."
In addition to potential budget cuts, athletic directors face another reality: Football accounts for approximately 70 percent of the money generated by all college athletic teams.
Because of the seating capacity of stadiums and football's popularity, no other sport affords college athletics the same chance to make money. But profitable programs depend in large part on good coaches, and successful coaches are commanding higher and higher prices. Prices once unimaginable to Vince Dooley.
Florida State's Bobby Bowden became the first coach to make $1 million a year.
(AP Photo/Brian Cleary)
Dooley, the retired Hall-of-Fame football coach who patrolled the sidelines for 25 years at Georgia, grinned as he recalled the deal he signed when he took over at Georgia in 1964.
"I had a one-page, three-paragraph contract that I have up on the wall in my office," he said. "The base salary was $12,000. I had a $2,500 subsistence, which was a tax break. I went out and negotiated my own television show. Old C&S Bank (now Bank of America) agreed to take me on a trial basis, $100 a show, 10 shows. So my total package was $15,500.
"Obviously, you could factor in inflation. But even if you do that, $15,500, that's as low as it gets."
When Dooley retired in 1988, his salary had climbed to almost $500,000. But even that sum soon looked paltry.
In 1995, Florida State coach Bobby Bowden became the first coach to make $1 million a year. In 2001, Bob Stoops of Oklahoma and Steve Spurrier, then at Florida, became the first members of the $2 million-a-year club. Stoops was the first to reach $3 million in 2006, thanks to an incentive-laden contract. But he didn't remain college's highest-paid coach for long.
In 2007, Alabama upped the ante when it lured Nick Saban from the Miami Dolphins with a deal worth $4 million a year.
Oddly enough, Oklahoma athletic director Joe Castiglione now finds himself talking about fiscal restraint.
"I'll admit there are some decisions that lead us all to scratch our head," he said. "… Sometimes it's like it almost becomes ego driven just to be saying that we may have the highest-paid coach.
"The highest-paid coach? Fine, great. Nobody's getting extra points (because) you have the highest-paid coach."
Look who's talking, the critics might say of an athletic director whose football coach can make up to $3.45 million a year if he hits all of the incentives in his contract. But Castiglione said Oklahoma's athletic department is one of only about a half-dozen in the country that balance their budget without state aid, subsidy from the university or money from student activity fees.
Georgia's Mark Richt makes more than $2 million a year.
(AP Photo/Rob Carr)
"Each institution has to make their decision," Castiglione said. "But the bottom line is when they do, it does affect the marketplace."
No conference has impacted the marketplace more than the Southeastern Conference, bastion of powerful football programs and very rich football coaches. Georgia's Mark Richt is one of five football coaches in the SEC who make more than $2 million a year, and Georgia's athletic director, Damon Evans, said he feels scrutiny from those who see the SEC as responsible for the rising salaries.
But Evans also pointed out that Georgia enjoyed robust ticket sales last season despite an economic slowdown. That ticket revenue, coupled with the money Georgia makes from TV contracts and the Bowl Championship Series, enables Georgia to pay Richt about $1 million more than the national average.
"And in order to stay competitive you almost have to do that," Evans said. "But people are no doubt pointing fingers at us.
"I do believe that we've got to take a look at it and we've got to see, 'Where are we headed in the future? Are we going to continue to create a system of the haves and the have-nots? Are we going to separate ourselves even more?' Because you know the majority of institutions aren't making money, aren't breaking even, don't have the means to do what some of the others can do."
Those questions have created consternation for athletic directors whose programs are struggling to pay for increased travel costs that stem in part from rising gas prices and other financial consequences in a stalled economy.
If the way Stanford operated under Leland is the model, the answer is simple: Hold the line. That's the approach Stanford took in 2001 when it refused to engage in a bidding war with Notre Dame over Tyrone Willingham even though he had established himself as one of the most successful football coaches in the school's history.
Oddly enough, a man who helped pry away Willingham salutes Stanford's approach.
"That is the ultimate paradigm," said White, the athletic director at Notre Dame when the school hired Willingham. "But not every (school) can emulate Stanford."
Stanford has only one Heisman Trophy winner – Jim Plunkett in 1970 – but has four Nobel Prize winners in its physics department. The school's elite academic profile draws students while most others, according to White, must use athletics as "the front porch of the institution."
"Successful programs can be very important," he said. "You’ve got cost containment and controlling the financial side of this thing. And at the same time you've got to put your program in position to be highly successful.
"It's a double-edged sword to say the least."
It's a sword that now has prompted talk of slashing athletic budgets, with the conspicuous exception of football-related costs.
"The AD's got a tough decision," said Frank Broyles, the longtime athletic director at Arkansas who retired in 2007. "Do they cut back and hope that they can keep their program going, or do they keep spending money?"
But Arizona State recently demonstrated there's another option.
Shortly after eliminating three sports, the school restored wrestling when boosters raised a $5 million endowment that will cover the costs of the program. The school also said it will do the same for men's swimming and track if it can find enough private money to pay for the programs.
But during a three-day conference that drew athletic directors and 2,800 college administrators in all, Boise State athletic director Gene Bleymaier echoed what seemed to be the prevailing sentiment in the face of rising football salaries and financial constraints when he voiced resignation.
With Bleymaier's support, Boise State stretched its budget and it awarded football coach Chris Petersen a five-year, $4.25 million contract after the Broncos capped a 13-0 season with an upset victory over Oklahoma in the 2007 Fiesta Bowl. That kept Petersen in place – for now.
Bleymaier knows Boise State likely would lose its coach if a powerhouse comes calling, the way Florida did after the 2004 season when it dangled a $14 million, seven-year deal in front of Urban Meyer, then at Utah, and a non-BCS school like Utah had no chance of matching the offer or keeping Meyer.
"I think a lot of schools are in that situation, not to be able to pay that," Bleymaier said. "But unfortunately there's always a handful that will, and that's going to drive the price up for a limited number of coaches and gradually more will follow. …
"But obviously there are limits, and I think we're definitely seeing that and reaching that in a lot of cases. Hopefully we can get some of the good coaches to stay where they are."