Awash in Big Ten money, Nebraska eyes spending opportunities
Nebraska is finally on equal footing financially with its Big Ten peers. This year, the university will receive an additional $25 million compared to 2016 from the conference’s revenue sharing and television deals. Nebraska received $22 million a year ago, bringing the total this year to $47 million. What will it do with the money?
We break it all down in our latest edition of Big Red Business.
Nebraska’s athletic program is poised for a whopping payout of at least $47 million from the Big Ten this year, thanks to its first year of full revenue sharing and a new television contract.
That represents about a $25 million bump from 2016.
Now the big question: What will the department do with all that money?
Even with an athletic department that is one of the most financially fit in the nation, there is only so much money for the many wants and needs. Even if it’s $47 million.
Based on interviews with University of Nebraska system president Hank Bounds, and John Jentz, the athletic department’s chief financial officer, a definitive shopping list is in the works. But the officials couldn’t provide a timetable for when it will be ready for close scrutiny and scrubbing by top administrators and the Board of Regents.
“I’d rather get it right than get it quick,” Bounds said.
Still, from those interviews, it is possible to piece together a few specifics that appear to be on the athletic department’s wish list, including both brick and mortar facilities improvements at Memorial Stadium and other venues, along with program enhancements for student-athletes, particularly for technology, nutrition, life-skills, and post-graduate studies.
Neither Bounds nor Jentz ranked these proposals in any priority order.
*Expand the health care and trainer facility. Bounds said the current space, across from the team locker room in the North Stadium, is not large enough to accommodate therapy, taping, and other training and health care needs.
“This is a real priority for athletes,” Bounds said.
*Make headway on deferred maintenance and facility upgrades. Systemwide, the university has about an $800 million backlog of deferred maintenance, excluding athletics, Bounds said. A number was not available on athletic department maintenance needs.
While it may not be exciting, this work needs to be addressed, Bounds said.
For example, Bounds cited the need in the south stands of Memorial Stadium for more restrooms, wider concourses, more concessions, and easier ways to get to your seat and to leave, such as escalators. For fans in the upper rows, it’s quite a Himalayan hike up and down the narrow and sometimes slippery stairs.
Bounds said the stadium improvements -- from WiFi, new video boards, and more bathrooms -- are “critically necessary” when you consider that fans have the option for watching games from the comfort of their family room and a high-resolution big screens.
“It’s really important for the overall fan experience,” he said. “It will keep people wanting to pay for tickets and to come to Lincoln.”
*Build a new swimming complex. The current swimming pool in the Devaney Center is outdated and not competitive, said Bounds.
*Find room for golf. Neither Bounds nor Jentz mentioned this, but athletic director Shawn Eichorst told the Omaha World-Herald that he wants to find a way to get the mens’ and womens’ golf teams to practice on campus. They are currently the only teams practicing off campus, he said.
*Seed student-athlete programs. Jentz mentioned two cutting-edge programs that need additional seed money to expand.
The Student-Athlete Experience Fund was launched several years ago and provides MacBook laptops to more than 600 student athletes. The second program, called the Post-Eligibility Opportunity Program, is one of a kind, said Jentz. “I get calls from all over wanting to know how to set this up,” he said.
Here’s how it works: Student athletes, who graduate and are letter winners, will each receive a one-semester “grant” of up to $7,500 to start graduate school on the Lincoln campus or the University of Nebraska Medical Center, garner an internship, or to study abroad in an international program.
Eligible students have up to three years from graduating or exhausting their playing eligibility -- whichever comes first -- to participate.
So far, Jentz said, about $500,000 from this program has been tapped. “We expect participation to grow over the next few years,” he said.
“While there’s no place like Nebraska,” said Jentz, “we also want to say there’s no student-athlete experience like Nebraska.”
*Build up the rainy day fund. Construction projects take lots of advance planning and financing typically relies on market conditions before they are buttoned up, so it’s possible some of the new money flowing into the athletic department will be banked until the time is right.
Let the spending begin
By all appearances, the spending spree is already underway, with the Board of Regents’ green-lighting about a week ago construction of a $14.1 million practice facility attached to the Devaney Center for men’s and women’s gymnastics.
Another $6.5 million was spent on enhanced high-definition video boards that will debut with the Sept. 2 season opener with Arkansas State. And while not a headline generator, the athletic department opened its wallet to renew a contract for updated ticket software.
But here’s one that should be in the headlines: The athletic department doubled to $10 million the amount of money it provides annually to the university’s general fund for non-athlete scholarships. That’s massive, given that the university system is facing a nearly $50 million budget shortfall.
Look at that pledge this way: The $10 million would cover tuition and fees for 1,174 undergraduate students annually based on current in-state tuition, room and board of $8,500.
When Nebraska joined the Big Ten Conference in 2011, it received about $14 million through revenue sharing, according to published reports. By contrast, it received about $9 million in its final year in the Big 12 Conference
The Big Ten revenue increased to $15.4 million in 2012, then $16.9 million, $18.7 million, and $22 million in 2016, according to the Omaha World-Herald.
For its 2018 fiscal year, Nebraska expects to receive about $25 million more from the conference than last year now that the school is on a full-shared payout, said Bounds. Add that amount to the $22 million received in 2016, and the payout swells to about $47 million.
While some published reports have put Nebraska’s conference payout well above $50 million, Bounds said he is comfortable with his number.
This doesn’t include the massive $128.7 million, 11-year apparel, equipment and marketing contract Nebraska just signed with Adidas. Half of that amount is a cash payout to the athletic department.
According to Bounds, the deal will each year “add about $2 million to $2.5 million more in cash and more than double in product” from its previous Adidas deal.
While Bounds said the $10 million in scholarship money being spread across campuses is coming from the new Big Ten and Adidas dollars, there are “no current plans to use athletics dollars to deal with the budget shortfall.” Keep in mind, however, that the scholarship money likely frees up funds to meet other needs.
'Flipping the switch'
The athletic department -- debt-free and among a handful in the country that doesn’t rely on taxes, tuition or student fee subsidies -- has been planning for this year’s financial boost for the past several years, said Jentz.
“We didn’t want to wait until (after) year six to flip the switch,” Jentz said. “We creatively used resources in recent years to move forward on initiatives such as full cost of attendance scholarships, expanded nutrition, academic programming….knowing long-term financial resources were on the horizon.”
As for facilities, gymnastics was “first on the list” partly because it is linked to another campus project, said Jentz.
The current gymnastics practice facilities for both men and women are “completely substandard,” and a “fraction of the size that is needed to train,” said Bounds.
Construction of the new facility -- an addition to the Devaney Center -- is scheduled to begin in August 2018 and be completed by the end of 2019. The cost will likely be covered by donations and athletic department revenue.
Once the women leave their current home in the College of Education’s Mabel Lee Hall, work can move forward on renovating and constructing a new education building, Bounds said.
The arms race
Big-time college athletics has its own version of an arms race. Facilities and all that come with them need to be bigger and certainly better than the other school to attract top athletes, which will hopefully lead to game-day success, more donations from alumni, and more tickets sold.
In that regard, Nebraska is certainly aware of what the competition is doing. It’s also a two-way street.
A few examples, just from the Big Ten:
*Iowa recently spent $90 million, the bulk of it for an athletic performance center that includes a weight room, dining hall and indoor and outdoor practice facilities.
*Illinois is in the midst of a $132 million stadium renovation that features new locker rooms, a sports medicine area, meeting and office space, and team venues.
*Northwestern currently has nearly $400 million of facilities either in progress or recently completed. The centerpiece may just the $270 million Walter Athletics Center, Ryan Fieldhouse and Wilson Field on the lakefront of Lake Michigan.
Described as the “new nerve center” of the Wildcats athletic department, student-athletes from all 19 varsity programs will eat there, train there, meet with academic and professional development advisors there and more, said Paul Kennedy, an athletic department spokesman. The complex is set to open by next summer.
It’s projects and dollar signs like these that Nebraska is up against in athletics, even during times of cutbacks in its core mission -- education. So, how does the university justify the spending for football, basketball and all the other sports?
“If we want to compete at the highest level, and I think that we must, then we have to maintain competitive facilities,” said Bounds, a former graduate assistant football coach at Southern Mississippi. “We also have to recognize that, in many ways, athletics is the front door to our institution.”
“Athletic competitions bring back tens of thousands of alums to our campuses on a weekly basis. These visits give us the opportunity to engage and ask for support. We are so fortunate that we have such strong support from Nebraskans. I believe that they expect us to compete at a very high level in every sport, and that takes resources.”
Not only does Nebraska have to compete with the other Big Ten schools, Bounds added, it has to win.
Reach Steve Rosen at firstname.lastname@example.org.