University of North Carolina Athletics
A Q&A With AD Dick Baddour: Budget Concerns
June 20, 2002 | General
June 20, 2002
Perception does not always equal reality when it comes to the University of North Carolina's athletic budget. Tar Heel Monthly editor Adam Lucas sat down with athletic director Dick Baddour to talk about some of the details of the budget and the needs that it creates.
Tar Heel Monthly: What is the athletic department budget?
Dick Baddour: Next year's budget will be approximately $36 million. That includes the salaries, operating expenses, cost of grant-in-aids, utilities and other costs associated with maintaining all of our athletic facilities, and everything else involved in running 28 varsity sports and caring for 750 student-athletes.
THM: Where does that money come from?
DB: A variety of sources. Ticket sales, obviously the majority of which are from football and men's basketball, generate $11 million. Radio and television agreements, which include our contract with Learfield Communications and the television partners we have through the Atlantic Coast Conference, bring in approximately $8 million. Another $7.3 million comes through the generosity of our supporters in the Educational Foundation to pay for student-athlete grant-in-aids. Roughly $6 million of that scholarship money comes from endowed scholarships, and the remainder is raised through annual giving. UNC Finley Golf Course brings in approximately $2 million, but in the past we haven't generated any profit from Finley as it went back to operate the course. The rest of our budget comes from student fees, which are about $2 million, contractual guarantees we receive to play basketball and football games, which are another $2 million, and about $650,000 from concessions.
Our contract with Nike nets us another $100,000 per year. Most of the well-publicized contract with Nike is in the form of product and coaches' consulting fees. Those are important because they allow us to outfit our teams with outstanding apparel, shoes and equipment without having to budget to pay for it, and it assists in compensating our coaches at a more competitive level.
THM: How does Carolina's budget compare with other schools?
DB: We fall in the middle range in the ACC. Nationally, we would be in the lower range for a program of our size, level of success and prestige. Currently, we are third in the country in the Sears Cup standings. However, we have the lowest budget among the Top 12 schools in the Sears Cup standings. We field 28 varsity sports, the most in the ACC. Most of the other schools nationally do not offer that many sports. In fact, Texas and Florida *--two state schools we are often compared to -- offer 18-20 sports, yet their budgets are in the $54 or $55 million range. And both of those schools, like virtually every other school in the country, draw major revenue through corporate signage agreements featured in their football and basketball arenas.
THM: Do you find that that fact surprises people?
DB: Most definitely. We've got to do a better job of educating our supporters about what
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We've got to do a better job of educating our supporters about what we're doing and how we're doing it, and the success our program enjoys despite its relatively limited budget.
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Our athletic facilities have been built through the generosity of the Foundation supporters, but the athletic department maintains those facilities from our operating budget. It is so important to note that construction of a facility and maintenance and daily upkeep of a facility are two entirely different things.
Very few schools in the country have to pay to maintain a 21,000 seat arena on its campus. The Smith Center brings in a great deal of revenue through basketball ticket sales, but it costs millions of dollars to operate each year. The concert business is totally different than it was in 1986. When the Smith Center opened, there was no new coliseum in Charlotte, no ESA and Walnut Creek in Raleigh, no new building in Fayetteville and the Greensboro Coliseum renovations were several years away. There are 100,000-plus additional arena seats in the state since the Smith Center opened. We are not allowed to sell alcohol in the Smith Center, the University controls parking and access from I-40 is not ideal. Promoters have been able to place concerts in facilities with all of these amenities and more. Thus, the concert business has not been there to generate revenue.
I'm also very concerned about our coaches' salaries. People read about the basketball and football coaches' salaries and the figures we pay them to be competitive in the national market, and we are competitive in those sports. But we are not competitive when it comes to our Olympic sports, especially when you consider how successful we are in those programs. We need to do a better job of compensating our coaches equal to the level of success at which we expect them to compete.
It is important to also say that 19 of our head coaches -- not including John Bunting, Matt Doherty and Sylvia Hatchell -- earn salaries on average of $53,000 per year, far less than the average professor's salary here at UNC. That is proper, but that fact is not always reflected in media coverage of coaches' salaries.
That's why the endowment programs for our individual sports are so important. The gift the Bryson family gave to baseball, the one the Chewning family gave to several sports, and the one Joe Galli gave to wrestling are examples of how individual donations can have a tremendous impact on our program.
THM: When you try to stretch a relatively small budget over a broad program, where do you see the cracks first? Do coaches get hit first?
DB: I did an analysis of our operating budgets compared to the other ACC schools. UNC is in the top three in the league in three sports in terms of the budget for that sport. We have two sports in which our budget is in the middle third, and we have 17 sports where we are in the bottom third. That is amazing when you consider the University of North Carolina has won more ACC championships than any other school for 15 consecutive years and has been the highest finishing ACC school in the Sears Cup in all but one season. That is a tribute to our great coaches and student-athletes.
We've been able to retain our head coaches for the most part through the years because this is where they want to be, it's a good environment for them to raise their families, and they know they can attract outstanding student-athletes. But you can get in a situation where a very attractive offer comes along and you lose a coach. That happened to us last year in women's tennis, when Florida offered Roland Thornqvist, who is a Carolina graduate, twice as much money as we were able to pay. So you can lose coaches.
You also feel it more in the support programs you are able to offer the student-athlete. Sometimes there is an inability to offer enrichment programs that you'd like to do.
THM: Does the success of the athletic department make it hard to get this message out?
DB: There's no question it does. Over the last 15 years, we have won 117 ACC championships; Duke is in second place with 47. We are winning more than our share of ACC championships, and when you couple that with the excellent facilities we have for the most part-and that's not true across the board, because there are some areas where we need to do some work-people come to the conclusion we have the facilities and are winning championships, so we must have the finances to maintain that level of success forever.
THM: $36 million is a big number. How does that compare to the University budget overall?
DB: In 1991-92, the University's budget was $710 million and the athletics budget was almost $20 million, which was 2.8 percent of the overall budget. Last year, the University budget was $1.5 billion, and we were at almost $34 million, which is down to 2.28 percent. So over the last 10 years, the athletic budget as a percentage of the whole University budget has dropped by almost 20 percent.
Relatively speaking, at $36 million, we feel our expenditures are in line with other University departments. I think that is especially true when you consider our athletics budget is almost completely self-sustained. The only resources we have received from state funds are the Smith Center utility subsidies, which now are around one million dollars. That subsidy was agreed to in 1982 by the North Carolina state senate to pay for a portion of the Smith Center's utility costs, because the building was a multi-use facility used by more than just athletics. The Smith Center was designed 20 years ago without the ability to play host to certain events and without luxury boxes because of this agreement that the state would assist the Smith Center in its operating expenses. The building is what it is, partly because of that agreement.
THM: You recently had to make a budget-related decision that was caused more by perception than the actual budget itself. What is the status of the video board for Kenan Stadium?
DB: We've recently made a decision not to install the video board next year. We've worked hard over the past 18 months to secure the outside resources to purchase and install the board. We were successful in doing that. Our multimedia partner has agreed to step up and help us, so the board was covered completely by new money. The funding is coming from money that would not be otherwise spent on any other University function. This is not a matter of allocation of resources. Our multimedia partner would not be donating this money to the University for other purposes.
However, with the difficult times for the University and the state, the chancellor and I agreed it's in the best interest of the University not to do that project next year. Coach Bunting agreed completely. It was not a matter of financing, but the perception this was not the right time to install a video board when times were so tough for the citizens of North Carolina. Our intention is to have it in place for 2003.
Tar Heel Monthly is a monthly publication devoted to the stories and personalities behind UNC sports. For more information, visit www.tarheelmonthly.com or email Adam Lucas at alucas@tarheelmonthly.com
