East Carolina University made headlines last week when it cut four of its 20 intercollegiate sports, including men’s and women’s swimming & diving, in an effort to save an estimated $4.9 million long-term.
An Athletics Fiscal Sustainability Working Group published a report on May 14, one week prior to the elimination of the four programs (men’s and women’s tennis were the two others), that sheds some light on the financial situation the school was in and why leadership came to the decision that it did.
The Working Group consisted of 10 university employees, including Senior Associate Athletics Director Alex Keddie, Director of Marketing Strategy Clint Bailey, and Interim Chief of Staff Chris Locklear.
TROUBLES PRIOR TO THE PANDEMIC
Prior to the COVID-19, the school was already in financial trouble.
“The reality is the fiscal model for ECU Athletics was not sustainable prior to COVID-19,” the report says. “Therefore, the need for meaningful change has only been accelerated. While the total impact of revenue losses resulting from the pandemic is to be determined, the initial analysis indicates the operational deficit in Athletics may grow by five million dollars, or more.”
With the additional $5 million projected deficit, the school’s operating shortfall for the 2020 fiscal year came in at approximately $12.5 million. The damage of COVID-19 for 2021 remains unclear, though the projected shortfall prior to the pandemic for next year was $5.6 million (compared to $7.4 million in 2020). One significant portion of the additional $5 million deficit comes from this year’s NCAA distribution, which is projected to be $715,000, $1 million less than originally predicted.
It’s worth noting that the operating expenses for men’s and women’s swimming were $283,864 and $282,437 in 2019, respectively, while both were projected to cost $320,000 in 2020 and $329,600 in 2021.
Under the circumstances at the time of publishing, a minimum $4 million athletics budget shortfall was projected in perpetuity beginning in 2022.
COVID-19 MADE MATTERS WORSE
Among the things that have financially hurt the university since COVID-19 came into effect was disrupting the annual Pirate Club fund contributions, where the school’s alumni can donate funds. Compared to 2019, there was a $500,000 decline in fund contributions in March and a $1.4 million decline in April. The school also saw a massive decline in season ticket renewals for football.
Later on in the report, the Working Group shows how the Pirate Club donations have been in decline in recent years, dropping over $3 million from 2017 to 2020. There was a spike in the club’s donations to the athletic department in 2020, due to football stadium renovations, but in recent years the athletics department has had to increase their amount of funding for athletic scholarships while the Pirate Club’s is declining.
DISPARITY BETWEEN AUTONOMOUS AND NONAUTONOMUS SCHOOLS
ECU implemented full cost of attendance in full scholarships in August of 2015, meaning the scholarship cost for football, men’s and women’s basketball, women’s volleyball and women’s tennis would’ve become more expensive.
The report also outlines the disparity between the autonomous and nonautonomous institutions (autonomous schools are in the Power Five conferences: ACC, Big Ten, Big 12, SEC, and Pac-12). Since 2005, the expense gap between the two has grown from $20 million to $80 million, and over the same 14-year period, the median generated revenue from nonautonomous conferences grew by 44%, while expenses grew by 87%.
It claims that the median autonomy institution is “almost 100% self-sufficient,” while the median institution in the nonautonomous group is only 40% self-sufficient.
MANY SPORTS, LITTLE REVENUE
ECU had 20 varsity sports programs during the 2019-20 season, making it the second-most among AAC teams, trailing only UConn (24), who will switch conferences beginning next season. Despite this, ECU was below the AAC percentile in head coach compensation, assistant coach compensation, team travel expenditures and athletic expenses per student-athlete.
A graph showed each AAC school’s revenue compared to expenses, outlining that the majority of them were operating at a loss with three right around break-even.
Breaking down guaranteed revenue generated by sport, the report shows football ranging from $200,000 to $2 million annually over the next five years, while also recognizing that men’s and women’s basketball, baseball, softball, and women’s volleyball also generated additional revenue over the last four years.
“The current fiscal model for ECU Athletics is not sustainable,” the report says. “While there have been efforts to achieve efficiencies, the primary challenge is in generating sufficient revenues. Fiscal impacts associated with the COVID-19 pandemic exacerbates the challenges and accelerates the need for change.”
With a list of 10 recommendations to close out the report, one of them (#7: Number of Sponsored Sports) suggests leadership “consider the elimination of one or more sports,” as ECU “has more than sports than most of the other AAC schools but is also near the bottom of the conference in total operating budget.”
This is what came to fruition on May 21, as with dropping both swimming and tennis programs, the school is now at the 16-sport minimum after previously running 20 programs.
Among the other recommendations made in the report are to establish an overall reduction goal for the 2021 fiscal year and assign differential cuts to achieve said goal, exploration of regional competition models in select sports and continuing the effort to limit travel expenses for non-revenue generating sports, and aligning Pirate Club fundraising with university advancement. They also recommended placing a two-year moratorium on athletics fees increases.
MONEY RAISED TO SAVE SWIMMING & DIVING
While ECU remains in a difficult financial position, the school’s alumni apparently won’t let the swimming programs go away without a fight. Less than a week after being cut, over $200,000 has already been pledged by alumni to save the programs.