Forecasting Finances

When developing long-term strategies for your athletic department, don't forget the part about the money.

by Dr. Elizabeth Alden
Originally printed in Athletic Management, 12.4, June/July 2000

As with everything else in our world today, intercollegiate athletics rides in the fast lane. Whether it's scoping out potential conference affiliations or continually updating athletic facilities, a successful athletics program in the 21st Century is one on the move.

From those who head the biggest Division I-A powers to those in charge of the smallest NJCAA programs, top athletic directors are researching today what they'll be doing five years from now. They have a vision of where they want their programs to go and the long-range strategic plans mapping the routes to get there. A major part of this forward thinking involves financial planning. The continually rising costs associated with a successful athletics program, coupled with the unpredictability of the future, means that budgets cannot remain stagnant. No matter the size of your program, the fiscal planning process must have a vision--your budget for 2005 should be sprouting some roots today.

In addition, some directors of athletics are being required, by their Boards of Trustees or other internal boards in control of athletics, to develop and maintain financial plans. This decree from on-high can often be a blessing, as it forces administrators to think and plan for the long term.

Whether in response to dictates from above or a push from within, many administrators are firing up spreadsheets and working on a strategy. And upper level administrators and athletic directors are finding that a good financial plan can be a guiding light as their athletics programs move into the future.

An Example

A good example of financial planning is the recent report created by the University of Wisconsin's intercollegiate athletics program. Entitled "Keeping Big Red in the Black," this five-year strategic plan will assist the Wisconsin intercollegiate athletics program with not only reducing current budget deficits, but also future growth and financial wellness.

The report starts by explaining why significant measures must be taken for the program to remain competitive and healthy. It then outlines three areas Wisconsin will focus on: cost containment, revenue enhancement, and facility improvements. The revenue enhancement section, for example, includes three major initiatives: the creation of an annual giving program, a new marketing approach, and increasing interest off reserves (see Sidebar - "Planning Revenue" at end).

Jamie Pollard, Associate Director of Athletics and Chief Financial Officer for the intercollegiate athletics program at Wisconsin, was a prime mover and creator of this plan. He believes that, "this plan will serve as the strategic road map for our intercollegiate athletics program. It provides long-term fiscal direction and allows our staff and constituents to better understand and appreciate the decisions we make."

Wisconsin also felt it important to publicize the plan, which it did in several manners. "We started by holding a press conference to formally announce the plan," Pollard explains. "This press briefing included a power-point presentation outlining who we are, why we need to do what we are planning to do, and when we will do it.

"We then sent a copy of the formal report to all our season ticket-holders," continues Pollard, "posted the entire report on the athletic department's Web site and the University's Web site, and took our power-point presentation on the road over a four-month period to various community groups, editorial boards of Wisconsin newspapers, and booster functions throughout the state. In total we made about 30 presentations.

"The plan has been extremely well-received by officials in the state of Wisconsin, the Board of Regents, university administrators, boosters, ticket holders, and our staff."

Start with Commitment

The basics for creating a good long-range financial plan are solid leadership, clear expectations, and knowledgeable people committed to the intercollegiate athletics program. The director of athletics may receive the charge to develop a long-range financial plan from the university's Board of Trustees or may initiate the process him- or herself. Either way, the director of athletics must believe that this process is vital to the overall future financial health of the athletics program.

"The many components involved in the development of a comprehensive financial plan require a significant investment of time and effort," explains Greg Phillips, Assistant Athletics Director at Florida State University and President of the College Athletic Business Management Association (CABMA). "Unfortunately, this complexity often leads programs to bypass or shortcut the process, or to allow the plans they do develop to become outdated."

Therefore, the process must be seen for what it is: a lengthy project with many components. And it must be embraced, despite the demands and the long-term commitment. The success of financial planning often rests on how much emphasis the athletic director places on the process.

The Planning Process

So, how do you start? And what should a strategic financial plan consist of? The following text will answer these two questions--and more.

What is an ideal timeline for this plan?
Athletics directors can best answer this question themselves based on institutional preferences. Some schools choose three-year plans, while others prefer five-year or 10-year plans. A five-year plan often works best, though, largely because it allows the principals involved to plan carefully and then work with the plan for a decent period of time. However, what is most important is for the financial plan to match the timeline of the overall long-range intercollegiate athletics plan. Ideally, an intercollegiate athletics financial plan is created within the process of developing a strategic departmental plan. One goes hand-in-hand with the other. While the departmental long-range plan addresses the future of the entire program, the financial plan focuses on the financial specifics required to meet the long-range plan. Without fiscal planning, a departmental plan becomes little more than a wish list with no plan to achieve it. Put more bluntly; no finances, no plan.

What might this athletics financial plan include?
The following bullet points are must-haves in your plan. Some of the items listed below should also be broken down for each year of the plan.

• The mission, goals, and objectives included in the overall departmental plan;

• An analysis of the program's current financial situation;

• An analysis of revenue projections versus expense projections, including dollars obtained through fund-raising;

• An analysis of capital projections throughout the time period of the plan, broken down into needs versus ideals;

• Specific information regarding the intended financial state at the end of the time period.

Of course the amount of information required in each of these areas will vary, based on the size and scope of the program. For example, large NCAA Division I institutions have more revenue streams available, but they also have expenses to match, if not exceed, those revenues. Colleges and universities with smaller intercollegiate athletics programs must rely primarily on institutional dollars to run their programs, and, thus, their financial planning processes are not nearly as complex. However, when athletic budgets rely heavily on enrollment fees, smaller programs can face tricky budget scenarios, too. In this situation, Linda Case, Director of Athletics at the State University of New York-Brockport, suggests that athletic administrators work closely with officers who oversee enrollment figures when making long-range financial plans. In fact, at her institution, she actually reports to the Vice President for Enrollment Management.

"In the New York State University System," explains Case, "athletic budgets are funded by an intercollegiate athletic fee that is assessed to undergraduate, and sometimes graduate, students. As a result, budget planning is based on enrollment numbers. An institution with consistent enrollment numbers and a plan for projected increases for the athletic fee can keep up with the changing face of athletics."

It's also important that the plan be created as a campus-wide document. While the intercollegiate athletics staff will be the primary users, it should still receive the sanction and approval of both the chief executive officer and chief financial officer of the institution. In some cases, the Board of Trustees or other board in control of athletics may want to signal its approval of the document as well.

Who should create the plan?
Any good planning process will include a multitude of people from the athletics department, as well as financial officers from the institution. Again, the actual people involved will depend upon the size and scope of the athletics program. In a larger program, the director of athletics, senior-level athletics administrators, coaches, support staff, and student-athletes should play a role in the creation of this document. In a smaller-sized intercollegiate athletics program, fewer staff members will be involved because of the smaller number of senior-level athletics administrators, but a wide representation of constituents should still be included.

It is also strongly recommended that no matter what the size of the program, a senior-level financial or budget officer of the institution should assist the director of athletics with this process. The financial planning process for the intercollegiate athletics program should not be considered an isolated process by the college or university. The plan will be stronger and more likely to succeed with the assistance and involvement of the institution's financial leaders.

How do you create such a plan?
The first step in creating a financial plan is to develop a timeline for the process. In most instances, six months is a good timeline because staff may lose interest when the planning process takes longer. But a lot must be accomplished in these six months, so everyone must understand the importance of sticking to the timeline and what will be accomplished each step of the way.

Much of the work on this project can, and should, be delegated. Committees and subcommittees work well in this type of planning and help to get many staff members involved. Committees might be based upon the format the plan will take. For example, a facilities subcommittee can look into costs associated with capital and non-capital facility expenses, while another subcommittee may be devoted to personnel-related financial planning.

The next step is to outline objectives, assign homework, and establish deadlines, as well as schedule regular meetings. Using the subcommittee examples above, you might ask the facilities subcommittee to ascertain the cost of a long-sought-after scoreboard for the softball field. Another example would be to ask the personnel subcommittee to research the costs of additional assistant coaches for all sports currently not funded with these staff members. Ask the subcommittees to finalize their homework in three months and report on them at a specific meeting.

Throughout the process, it is critical that the leadership presents clear expectations, and that staff be encouraged and rewarded for meeting these expectations. Piling additional planning work on top of other job duties is not the best way to accomplish the work; understanding that some work may temporarily need to be delegated or ignored will make for a smoother process and a more successful long-range plan.

It's also helpful to keep the entire department informed on the progress and importance of this process, so they can assist those directly involved. Allowing long-range planning efforts to be the focus of the athletics program during the creation process will produce a stronger and more reliable plan.

What will the ultimate outcome be once the plan has been created?
The primary objective is to have a plan in place that has been approved by the chief executive officer, his or her senior staff, and the financial officers of the institution. More important are the intangible results. An intercollegiate athletics program with a long-range financial plan has direction. It knows where it wants to be in five years. It knows its fiscal goals and objectives each year. Administrators, coaches, support staff, and student-athletes understand what needs to be accomplished. This phenomenon cannot be understated; a healthy functional program is one that understands where it is and where it hopes to be in the future.

Another positive outcome of having a long-range financial plan is that it can assist team building amongst the internal staff. Too many times throughout the history of intercollegiate athletics, an atmosphere of "haves" and "have-nots" has developed among coaches of different sports within the same program. Coaches, oftentimes, are embittered when they see their coaching colleagues receiving funding that they are not given. A general knowledge and understanding by the coaches about the budgets for each and every sport can go a long way in creating cohesiveness within the staff. Involving the coaches and support staff in the planning process will not only educate them about the overall college or university budget-planning process, but ideally it will give them a sense of understanding and ownership of the intercollegiate athletics long-range financial plan.

Who is responsible for its review and maintenance?
A good plan must be constantly reviewed and measured for accuracy and completion of goals and objectives. As you have likely witnessed, too many long-range plans get put on the shelf and ignored. Therefore, it is important to outline, as part of your plan, the process for review of the plan.

This review should take two different avenues. The first is an executive summary prepared by the director of athletics and senior athletics staff for submission to the institution's CEO, CFO, and other interested parties. This summary would be submitted at the completion of each academic year.

The second avenue is an internal review by the athletics staff. A staff meeting at the end of the year devoted entirely to a review of the long-range financial plan will not only identify the accomplishments of the past year, but also will identify the program's fiscal goals for the next year. This allows staff members to have a clear sense of both the past and the future, particularly as they move into their summer mode.

Reward Efforts

Finally, if the long-range financial plan is sound, functional, and on-target, the athletic director and administrative officers of the college or university should clearly state their appreciation of this fact. Too often, after careful planning and hard work, the efforts of staff go unnoticed and unrecognized. From the business manager to the equipment manager, financial planning takes effort and commitment. A pat on the back will go a long way in keeping these people committed to and focused on their long-range financial plan.

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