Dollars, Cents, and Coaching Change

The debate over AState men’s basketball has been all one direction. The decision may be simple, but not the way you think.

Arkansas State is at or closing in on a $20 million athletic budget that would seem to give a lot of room for making a coaching change. We are talking about 1.5% or so of the budget right? Wrong. State finance rules do not make it quite that simple.

The athletic department budget cannot pay a buyout. In this case you would be looking at $300,000 for Brady’s contract and about $100,000 for the assistants maybe closer to $150,000 if you have to buy back unused vacation days. That money has to come from the Red Wolf Foundation and would be in addition to the supplements needed to hire a high level coach and assistants.

Spending $400,000 only allows you to hire a coach and assistants at the current level. In football AState has moved its salary structure more in line with the American Athletic Conference and other top G5 schools. If AState wants basketball to be in line with top G5 schools pay for the head coach and assistants needs to rise about $200,000 and that means an outlay closer to $700,000.

Reviewing the most recent RWF tax return just the buyout and not increasing salaries, would mean increasing the spending for personal services contracts by 50% in the fiscal year ending June 30, less than three months away.

For comparison let’s look at an expenditure that everyone who had entered Centennial Bank Stadium agreed had to be made. Buying a video board. To pay the expenditure of about $1.2 million the RWF borrowed the cost. Borrowing the full amount rather than only a portion suggests that the wiggle room did not exist in the RWF budget without dipping into reserves for the press box renovation.

The Foundation has a war chest for the press box but the plan is to complete it without further borrowing.

The Football Operations Center is the next target. Beyond the need for better facilities, it is a high priority because the project will include premium seating and is designed to enhance revenue in addition to enhancing recruiting and providing better training and treatment facilities. Premium seating attached to the Ops Center should produce $250,000 to $350,000 per year.

If the cash flow exists to pay a buyout, it would require dipping into funds that are unrestricted but being budgeted for the Ops Center or other budgeted item.

Looking at the matter strictly from a dollars and cents standpoint, an increase in attendance after a coaching change is likely to result but the impact is likely less than many would believe. There have been two coaching changes since moving to the Convocation Center, the first change from Catalina to Nutt produced an increase of 355 per game, the change from Nutt to Brady produced a change of 291 per game. Assuming 15 games and the average value being $10 per person increase (remember increases in students are revenue neutral) the best case based on the past would be a revenue bump of $53,250 for the year at a cost of not less than $400,000. Delaying the Ops Center one year to make a change results in a loss of at least $200,000 to the RWF, while changing a year later preserves the outlay of cash and hastens the revenue increase.

The greatest factor against making a change doesn’t show up on the most recent financial statements.

Starting with the Fall semester Arkansas State will begin offering full cost of attendance. Coupled with expected increases in tuition and room and board cost AState athletics will have an increase its outlay for student school costs by about one-third.

AState is simply already so committed financially for critical expenses that rise dramatically this year that making a change in men’s basketball cannot be financially justified and cannot be accomplished without having a negative impact on all sports since the expense would either delay the drive for the Ops Center or force AState to delay paying full cost of attendance in most sports including basketball.

In a long-term view, making the more popular one year decision to replace John Brady on the heels of consecutive 19 win seasons, would likely hurt the long-term future for all sixteen sports.

The game changing impact of full cost of attendance and the dramatic increase in costs for AState will be part of an upcoming feature on AStateNation.