Lenses on Penn basketball’s expenses

There has been much talk in the past several years, particularly this season, about how much or little support Penn Athletics has received from the university.

It must be noted that the problem for Penn Athletics isn’t the inability to spend. According to data from the Office of Postsecondary Education, Penn’s annual expenses since 2004 – the start of Amy Gutmann’s presidency at Penn – average out to 30,644,364, the highest average in expenses in the Ivy League in that span:

Average Annual Athletics Expenses Since 2004

  1. Penn 30,644,364
  2. Yale 27,483,608
  3. Princeton 19,230,050
  4. Harvard 18,707,094
  5. Columbia 18,703,370
  6. Dartmouth 18,673,655
  7. Cornell 18,589,023
  8. Brown 15,175,837

Penn Athletics also ranks second highest among all Ivies since 2004 in annual operating expenses:

Annual Operating Athletics Expenses Since 2004

  1. Princeton 243,306
  2. Penn 213,518
  3. Harvard 205,083
  4. Columbia 196,110
  5. Brown 188,651
  6. Cornell 180,694
  7. Dartmouth 159,819
  8. Yale 156,991

Even a comparison of Ivy expenses on men’s basketball programs since 2004 makes Penn look charitable, as Penn ranks first in the Ivy League in total annual expenses on men’s basketball in that span:

Average Annual Men’s Basketball Expenses Since 2004

  1. Penn 1,085,005
  2. Harvard 912,857
  3. Columbia 895,928
  4. Princeton 895,102
  5. Cornell 781,351
  6. Yale 754,243
  7. Dartmouth 732,493
  8. Brown 729,028

Indeed, Penn Athletics isn’t currently in dire financial straits at all, also taking into account its comparatively high revenues. It’s not even necessarily heading in a more fiscally conservative direction with regard to its men’s basketball program. From 2004 to 2013, Penn’s men’s basketball–related annual expenses rose by 42 percent, the third-highest jump in the league behind only Harvard (62 percent) and Cornell (43 percent).

There have been strong suggestions that Penn coach Jerome Allen received a contract extension that would keep him at the helm of the program for multiple seasons beyond this one, and so many have questioned whether Penn athletic director Grace Calhoun would be willing to buy Allen out of his contract.

Any way you slice the data above, Penn is easily financially well-equipped to buy Allen out.  There’s money in the margins at Weightman Hall. But where the money’s coming from makes all the difference.

In Nov. 2013, I reported for the Daily Pennsylvanian that the university was lessening its financial support of Penn Athletics:

“Penn Athletics’ total expenditures and revenues totaled out to $36,774,000 in 2012-13 according to its Annual Report. Forty percent of its sum on the revenues side came from subvention, or funding that the Division of Recreation and Athletics receives from the University. That means DRIA received $14,709,600 from the University in 2012-13.

But the allocated costs for 2012-13, which include contributions back to the University as well as facility maintenance and other operational expenses, total $13,974,120. So if you subtract the allocated costs from the subvention, Penn Athletics is only getting back $735,480 from the University. That number has fallen from nearly $1.6 million in 2009 to less than $750,000 in 2012, while the total revenue derived from gifts only increased roughly $25,000 from 2011 to 2012.

In other words, Penn Athletics isn’t looking to the University for financial support at all. It can’t afford to. Instead, it’s relying on gifts big and small from alumni donors.”

Under Gutmann’s leadership, the distance between College Hall and Weightman Hall has seemed all too distant. Unlike past Penn presidents, Gutmann has been an infrequent presence at Penn sporting events and doesn’t naturally gravitate toward sports outside of admittedly fantastic initiatives such as the Young Quakers Community Athletics Program and similar endeavors.

But Gutmann’s not the president you want to have if you’re looking for a splash head coaching hire should Calhoun decide to move on from Allen after this season ends. As reported at the time (and as the Ancient Quaker noted just yesterday), this is what Gutmann told me two years ago when I brought up Penn’s last-place finish among Ivies in the 2012-13 standings for the Learfield Sports Directors’ Cup, a measure of collegiate institutions’ overall athletic success for a given year:

“I am a very competitive person and I want to play by the rules and win by the rules. But the real deep and important purpose of our athletics is not to win more than everybody else. It’s the experience of teamwork, of strong competition, of discipline. It’s the education and creating of character as well. If all we wanted to do was have the most winning teams, we wouldn’t be part of the Ivy League.”

Quaker fans eager to move on from Allen seem to be obsessed with the idea of making a splash with the program’s next hire, probably because Al Bagnoli just got lured away from Penn Athletics after 23 years by a new ivy athletic director to helm the historically repulsive dumpster fire that is Columbia’s football program.

If Calhoun should decide to go in a different direction at the head coaching position, she’ll be well aware that there are other ways to revitalize a program besides throwing big money at a big name. (Like Fran Dunphy circa 1989, for example.)

But one Office of Postsecondary Education statistic stands out as troubling across the board for Penn Athletics. Penn has the second-lowest average of men’s head coaches’ salaries among Ivies during Gutmann’s presidency, ahead of only Brown (easily the lowest-spending school since 2004):

Average Annual Men’s Coaches’ Salaries Since 2004

  1. Cornell 111,199
  2. Yale 105,107
  3. Princeton 92,568
  4. Columbia 91,935
  5. Harvard 87,128
  6. Dartmouth 85,288
  7. Penn 83,851
  8. Brown 75,192

Penn has yet to comparatively shell out to its coaches over the years, so it’s unlikely that it will start doing so with the next high-profile head coaching position the school must fill.

That distance between College Hall and Weightman Hall has broader and much more important implications beyond men’s coaches’ contracts. The bottom line here is that although the money is definitely there to get creative within reason, Calhoun’s call must be approved by Gutmann. I don’t ultimately foresee any conflict between those leaders whatsoever on this issue, if and when it does come up.

But the latter’s apparent isolation remains troubling. The reactions of Calhoun and Gutmann will be crucial in measuring Penn’s commitment to a return to on-the-court excellence for Penn basketball in the future.

8 thoughts on “Lenses on Penn basketball’s expenses

  1. Great reporting separating rumor from fact. I am surprised to learn some of these details regarding the Penn operation. I frankly doubt that Amaker’s compensation is reflected in Harvard’s budget numbers. Maybe booster assistance is not subject to public accounting. Thanks for this work.

    • According to a feature story about college basketball coaching salaries written by Washington Post columnist John Feinstein, Amaker makes “north of $1 million.” Assuming that there are roughly 20 other men’s head coaches at Harvard, his compensation alone should add about $50,000 to the average figure school-wide.

      Thus, your guess that booster assistance is not counted in the total must be correct, unless the other 20 men’s coaches, including football coach Tim Murphy, are working for less than $37,000 each.

      • Some members of the Harvard class of 1969 were successful in running off several senior Harvard portfolio managers, including endowment head Jack Meyer, because the alumni objected to Harvard employees making $5 million a year. (Meyer left with many of his senior staff to start their own hedge fund, Convexity Capital, where they make much more than $5 million a year. Meanwhile, Harvard now pays Convexity to manage a portion of its endowment for 2 and 20, instead of just salary plus benefits.)

        I would imagine that the type of alumni who would object to paying a financial employee $5 million a year are also the type who would not approve of paying a basketball coach $1 million per year. I guess the Harvard Class of 1969 shot its wad pushing Jack Meyer out the door and doesn’t have the appetite to take aim at Tommy Amaker.

  2. Mike,

    Thanks for the great and informative article.

    When you write “I don’t ultimately foresee any conflict between those leaders (Calhoun and Gutman) whatsoever on this issue, if and when it does come up.”, do you mean that Dr. Calhoun also agrees with the athletic philosophy of President Gutmann?

    While I am not against the idea of hiring a big name coach who is a bit down on his luck, it does not seem to be a realistic option. The Penn Administration does not seem interested in shelling out a large sum of money and there does not seem to be a group of alumni willing to add significant amounts to a smaller base salary. If either of those were present maybe Fran Dunphy and Al Bagnoli remain in place for the school’s premier teams.

    Additionally, I don’t know if Penn and/or the Ivy League holds the allure for a coach in that position. Would a big name former coach want to come in and rebuild a program that does not have tremendous support from the administration? While Amaker came into a league where he was able to dominate rather quickly, would a similar type of coach want to come in and have to face Harvard, which competes with major conference schools for recruits and appears to remain a leading force in the conference for the next several years?

    I do think given the variables that it is more understandable for Penn to go after an assistant coach or a peer level head coach. While I would like to see Penn reclaim the top spot in the Ivy League, I am aware that we are far away from that spot at this time. Since the Rosen-led 2nd place team, it has been incredibly difficult to watch and support the coach and the team. At this time, I would be pleased with a new coach who has a logical coherent philosophy, gets the most out of the players and creates genuine excitement for the team, the student body and the alumni.

    • Hi rb,

      Should she decide to move on from Allen, I believe Calhoun will go with a candidate that doesn’t require breaking the bank – not because she’s unwilling to break the bank, but because the best candidate available simply won’t require that in her view. So no conflict with Gutmann, who I also don’t see inserting herself into the process.

  3. Mike,

    Two Questions:

    1) Is there any plausible scenario that you see whereby the AD decides not to ‘move on?’ I find it hard to come up with one, but maybe I’m just deluded.

    2) This was an excellent article– as a fan, I really appreciate the effort you expended researching and writing it. Why is there no coverage like this in the DP?

    • Hi Silver Maple,

      Thanks a lot for reading and commenting.

      1) It is plausible. Calhoun could elect to leave Allen at the helm to develop the promising freshman talent he brought in this season. But it’s going to be tremendously difficult for Calhoun to accept three straight seasons near or exceeding 20 losses and pass up a chance to put her own stamp on the program by bringing in her own coach.

      2) Thanks for the kind words. I certainly can’t speak for the DP now that I am no longer an editor or even writer there – I enjoyed writing these kinds of in-depth analytical pieces while I was there and I’m sure they’re writing and pursuing the kinds of stories they enjoy. The DP has produced some solid stories and historical analysis so far this semester.

  4. Hi Mike –

    Yet another of your thoughtful and reasoned articles that I enjoyed reading in the DP. Two points on which I respectfully disagree:

    1) President Gutmann says a lot of things a la in her meeting with you and being competitive etc. etc. But bottom line I’m sorry to conclude that her “competitiveness” is self-serving and is mainly vis matters that deal with her own image and persona. My enduring image of her limited presence at athletic events is at Homecoming FB games and the lady that follows her and is carrying her handbag. She either fails to realize or could care less about Penn losing out on the multiple positive influences on campus community, brand projection, fundraising etc. that successful athletic programs bring.

    One has to wonder if she saw last night’s Harvard-Yale BB sell-out, which the MA Governor had to make a special request for seats? Pre Amazer Harvard BB attendance was nil; it’s axiomatic that successful programs are essential for successful attendance. Question for you: Have you read John Bacon’s “Fourth and Long”? It’s a fabulous sports read, has multiple overlap lessons for Penn, and a major take away is that successful programs, especially in their resurrection, must come with a commitment from the top.

    2) DP reporting: Mike, they threw away the mold when you graduated, and most now read read like 1/2 page essays for a creative writing course. The new format is a joke, and I’m sorry to conclude that Them’s the good points!

    Wishing you continued success.

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