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The cost to compete

Private schools like Gonzaga, Marquette pay more

Posted: Wednesday January 19, 2005 2:03PM
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Tom Crean
In 2003, Tom Crean led Marquette to its first Final Four since 1977.
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Tom Crean was already Marquette University's highest-paid employee when, after he led the Golden Eagles to the Final Four in the spring of 2003, the school made him one of the nation's highest-paid basketball coaches -- and kept him away from larger, publicly funded suitors. As he drove to the press conference on April 22 where he would announce his new deal with Marquette, the man waiting to open the gate of the campus' restricted Jesuit-residence parking lot (the most convenient place to park for the event, but one to which even a BMOC like Crean didn't have access) was none other than school president Rev. Robert A. Wild.

Sure, the corny symbolism of that scene -- academic subservience to intercollegiate athletics -- may have been thicker than the smell of brewery hops wafting over Milwaukee. But the concept of a coach as a university's highest-paid employee is old hat. According to the latest data available -- from the 2003 fiscal year -- no fewer than 15 private-school basketball coaches were ranked No. 1 on their school's payroll sheet. "People tend to latch on to those symbols," Father Wild said with a laugh, recollecting the parking-lot moment. "I just turned the key to get the job done; I'd happily do that for anyone, under the circumstances."

For private universities, especially those that don't compete in Division I-A football, D-I basketball is the sport in which they have a fighting chance against the state-school behemoths. Marquette is the lone school outside of the six traditional "BCS" football conferences -- Big East, SEC, Big Ten, Big 12, ACC, Pac-10 -- to earn a Final Four bid this decade. The 14-2 Golden Eagles entered the latest Associated Press poll this week at No. 25, while Spokane, Wash.-based Gonzaga (13-3), the darlings of the Northwest, stood at No. 11.

Football-playing privateers like Boston College, Duke, Syracuse and Vanderbilt -- all with annual school revenues of more than $500 million -- have little trouble shelling out the coaching salaries necessary to keep playing high-profile hoops. But major-conference outsiders like the Golden Eagles (11,000 students, Conference USA) and the Zags (6,100 students, West Coast Conference) must ante up a larger portion of their resources to retain their increasingly sought-after head coaches. And the schools don't chalk it up as an ugly economic reality; rather, they see it as a necessity to obtain national visibility for not just the athletic program, but the university as a whole.

It's a difficult task to analyze the finances of private schools, because the figures are just that: private. The schools are neither willing nor obligated to divulge the data, but thanks to The Chronicle of Higher Education's Annual Executive Compensation Survey, as well as research by SI.com, we were able to review IRS 990 forms that require each private university to list its five highest-paid employees. Of the 15 that listed a basketball coach as No. 1, the percentage gap between the coach and the highest-paid academic administrator varied greatly. Marquette and Gonzaga were Nos. 1 and 2, with gaps near 300 percent, while Vanderbilt was 15th, with a margin of 110 percent.

Beyond Presidential
Private-school basketball coaches who were the highest-paid figures at their school in the 2003 fiscal year, exceeding the salary of the university president (using full names from IRS forms)
School Coach 2003
Salary
President 2003
Salary
Difference Pct. diff.
between coach
and pres.
Marquette Thomas A. Crean $807,128 Gregory J. Kliebhan (VP) * $250,497 $556,631 222.2
Gonzaga Mark N. Few $528,321 Rev. Robert J. Spitzer $178,500 $349,821 196.0
Providence Timothy J. Welsh $544,755 Michael V. Frazier (CEO) * $200,132 $344,623 172.2
St. John's Michael D. Jarvis $733,700 James P. Pellow (VP) * $396,971 $336,729 84.8
Villanova Jerold Wright $535,816 Rev. Edmund J. Dobbin $290,023 $245,793 84.7
Xavier Thad M. Matta $399,824 Rev. Michael J. Graham $246,214 $153,610 62.4
Duke Mike Krzyzewski $853,009 Nannerl O. Keohane $528,622 $324,287 61.4
Wake Forest George E. Prosser $848,828 Thomas K. Hearn Jr. $542,135 $306,693 56.6
Seton Hall Louis Orr $467,899 Patrick E. Hobbs (law) ^ $306,052 $161,847 52.9
Syracuse James A. Boeheim Jr. $669,089 Kenneth A. Shaw $488,204 $180,885 37.1
Baylor Dave Bliss $656,582 Robert B. Sloan Jr. $483,989 $172,593 35.7
Boston Col. Albert L. Skinner $540,668 Alan Wolfe (prof.)* $400,909 $139,759 34.7
St. Joe's Philip Martelli $363,164 Rev. Nicholas S. Rashford * $275,500 $87,664 31.8
Creighton Dana D. Altman $672,067 M. Roy Wilson (VP/dean) * $561,322 $110,745 13.9
Vanderbilt Kevin E. Stallings $981,046 Gordon Gee $887,209 $93,837 10.6
* President's compensation is donated to the school's religious community; in the event a president's compensation was officially listed as $0, the highest-paid academic administrator, usually the VP or CEO, was used as the reference point. ^ President's compensation is only $36,757; law dean was highest-paid academic figure.

A few caveats, before we go any further: Clearly that table does not reflect everything these guys make -- coaches like Jim Boeheim or Mike Krzyzewski are undoubtedly pulling in seven figures -- but these are the actual figures from the schools' IRS forms, and they serve the purpose of this piece, which is to compare spending, not to ascertain each coach's exact annual income. Furthermore, while a coach's salary comes out of the school's general revenue pool, not all of it is paid from the school's operating budget. Outside sources, such as school-guaranteed shoe-company contracts and media deals, may be used to fund portions of a salary.

Entering the national market

It's not a fluke that Marquette and Gonzaga top the previous table. Each is a school on the fringe of college basketball power structure that decided, after achieving a notable level of national success, it did not want to become a stepping stone from which Crean or Mark Few, respectively, moved on to more lucrative gigs.

The solution was a simple one, and it couldn't be dictated by either school's internal pay scale: Want to keep Illinois or Ohio State from stealing Crean? Then pay him a Big Ten salary. Want to keep Washington from commandeering Few? Then pay him like the Huskies would have. The economics, according to Gonzaga athletic director Mike Roth, determine that "the market for basketball coaches in top-20 programs is higher than the market for university presidents.

"For most positions on campus, the market isn't defined by all of the other D-I basketball universities," Roth said. "The competition here, for our academic positions, is schools similar to us in mission, size and geographic location. But in basketball, since we've garnered significant national attention, our market became national."

Marquette's Wild concurs. "The force of the market comes into play. ... If you want to compete in college basketball, you have to pay a lot for a good, capable coach, and Tom [Crean] is a very good coach."

While both Marquette and Gonzaga are respected academic institutions, their annual revenues pale in comparison to private schools they aim to contend with on the hardwood. As a school, Gonzaga brought in $114,647,806 in the '03 fiscal year; Syracuse's earnings were $628,956,620. As a result, Gonzaga paid Few a salary that was 0.46 percent of their revenue pool, a small number at face value -- but not when one considers that Boeheim's pay at Syracuse is just 0.11 percent of his school's pie, more than four times less than Few's slice. This chart illustrates the coaches'-salary-vs.-overall-revenue picture for all 15 schools:

Slicing up the Pie
The dent each coach's salary makes in his school's overall revenue pool
School Coach 2003 School
Revenue
2003 Coach's
Salary
Percent of
School Revenue
Wake Forest Prosser $156,242,832* $848,828 0.54
Gonzaga Few $114,647,806 $528,321 0.46
Providence Welsh $129,554,178 $544,755 0.42
Xavier Matta $126,281,246 $399,824 0.32
Marquette Crean $281,787,335 $807,128 0.29
St. Joe's Martelli $149,346,845 $363,164 0.24
Creighton Altman $314,472,861 $672,067 0.21
St. John's Jarvis $354,261,589 $733,700 0.21
Seton Hall Orr $231,985,000 $467,899 0.20
Villanova Wright $284,615,771 $535,816 0.19
Baylor Bliss $370,156,807 $656,582 0.18
Boston College Skinner $500,801,442 $540,668 0.11
Syracuse Boeheim $628,956,620 $669,089 0.11
Duke Krzyzewski $1,292,066,414 $853,009 0.07
Vanderbilt Stallings $1,839,377,440 $981,046 0.05
* While Wake ranked No. 1 in this chart, paying 0.54 percent of its revenue to Skip Prosser, it should be noted that the school also earns approximately $1 billion in combined revenue from its Health Sciences program and its affiliated Baptist hospitals, which appeared on separate IRS forms. If one were to factor in the extra $1 billion, Prosser would rank only above coaches Krzyzewski and Stallings on this chart.

Yield signs

Among these 15 schools, when it comes to directly generating revenue through the basketball program, it's Syracuse, Duke ... and everyone else. The Orange, with the benefit of calling the 33,000-seat Carrier Dome home, brought in $11,688,023 in '03-04 -- a figure more than 17 times higher than Boeheim's salary. And the tradition-rich Blue Devils, playing in the 9,300-seat Cameron Indoor Stadium, still earned $10,581,992 in '03-04 -- more than 12 times Coach K's salary. The next-closest team on the revenue ladder, Wake Forest, is more than $2 million behind.

Marquette raked in an impressive $6 million in '03-04, buoyed by its '03 Final Four run and the fact it shares an 18,700-seat home venue, the Bradley Center, with the NBA's Bucks. But its return on investment -- earnings seven times the size of Crean's salary -- was considerably smaller than Duke's or Syracuse's. Gonzaga, meanwhile, handicapped by playing in its 4,000-seat Kennel, and a conference (the WCC) with considerably less clout than the ACC, Big East or even the C-USA, brought in $1.95 million in '03-04, fewer than four times the total of Few's salary, and the second-lowest total overall ... behind scandal-ridden Baylor. Xavier received a rate of return 14 times the size of Thad Matta's contract, which, at $399,824, was the second-lowest of the 15 coaches -- but the Musketeers, unlike the Golden Eagles or Zags, no longer have the same coach. Matta jumped ship for a larger deal at Ohio State in the 2004 offseason.

Programs aren't typically judged in terms of coaches'-salary-vs.-basketball-revenue, but the numbers on this chart offer another interesting angle of comparison:

Return on Investment
Of the private-school coaches who outearn their school presidents, here's what their basketball programs earn for the university
School Coach 2003 Salary 2003-04
Basketball
Revenue
Pct.
Higher
than salary
Syracuse Boeheim $669,089 $11,688,023 1646.9
Xavier Matta $399,824 $5,694,895 1324.4
Duke Krzyzewski $853,009 $10,581,992 1140.5
Providence Welsh $544,755 $5,409,513 893.0
Wake Forest Prosser $848,828 $8,384,325 887.8
St. John's Jarvis $733,700 $6,435,345 777.1
Villanova Wright $535,816 $4,078,442 661.2
Seton Hall Orr $467,899 $3,538,279 656.2
St. Joe's Martelli $363,164 $2,730,454 651.9
Marquette Crean $807,128 $6,020,233 645.9
Vanderbilt Stallings $981,046 $6,370,931 549.4
BC Skinner $540,668 $3,163,990 485.2
Gonzaga Few $528,321 $1,954,297 269.9
Creighton Altman $672,067 $2,180,567 224.5
Baylor Bliss $656,582 $1,567,394 138.7

Finding value beyond the numbers

In the hands of an accountant, the above trio of charts does not paint a pretty picture for Marquette and Gonzaga: In order to stay competitive on the national scene, the gap between what the Golden Eagles and Zags must spend on their coach versus their academic administrators is considerably larger than that of their more prominent private-school brethren. As are the slices of school revenue Gonzaga and Marquette must commit to their basketball programs. And the rate of return on their coaching investments, in plain dollars-vs.-dollars, is far less than the Dukes or Syracuses of the world.

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In the mind of the schools, however, there is faith that impact of Crean and Few -- the intangible part of "return on investment" -- far outweighs the financial burden.

Marquette's investment in Crean was about a revival. Back in 1977, Father Wild was just starting out at the university as a professor in the theology department when Al McGuire put the then-Warriors in the history books, winning the school's first and only national championship in his final season as head coach. Wild was able to witness, first-hand, the effect that McGuire's "seashells and balloons" joyride had on the school as whole. "I knew how much it meant at the time, both inside and outside of the community," Wild said. "And when I took [the president's job, in 1996], I was conscious of something my predecessor said to me -- that athletics can be a rallying point for the whole community. So when the opportunity presented itself to work to be competing at a high level again -- by keeping Tom -- we took it."

The Golden Eagles had suffered a nine-year drought from the NCAA tournament from 1984-'92 and another four-year layoff form '98-'01 before Crean worked his Final Four magic in '03. Marquette athletic director Bill Cords, who arrived at the school 18 years ago, when "things weren't very good at all," said Crean's success has impacted the entire university, creating a swell of momentum on campus. While there is no proven link between athletic successes and the rise of applications and non-athletic donations, "everything started moving faster at about that time here," Cords said. The school will move out of the C-USA after this season, accepting an invitation to join the new-look Big East, a storied basketball conference with a much higher profile. And among the capital campaigns that pushed forward was the construction of a state-of-the-art, on-campus practice facility for the basketball team, which opened in 2004 bearing the name of the man who put the program on the map in the first place: The Al McGuire Center.

Gonzaga didn't have a McGuire story of its own; before the Dan Monson-coached Zags reached the Elite Eight as a No. 10 seed in '99, their national status was little more than the answer to the trivia question, "What was John Stockton's alma mater?" Ever since Monson left for Minnesota in '99, the school has made a concerted effort to retain his successor, Few, by being proactive with contract matters, voluntarily rewarding continued success with raises instead of merely reacting to larger schools' attempts to lure him away. Few's name is mentioned for nearly every major coaching vacancy (so much so that Roth refers to March and April as the annual "Mark Few Sweepstakes"), but Few has remained in Spokane, taking the Zags to two Sweet 16s, in '00 and '01, and five straight NCAA tournament bids.

For Gonzaga, continued investments in Few are investments in the transformation of a Cinderella into a powerhouse. Cinderellas enjoy fleeting success, see their coaches pilfered by schools with bigger pockets and then have to rebuild; powerhouses keep their coaches, make regular NCAA tournament trips and are willing to make financial commitments to stay competitive. The Zags took another major step in the powerhouse direction this season, opening the $23-million, 6,000-seat McCarthey Athletic Center, which was part of a $119 million capital campaign at the university. They renegotiated their TV contract to include expanded coverage in the Pacific Northwest on both Fox Sports Net and their local NBC affiliate. And although Gonzaga students are not checking boxes on their applications that say, "I enrolled for the basketball," is it a coincidence that the school's enrollment has jumped from 4,800 to 6,100 from 1998 to 2004, or that donations have jumped from $9.1 million to $17.1 million in that same period?

"The university has seen significant success outside of basketball in recent years, and no one has argued that basketball hasn't had an impact on that," Roth said. "It makes the decision to reward someone -- like Mark -- who has brought tremendous success to the university a no-brainer."

The Zags aren't second-guessing their decision to spend the money required to become a player in D-I hoops. The school is paying more for its coach, relatively speaking, than private-school elites like Duke and Syracuse are for theirs, but through basketball, Gonzaga did something that wasn't necessary for those higher-profile universities: It introduced itself to the nation.

"Think back to eight or nine years ago," Roth said. "Tell me if you'd ever heard of Gonzaga, and if you had, could you even pronounce it correctly, or know where it is? It's hard for people to put a price tag on that."

Luke Winn covers college sports for SI.com.

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