Behind the Curtain: The Report on VT Athletics

I made a few comments in a previous thread about what I was learning about the current state of VT athletics. As I posted there, I am the Faculty Senate President for this year, which also affords me a seat on the Board of Visitors (non-voting) as the university's faculty representative. My role is to speak to the Board about issues facing faculty as part of their decision-making process. This role also allows me to attend meetings, meals, etc. with BOV members to get to know them and to work some "soft diplomacy" in getting things accomplished. I had good conversations with many of our Board members and appreciate their engagement and desire to serve the university; they are thinking critically about the future of the university and how we meet emerging needs.

On to Athletics. At the BOV retreat, Whit Babcock gave an hour-long presentation on the current state of VT athletics. There have been reports on this presentation already in the media, but I'll condense here what I learned, what I felt in the room and what conversations took place later, when the cameras were off. I'll tell you what I feel comfortable saying; some things are asides from administrators that are clearly off the record and since, well, everyone knows who I am, I'm not going to try to act as some anonymous source. Everyone knows it's me.

On to the fun stuff. I'll try to present these tidbits as short takeaways rather than a long, narrative essay.

1. The Current State of College Athletics

The House vs. NCAA settlement has obviously upended the college athletics funding model. Whit reports that 90% of P4 conference members will compete with the full NIL revenue share ($20.5M). There will be no transparency on this until FY27 as to who spent what amount and how they funded it.

Increases in student fees help cover this cost, but fees are basically a zero-sum game for athletics, just about everything that comes in gets paid back to main campus.

VT Athletics generates 90% of the licensing revenue that the university takes in, but receives only 50% of those proceeds. This model has been revised and will be more proportional going forward.

Athletics generates 100% of the revenue from game day parking but only receives 75% of the proceeds. They have worked with Parking Services to negotiate down the price paid to rent spots from Parking Services from $300k for 6 games last year to $200k for 7 games this year.

Upcoming renegotiations of media rights will trigger realignment discussions.

VT Athletics generates about $94M in economic activity for the New River Valley, if we fade, then the local economy is likely to suffer massively.

2. The New Revenue Sharing Model

TV viewership will be key to revenue sharing, with 60% equally split and the remaining 40% based on viewership. The model weights 75% based on football and 25% based on men's basketball. The conference will update "standings" after every game. VT current sits in 9th-10th place in the revenue sharing model. 6 wins in football would likely keep us at 9th-10th and we get basically nothing out of the revenue share.

We currently make $43M from equal ACC revenue sharing; the viewership-based model will result in that amount being $30-65M. So it's a gamble. Winning will net us profit via better channels and time slots, losing on the field will mean losing money.

3. VT Athletics Budget Analysis

For FY24, we were around 12th-14th in the ACC in athletics funding. UNC has made a huge push to up their budget to $185M. Clemson is around $200M, and VT is around $144M (that's behind even GT at $159M). Some of our challenge stems from legal constraints (VA law says that public institutions in our "tier" - VT and UVA - can only subsidize 20% of the athletics budget with campus funds). Hokie Club is 2nd largest in the ACC in terms of number of donors but middle of the pack in terms of dollars collected.

Our student fees remain fairly low, but our reliance on them is within the top 10 nationally; this is catching the attention of the federal government in a negative way. The feds don't want to see institutions hiking the cost of attendance via fees. We want to be fiscally prudent and avoid unwanted scrutiny.

Our university leadership and BOV will be lobbying lawmakers to change VA law to remove the restrictions on subsidies.

4. The Bottom Line

Whit's ask: $52M more for athletics, so we approach Clemson's budget to become more competitive.

Quotes:

Whit: "I'm frustrated that we haven't changed the funding model, we have talked about it for years, and we had an outline for it in 2020."

Whit: "Our lack of athletic success, no excuses – the buck stops with me"

Whit: "I don't plan on doing this job for many more years, either at my choosing or at y'all's choosing."

Whit: "We cannot keep taking pride with doing more with less."

BOV member: it's remarkable you've gotten to where you are with what you've been given, but we need more investment to compete with Clemson.

BOV member: "we would have a large, empty hole if not for athletics." And "what I don't like to see is what I see right now, Virginia Tech at the bottom, underneath our peers." Surprised by the fact that athletics was the only unit that took a pay cut during COVID. Supportive of Whit "you've been too nice, you need more than this. You're always so respectful when you request it."

Whit: "$20.5M is the minimum ante to stay competitive in big-time athletics. Dr. Sands gave us a bump of $5M and it saved our tails but that was a one-time thing."

Whit also noted that many donors are fed up with the new system, transfer portal, etc. But he remains optimistic that we can send the right message out to our supporters to draw in donations.

5. Looking Ahead

I will update in the comments as I am able; I have a meeting with Provost Clarke next week. He and EVP/COO Amy Sebring chair the Budget & Planning Committee so they have major control over the budget. They've been tasked with trying to figure out how to better finance Athletics. As noted above, some of the things I speak to them about are confidential and I will not betray that trust. But I'll share what I can. I had an aside with a BOV member who is supportive of providing more funding to athletics (at present, that means a max of about $10M under state law) but it will mean cutting Olympic sports. "Hard choices will have to be made." A creative budgeting strategy was proposed in one of my asides with a BOV member, but as that is not something the full Board is considering, I'll wait until the details are fleshed out. But the BOV members are interested in finding solutions for this situation.

We will see what other options come up. If cutting academic programs is on the table, I can tell you that the faculty will revolt and you will see my name in the news at some point for having to confront any such proposition.