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Moneyball begins to take its toll within Ducks athletics

Moneyball begins to take its toll within Ducks athletics

FishDuck Staff
Reported by FishDuck Staff on September 18, 2012
In ,
| 17 Comments

Missing: Have you seen this man? 2004 CWS Champion, six CWS appearances.

How much money did Oregon baseball take in as a gross revenue last year?

Answer: A measly $649,981

Any idea how much the team spent in 2011?

No worries, there’s an answer to that too. But beware, it’s disturbing: $2.9 million.

Here’s a quick economics lesson. That is a deficit of roughly $1.54 million. It doesn’t take a Wall Street tycoon to realize this simple formula–If spending more than what is being earned, it’s going to lead to a problem.

So, what happens when a team, no matter the level, doesn’t generate a profit? The stench of extinction begins to fill the air. There were pleas after pleas to bring the collegiate baseball program back to Eugene. In 2008, the Ducks athletics department did right by the fans, raising the funds for a new stadium. With Howe Field converted to softball long ago and Civic Stadium beyond repair, to provide the University of Oregon with a new program it necessitated a new facility.

Next, the department needed an experienced, hall of fame-bound coach to craft an unproven team with many questions into stars. Instead of merely settling for very good, UO brought in the very best there is, George Horton, winner of the 2004 College World Series. He also took Fullerton to the World Series six times during his CSF tenure. Most recently, in 2012, Horton took his Ducks squad to the Super Regional round of the CWS.

The team defeated Austin Peay 6-5 in round one, snuck by Horton’s former school, Cal State Fullerton 7-5 and pounded Austin Peay into the ground for a second time by a score of 8-1. Oregon then played Kent State in a three game series, losing two games to one to end their season.

Horton then spent his summer coaching the USA Collegiate National Team, traveling to Cuba and The Netherlands, helping the U.S. team to a bronze medal at a European tournament.

In 2008 when Horton was hired, he was given a contract of four years, worth roughly $450,000 a year, plus over $100,000 in incentive clauses. Well, it’s 2012, those four years are up, and it’s that time of year where Coach Horton, his agent Greg Genske, and the University of Oregon talk contract extension.

One problem: The talking stopped, in August.

The preliminary deadline to come to an agreement was Monday, September 10th. That day has come and gone, and there’s still no word of an agreement on an extension. Genske and Horton were seeking a contract of around three years, worth $3 million, or roughly $600,000 per year. This contract would have made Horton the highest paid coach in the Pac-12.

In four seasons at Oregon, Horton has a record of 133-111-1, including NCAA tournament appearances in 2010 and 2012. The Ducks were 46-19 last season, and ranked No. 1 for a time in the national polls. Under Horton, the team came within one victory of the program’s first CWS berth since 1954.

There are two things that are evident here: First, the only program that seems to matter is football. Would they let Chip Kelly sit for over a week without a contract? I don’t think so. Second, there are severe financial problems within the athletics department.

It may be simply that, despite the outside perception that the Oregon athletic department is rolling in Nike money, the program does not have the revenue available to pay Coach Horton the salary he deserves. Rob Moseley of the Eugene Register-Guard recently wrote a story about how fans are fed up with football ticket prices skyrocketing and longtime season ticket holders have refused to re-up for 2012 and 2013.

Prices usually only go up when there’s a financial problem, or if a team wins The Big One. If baseball took in a negative profit in 2011-2012, how many other UO sports are in the red in terms of profit and revenue?

If there is in fact a financial problems at Oregon, which the figures above indicate that there may be, then the solution might be to reduce spending by cutting a program—something that was done in 1982 when baseball was removed. And my feeling is that when and if it gets to that point, it’s going to be baseball, again.

If the department thrived without it from the 80′s to 2007, it can be done again. Technically, the program is currently without a coach and evidence has shown, at a smaller level, that giving the axe to a sport can financially work, turning crisis into calm.

Western Washington University, a small Division II school in Bellingham, Wash., was facing financial catastrophe in 2009. The university made the decision to cut the football program to save money. As a result, WWU is out of the red, and the other sports within the department are, as a result, doing much better than they were before while trying to justify the budget to pay for a football program that was not generating profits.

The point is that the U of O has already done it before, so it wouldn’t have any chaotic backlash, and if the team produced a deficit of $1.54 MILLION, it may mean that it is simply not feasible to support the program. There is either not enough fan support to justify baseball, or the point was already made to Oregon State that seemed to be one of the prime justifications behind launching the baseball program to begin with—if we want to, we can be better than you at every sport, even baseball..

So what would happen to PK Park, the beautiful new baseball stadium just east of Autzen Stadium, albeit gorgeous, that is also the cause of much grumbling for taking away prime parking spots for football; another big piece of revenue for the program.

There is a solution that actually makes the athletic department money.

The Ducks are not the only baseball team that plays in Eugene. The Eugene Emeralds, a Class A ball club has called Eugene home for decades. With the much beloved but archaic Civic Stadium in south Eugene well beyond its years somehow kept operable long after its reasonable lifespan had expired, Oregon deciding to build PK Park for its baseball program was the godsend that kept the Eugene Emeralds in Eugene.

Once the new stadium was ready, the Emeralds almost immediately made PK Park their new home. So, even if the baseball program ceases to be, it can still be rented or sold to the Emeralds for more than they pay (in rent) now. Everyone wins.

The UO is making a profit from the team paying for the land and the ball park, while the athletic department is not sending money outward. The team can sell ticket packages to Oregon fans and students, which bring the Emeralds and the athletic department money. The college baseball prelim rounds can still be played at PK, just as they were this year, and that again makes the university money.

There are plenty of winning scenarios for disenfranchising the baseball program, but I am not saying it should be done right now. The athletic department, specifically the baseball program, is struggling, and they have to figure out a solution on how to fix it. Financial problems point to why they have avoided the resigning of the legendary George Horton to a well-deserved contract extension, and perhaps in part the reason for escalating ticket prices in football to justify the expenses of baseball and other programs to maintain the level of success that fans have grown to expect from the University of Oregon.

It’s not necessarily a bad thing, all the success that has come to the Oregon athletic program as a whole, but that success isn’t free–it comes at a price.

Cutting the baseball program to get out of the financial red line is extreme, but the method has proven to work at other schools. The team and university cannot afford to keep taking in negative seven figure dollar amounts, even one that at least from outside perception is rollin the dough thanks to some very rich donors. A team also cannot afford to take the field without a leader either.

One way or another, something has to change.

If there’s a better way to get the team finances out of danger AND extend George Horton’s tenure in Eugene, I’d like to hear it.

PK Park: Opening Soon


 

 

This article is published and edited by:

Editor

FishDuck Staff

Editor In Chief

Dano Dunn

Dano Dunn

 

  • http://twitter.com/uomatters UO Matters

    Nice story. I like the Ems angle. PK Park was financed in part with a $10 million balloon loan from the UO Foundation, guaranteed with future media revenue. So while the subsidies from the football program now are large, they are going to get huge when that loan comes due.

    http://www.uomatters.com/2012/01/uo-dumps-more-money-on-baseball.html

  • Woodduck48

    I thought that the new TV contract will bring in $21 M per school per year, a big increase over the prior contract. Is that right? if so, how could there be a financial crisis? if not, what is the case regarding the new contract?

    • http://twitter.com/uomatters UO Matters

      Crisis is a bit strong. Rob Mullens’ business model is to spend every dime that comes in, mostly on increased salaries and bonuses. So while revenue is indeed up, so are expenses. Google NCAA EADA to get some numbers, or check this FAQ: http://www.uomatters.com/2011/08/uo-iac-material.html

      They’ve also been dipping pretty far into Phil Knight’s Legacy Fund, and hitting the academic side up for ~$5 million a year in hidden subsidies, depending on what you think should count.

  • UOStu

    It’s sort of interesting that this article, while possibly a valid argument, leaves out pertinent information (like the fact that Horton has been coaching the team through fall practices and is comfortable with where negotiations are), and also that with the way the NCAA baseball tournament works with the top 16 seeds hosting the prelim rounds, the stadium wouldn’t host squat without a team.

    Additionally, I’d like to see information to back up that A) They would be able to turn more profit by using the stadium only with the Emeralds (I doubt the Padres organization wants to buy a Class A team an expensive stadium) and also that there wouldn’t be any backlash if they cut baseball. No, quoting someone who says they wouldn’t care isn’t proof of the latter point (but you didn’t do that anyways).

    So good try, good effort.

  • KeizerDuck

    It seems as if the half empty basketball arena is the real budget buster. I expect they figured higher attendance would allow them to subsidize baseball which is very unlikely to ever break even. You can’t fill a baseball stadium in the cold and wet spring that exists in Oregon

  • Woodduck48

    I left a message two hours ago and it does not appear, so i re-post. How can the UO Athletic Department be in financial trouble given that the new tv contract provides about $21M to the school each year, a huge increase? Salary increases within the AD could add up to more than $1M dollars, but not $15M or whatever the increase is over the old contract. Not to mention the increased revenue from football ticket price increases. is the money going toward the debt on the Matt Knight Arena? Or where?

  • John S.

    I can’t take this article seriously. In the first paragraph the author misuses the term “gross profit”, tries to scare us with debt logic, tells us we are getting an economic lesson, and very badly calculates figures.

    Not to mention he uses the phrase “Wall Street Tycoon”. Honestly – this article makes FIshduck look awful. The financialization of public universities is a very serious topic that deserves serious discussion – preferably by someone who holds more than a communications degree?

    I don’t know enough about college baseball and I couldn’t drag myself through this full article – but it’s pretty obvious Oregon is investing a lot up front lately that they hope will pay dividends down the road. Clearly this will sometimes involve short term deficits…

  • http://www.facebook.com/chris.carson.33886 Chris Carson

    The Sky is FALLING! At least this article isn’t super dramatic

  • QuackAttack

    absolute ridiculous.

  • QuackAttack

    absolutely ridiculous.

  • Joe

    Jerod.. I appreciate the review..you just simply don’t have all the information. That revenue number is off by about 1.5 m.. Get me on Facebook and I’ll explain if you’d like
    Giansante

  • bruno

    I’d feel better if your math added up. It doesn’t…twice.

  • http://www.facebook.com/hosfield Hank Hosfield

    Feel free to explain the revenue number here, Joe. You’re one of the four (along with Renee Baumgartner, Jim Bartko and Mark Ruckwardt) who comprised the Athletic Review Committee that created the rationale for adding baseball. I’d love to see how it’s going to pencil out to be anything but a big line of red ink like it is everywhere else in the college baseball world except for possibly two places. I’ve never felt that athletics must run at a profit to justify their existence within the educational mission, but I’m more fiscally prudent than to offer Horton hundreds of thousands more per year to coach a non-revenue sport. Even if Oregon wins in Omaha, baseball is still a guaranteed money loser. I think Horton has done a great job, and I’d hope to keep him around, but you can’t justify the negative ROI, and I bet Oregon can find another excellent coach for half the money.

  • Pow

    I’d like to point out that football and basketball are the only revenue sports. Rarely do any other sports turn a profit – in the south baseball has been known to turn a profit. Every article I read forgets to mention that crucial little fact.

  • John S.

    Following up on my previous post I would just like to note that edit’s to this article have been made. Either by the author or Fishduck. Fishduck is very excited about being “full fledged” media lately. Well when a media institution makes a correction to a post/article. It should should be noted at the bottom of the article. I know this isn’t world affairs, and you guys don’t have an ombudsman – but there should be a note at the bottom that says what was edited and a brief explanation unless it’s just spelling corrections, grammar, etc.

    “Gross profit” was changed to “gross revenue” in the first paragraph, presumably after my original comment. Gross revenue is not a commonly used metric in accounting. Net revenue would be much more accurate – net revenue being sales minus costs.

    Sorry if it sounds like I am being a little harsh – I love the site, but the writing has been very hit and miss for me.

  • JDWebfoot

    $2,900,000 – $649,981 = $2,250,019. Where does the $1.54 million figure come from?

  • Wisequacker

    How about crunching some numbers for women’s hoops and their overpaid coach? At least the baseball team is a winning one which is more than you can say for Westhead’s lady ducks.