Business Insight Zone

According to veteran Texas Monthly writer S. C. Gwynne, my beloved alma mater boasts “the most profitable — and most successful” athletics program “of any school in history.” Gwynne explores the ramifications of this success in a detailed 8,000-word feature on the empire that UT men’s athletic director DeLoss Dodds has built during his 27 years at the University. The feature is here . . .

Come Early. Be Loud. Cash In.

. . . but you have to be a subscriber to read more than the opening paragraphs online. So, setting aside my fan’s pride in the Longhorns’ athletic exploits (perhaps you’re aware they have the #1 football team in all the land?), I’ll offer a few business-minded thoughts prompted by the article.

Focus

Texas has finished among the top ten for the Directors’ Cup, “which measures the overall success of a college’s athletics program,” for seven years running — even though it fields only 20 teams across its men’s and women’s programs, instead of the 30 or more at comparable institutions like Ohio State or Stanford. (For instance, UT does not have a men’s volleyball team or a women’s field hockey team.)

Dodds and his colleague, women’s athletic director Chris Plonsky, have set a very high standard to go along with these limits: every single team is fully funded, meaning that they have ample travel budgets and that they can spend top dollar on the best coachs and facilities. All of this is in service of a breathtaking goal — in Gwynne’s words, “to allow every one of UT’s teams to compete for a national championship every year.”

This is reminiscent of Peter Drucker’s advice, famously implemented by Jack Welch in the early days of his tenure as CEO of General Electric, to be #1 or #2 in every business you’re in — or else get out of that business.

Working within constraints

Besides this self-imposed focus, UT operates under very different conditions than it did back when Darrell Royal was leading the Longhorns to national football titles. Here’s a key passage from Gwynne’s article:

Today’s sleek, dazzlingly efficient program is really only a decade old. And ironically, it is the product of a sweeping financial crisis in American college sports that has gutted many of the country’s most hallowed universities.

The crisis started with a law known as Title IX, which has turned the world of scholastic sports upside down. Passed by Congress in 1972, it ultimately required that women be given equal opportunities to participate in school sports, a change that happened only gradually over the following three decades. No institution was more deeply involved in this process than the University of Texas. But in 1992 a group of female students sued the university under Title IX. They wanted more teams for women to roughly equalize the number of male and female athletes on campus. The key word was “equalize.”

The lawsuit was immediately seen as a groundbreaking case. That was because no school had done more for women’s athletics than UT. . . . In spite of that, the university had remained out of compliance with Title IX, as had most schools across the country. The large number of football players — 130 or more at UT — created an imbalance with the numbers of players on the smaller women’s teams. Instead of fighting the lawsuit, the university settled it, in 1993, by agreeing to start three new women’s teams: soccer, softball, and rowing. That sent shock waves across the nation: If UT could be forced to change, then everyone could.

As Gwynne goes on to relate, many universities have crumpled under the weight of Title IX — but UT has worked within the parameters of aggressive Title IX compliance to thrive more than ever before. Along with its powerhouse men’s teams in football, baseball, and basketball, it is perennially among the best schools in the country for women’s basketball, softball, and volleyball.

You have to spend money to make money.

The view in the photo above is from the north end of Royal-Memorial Stadium, which has recently been expanded, at massive cost, to accommodate even more of the Longhorn faithful for home football games. Like previous renovations to the once-rickety stadium, the North End Zone (NEZ) project has added not just regular seats, but thousands of ultra-high-dollar seats in club levels and luxury boxes. This means much more money flows into the coffers of UT athletics, and not just for the football program — which may be the best-funded in the country — but for all the “non-revenue” sports like swimming and tennis.

It will take years to pay off the load of debt that the athletics program took on to finance the NEZ. This implies a calculated risk that the Longhorns won’t undergo a football drought like they did in the 1990s; losing seasons drive away too many of the high rollers who populate those luxury boxes on game day. But as long as the formula keeps working, UT should remain a force not only in football, but also in all the other sports in which it competes.

The whole and the parts

According to head football coach Mack Brown, the factors discussed above have erased jealousy between the various sports. No team has to wonder why they don’t get any goodies . . . because they all get the goodies.

But the success of UT athletics, especially when paired with its financial autonomy from the rest of the University, means that resentment or distrust does arise among some professors and administrators. As Gwynne relates in the closing section of his article, Dodds, Brown, and other members of the athletics staff have tried to bridge this gap lately by going out of their way to court the favor of faculty members.

At one level, this would be savvy dealing even if it were insincere (which I doubt it is). Beyond that, though, it highlights a similar challenge faced by organizations of all types: how do you get along with ALL your constituencies? Every organization operates in various “worlds” simultaneously, because it has to meet the needs of customers, employees, donors, vendors, audience members, alumni, voters, or whatever other interested parties.

For the last decade-plus, UT’s athletics program has done a historically good job of balancing the demands of its many constituencies — and, having once worked for the University’s alumni association, I can tell you that the demands of devoted Orangebloods are demanding indeed.

Kudos to Gwynne for doing his typically smart job in handling the complexities of this topic. If you can lay hands on a copy of the magazine or get access to the subscriber side of the Texas Monthly site, his article is certainly worth your time.

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Related links:

• The Longhorns’ bowl game: the cost of high expectations.
• The Tampa Rays invest for the long haul — and win.
• Why the business of sports is so worthy of coverage.
• The Red Sox: smarter and richer.
  

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Image by JoshS1, used under a CC-Share Alike license.

Category: The business of sports