Paying Jim Harbaugh millions to coach U-M makes business sense

By hiring Jim Harbaugh to coach football, the University of Michigan has opened the door to a much-needed discussion of what’s happened to big time college sports.

This isn’t just about the U of M, to be sure, although Harbaugh’s hiring has become a national news story brandishing comments like a New York Times story last Wednesday: “Never has (college sports) been so awash in money, a growth industry on campuses that some observers believe increasingly resembles professional football more than higher education.”

When I first started going to Michigan football games back in 1946, things sure were different. Michigan Stadium held had 85,752 back then, fans sitting cheek to jowl, no fancy cushions, no private boxes. A 1946 U of M “season ticket” offered last week on eBay had a face value of $15, plus $3 tax. And tickets were easy to get. “Band Days” brought thousands of high school band members into the stadium, giving the appearance of a full house. My father and I would eat an apple at halftime, and on the way home we’d go by the Dexter Cider Mill for cider and doughnuts.

Today, Michigan Stadium’s rated capacity is 109,901, but I’ve heard crowds announced at nearly 115,000. The athletic department is proud of the 250 consecutive crowds of more than 100,000, “the largest crowd watching a football game in America today.” Tickets are expensive; just the seat license (i.e. permission to buy a ticket) runs $600 for a season, while game tickets are around $75 each, depending on the game and seat location. Hungry? At halftime, you can get away with chicken, fries and a big drink for around $20.

Back in 1946, you could hear Bob Ufer call the game on WUOM, the University’s radio station. “Meeeechigan scores!” he’d shout. And you’d cheer. Today, every game and everybody is on TV every day. The Big Ten Network is among the big financial successes of national sports/entertainment. (The Big Ten athletic conference, of course, now has 14 members and is marketing its androgynous logo, “BIG”.) ESPN, the sports TV network, is paying $7.3 billion (!) over 12 years to telecast seven championship bowl games.

Salaries for head football coaches have grown proportionately. Fritz Chrisler was hired from Princeton in 1938 at a starting salary best estimated at less than $25,000. Legendary coach Bo Schembechler earned $21,000 in 1969, the equivalent of $135,000 in today’s inflation-adjusted dollars. Brady Hoke was paid an average of $3.6 million annually, including his buyout. Jim Harbaugh was hired last week at a base salary of $5 million for seven years, together with various performance incentives. Alabama’s Nick Sabin gets a reported $7.1 million, highest in the country.

Of course, much of the vivid discussion about what’s happened to big time college sports has to do with growing and enormous disparities between coaching and academic salaries, reflecting the terrific changes in relative prestige and social importance of the sports/entertainment complex on the one hand and academe on the other. New University of Michigan President Mark Schlissel, for instance, gets $750,000 annual base pay; Jim Harbaugh gets 6.7 times more.

There’s something badly out of whack here.

One reason is that for many years universities managed to inhabit one world, sports another, making comparisons largely irrelevant. But with the advent of television and all the money and public attention that medium brings, the sports/entertainment complex has come to infest previously serene college campuses all around the country.

Another has to do with simple economics. Giant football stadiums are expensive fixed assets, and they need to be filled with paying fans if the bonds are to be repaid. Ticket sales for the Michigan football program were $43 million for the 2012-13 season, according to MLive.com. But over the same period, according the Sporting News, U of M student ticket sales dropped by 6,000. At $295 per season ticket, that’s a big chunk of change. More important, the rumor in Ann Arbor is that the waiting list for season tickets has pretty much dried up, suggesting revenue hemorrhages could have destabilized the athletic department if nothing were done.

Even at $5 million a year, hiring a big-name coach like Jim Harbaugh – especially one the fan base thinks will walk on water – makes enormous business sense when you consider what’s likely to happen to ticket sales in the coming years. Interim Athletic Director Jim Hackett, a very successful CEO of Steelcase, plainly knows his numbers as well as his marketing.

So maybe the inevitable conclusion is that big time college sports (especially football) in America is now and forever will be infected by the ugly face of rampant professionalism and money-chasing.
Another possibility – and here, as a U of M alum and former Regent, I’m easily open to charges of wishful thinking – Harbaugh’s particular priorities might actually make a difference. After all, when he was football coach at Stanford back in 2007, hardly academic chopped liver, he antagonized U of M fandom by calling out University athletics on grounds of academic failure.

President Schlissel, Interim AD Hackett and Harbaugh have all indicated their commitment to maintaining an equilibrium between excellence in the classroom and in athletics. That used to be the way Michigan did it. And I hope it’s not too much to hope they can do the same thing all over again.

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***
Tue, 01/06/2015 - 8:46am
With the NCAA planning on letting the big power conferences to set up their own system of governing (or else face a possible pullout from he NCAA) the chances of higher academic standards becoming the norm at Michigan or anywhere else is I'm afraid very wishful thinking.
JC
Tue, 01/06/2015 - 10:25am
The Big Ten now has 14 members, not 12 as the article states. Rutgers and Maryland joined officially in summer 2014 and began competing in sports last fall.
Nancy Derringer
Tue, 01/06/2015 - 10:27am
Thanks, JC -- I made the fix. Readers keep us on our toes. Nancy Derringer Bridge magazine
Tue, 01/06/2015 - 9:23pm
Nancy, You should also fix the spelling of Fritz Crisler's name.
John
Tue, 01/06/2015 - 4:14pm
The article did say 14.
James Stenbeck
Tue, 01/06/2015 - 10:25am
It is somewhat ironic that you published your opinion regarding Harbaugh's 5 million salary within the same Bridge issue lamenting the cost of higher education and the struggles of many to meet the outrageous cost. The sad part is, I don't think most Michiganders/Americans care about his salary or the cost of higher education or any relation between the two. The more things change, the more they remain the same: to wit: in Roman Times they called it "Bread and Circus." In 21st Century America its "Beer and Football (or Basketball or Baseball, etc....).
Rick
Tue, 01/06/2015 - 1:57pm
Thanks James - Yup. And 'The Bridge' totally missed it. When you're super wealthy that kind of stuff just flies over your head.
Rick
Tue, 01/06/2015 - 1:59pm
... Which is why our governor totally doesn't get it. When you surround yourself with wealthy people you never see the 'little people' nor their hopes, needs and living situation. Welcome to the new GOP Michigan...the one The Bridge can't see (like the forest for the trees).
Tue, 01/06/2015 - 4:11pm
Well Said Phil, How about a relatively minor change re: athletic scholarships that would help change them from being paid minor league participants, back into student athletes. Easily done by making all scholarships loans that will be forgiven in full when the recipient graduates. If the athlete chooses to leave early or can't handle academics, the loans would be handled just like today's student loans.Those able to go pro, could make the buy-out of their loans, part of their initial contracts. This would eliminate the lost costs of athletic scholarships for those leaving early and force athletes to accept and appreciate the opportunity to gain an education that will benefit them in later life just like the majority of "regular" students at their respective institutions. Seasoned Citizen from Ann Arbor.
Jon Forslund
Tue, 01/06/2015 - 4:23pm
You listened to Bob Ufer call the UM on WUOM in 1946? First, in those days, Mr. Ufer called the game on WPAG (http://tinyurl.com/yk6xc23). Second, WUOM didn't go on the air until 1948. When WUOM first started broadcasting UM games, it was Bill Flemming's voice (later of ABC fame) you likely heard (http://tinyurl.com/ovmcyyb). Finally, there is an irony in those who approve of Jim Harbaugh's hiring who earlier denounced Mr. Harbaugh (http://tinyurl.com/n6g4by9) after his 2007 comments concerning UM football players' alleged academic initiative. Recently, in fact, UM President Schlissel had to "clarify" (http://tinyurl.com/l4uryd6) his earlier remarks (http://tinyurl.com/o9lgoog) about allegations similar to Mr. Harbaugh's. It will be interested if Mr. Harbaugh can replicate Stanford's lofty standards, the standards that Mr. Schlissel seems to favor, at UM
Ron
Tue, 01/06/2015 - 8:20pm
I'm confused by this sentence: "Salaries for head football coaches have grown proportionately." That 1938 salary of $25,000 is now multiplied by 200. The stadium seating grew by less than 1.5 times. Inflation does not come close to the salary growth. The situation is another example of the growing inequity in pay between the rich and middle class. Which makes me even more confused by the claim that hiring the coach even at $5M a year "makes enormous business sense." What is business sense at a school? How can you talk about business sense when the "business" of a school is educating students. The only business sense here is a few people making more money than a hundred average families combined. How does that make sense in the business of educating students?
Mike
Wed, 01/07/2015 - 3:35am
The relationship between the football program and the university has become truly disconnected. The games are a contest between "our mercenaries" and "their mercenaries." At least our new coach will receive a bonus of up to $150,000/ year based on team grades--even though the bonus categories for team performance on the field are far higher. But of course the really star players will still graduate to the NFL rather than from Michigan.
***
Wed, 01/07/2015 - 9:42am
A big reason why his salary makes sense is because if he is successful the university will get much more in alumni donations for the university far in excess of what they are paying him. It may be misplaced priorities and all of that but many alumni want winning programs for high profile sports and are much more inclined to donate when that happens.
Gayle
Wed, 01/07/2015 - 11:03am
That’s right. Ticket sales, major gifts, and other revenue make University of Michigan Athletics one of only 23 NCAA Division I athletic departments that earned sufficient revenue to cover expenses. Football generates most of the income. Michigan Athletics is a self-sustaining auxiliary unit of the University and does not receive funds from the university’s general fund or receive state appropriations. In fact, cash flows from Athletics to the University. The Athletics Department pays the full University tuition for over 850 student athletes at a cost of $20 million each year. In addition, Athletics gives another $2 million a year to the University for undergraduate, need-based scholarships for non-athletes.
Derp
Wed, 01/07/2015 - 4:05pm
"Tickets are expensive; just the seat license (i.e. permission to buy a ticket) runs $600 for a season." Not true, I pay $300(PSD, permission to buy a ticket) for 4 seats per year.
john Herold
Thu, 01/08/2015 - 11:29am
The seat taxes at The Big House and Crisler Center vary according to the location of the seat. If you're OK with end zone seats it's only $50/year (80% tax-deductible). 50 yardline seats... are the $600 ones. Private boxes are around $80,000/year ! I'm waiting for the Feds to reconsider the 80% tax deductible break. If one gives to Music School you get 100% deduction.. why are athletic "donations" on worth 80% ?
Wed, 01/07/2015 - 4:15pm
This is a disappointing article by Phil Power. Where so many of the Bridge articles (I know this is opinion) seem to be rooted in some sense of rationality, this piece is all about an emotional attachment to UofM and the football program. There are so many reasons this is wrong. The cost of attendance, the fact that this is educational athletics, the fact that the UofM is a public university that our state tax dollars subsidize, the fact that universities are non-profits that we subsidize through Federal tax breaks, and, as I wrote on my blog, the fact that that coaches of male sports make over 300% more on average than coaches of female sports. But hey, as long as it brings revenue and attention, who cares about any of the values that should guide our universities. For more on gender discrimination, read my blog post here: http://www.michiganpopulist.org/harbaugh-hiring-control-non-profit-pay-g...
Duane
Thu, 01/08/2015 - 9:53pm
Chad, I wonder if you have consider the other side of each point you make. If the compensation for the coach is not from public coffers then why does it matter if it is taxpayer supported institution? If the taxpayers (more the rule than the exception) gains pride in their state and feel they gain from the schools athletic success then is there added value to the tax payers? (If the Lions are loss and Sparty or Big Blue win and people are upbeat isn't there a benefit?) If the Staruday afternoon socializing experience creates a lifelong link between the student and the school isn't that a value? If the lack of such activities such as at WSU prevents such a link is that a value? If an alum uses the hype and paraphernalia associated with the Saturday afternoon activities to create and interest in college in their children and then extend that interest into academic motivation, isn't that value? If you only look for what you want to see you risk not seeing all the valuable possibilities that are available. The question I offered were all actual events, and the grandkids are all succeeding academically so they can be part of college life and college life extends beyond the classroom to Saturday afternoon. With regard to you concern about who is being paid what, you seem to fail to consider what the results maybe. You appear to feel people should be compenated based on who they (gender) are rather then the results they deliver. I would offer that if the women's volleyball coach were filling the 'Big House' for one or more matches a season they would be receiving a 7 figure income (if they were still at UM). Do you think the new coach was selected because he was a male or because he has delivered athletic and academic results with the students he has coach, do think he was hire because there was a belief that he would increase the moneys to the University through tickets, paraphernalia sales, though TV and tournament revenue, from alum donations? What do you think the compensation for a women's team coach would be if they provided equivalent results? You may want to make it a gender issue, but if you ignore the results delivered then you have failed to make an unprejudial assessment of the situation. What I have found is that a community succeeds not because of who is in the community, but because of what people who are part of the community do. We have taught our daughters that they will succeed and have personal satification not because of who they are or even how hard they work, rather it will be because of the results they deliver. Both have found that true in their professional and personal lives.
RonJStefanski
Thu, 01/08/2015 - 4:38pm
Phil Powers lays out a strong case for Harbaugh on business terms. After the dust settles, I think we will see that Harbaugh is no god; just a great solid coach with terrific reasons to be back at his alma mater. This will be good for him, his family and Michigan fans. College sports is getting out of control, and Harbaugh's decision to accept less than what he could have negotiated well speaks to the example we can hope he lays out for his players. In the end, many of them will not play football professionally, and hopefully what they get from their Michigan experience is a great run of football, along with one of the best college educations in the US today. Go Blue!
Tom
Sun, 01/11/2015 - 7:41pm
As with other institutions in our society (take our government, for example) the infusion of mind-boggling sums of money for purposes quite apart from the institution's stated mission, always, without exception, has a distorting, de-stabilizing, value subverting effect on the institution. We engage in this incremental, compromising behavior as a society all the time - we're the drunk who believes he can stop at any time, except our intoxicant here is the almighty dollar. That's the ruse we engage in; because, frankly, we lack the collective willpower to say "no, enough". Perversion comes in many forms.
John Nash
Mon, 01/12/2015 - 8:34am
Phil you said it, how can anything change when large universities have the type capital investments they have in their stadiums. I do not think it ends at the college level. Have you seen some of the high school stadiums - where bigger and better than the Mid-American college stadium we had back in 1963 when I was in college.
R.L.
Mon, 01/12/2015 - 1:09pm
Ones worth is a relative term. It is a sad commentary that anyone coach or player should command the monies they do. Many respond I don't care because I don't go to games anyway.At least at the professional level all those endorsements have to be paid for by someone. Buy a pop, clothing item, car,etc. You are helping to pay for that endorsement. Pay the college players and let many of them not graduate or get a useless degree. No harm no foul. Remember when people played for love of the game. R.L.
chuck gehrke
Thu, 01/15/2015 - 5:17pm
The AthleticDepartment continuously claims all the money it spends on buildings etc. are from their revenues and are separate from the University's budget. So, if they are so separate from the general University the various teams which want to play under the name "The University of Michigan" should pay the University a franchise fee. For the privilege of using the name of a premium product they should meet certain quality and ethical standards or the contract isn't renewed. If a player want to go to school in their spare time let them pay for it out of the salary they should be paid for generating all of the Athletic Department's income and being exploited for the gain of the Department and a few select individuals. If this option isn't appealing then how about this. The NFL pays either the university or college a fee for each player they select in the draft. The higher the draft round the player is selected from the higher the fee. Or all the money collected from this system is pooled and distributed to the various teams or conferences with draft eligible players. Each first round draft choice would be worth at least $500 - 750K and then subsequent rounds proportionately less. Since education currently has essentially nothing to do with all of this nonsense let's put things on a real business basis and quit kidding ourselves.
Ken McFarlane
Tue, 01/27/2015 - 12:57pm
Then let's just admit that the athletic programs are professional minor leagues and separate them from the universities.
Nick Fleezanis
Thu, 01/29/2015 - 7:05pm
I think it is scandalous that a coach of any sport at a university be paid what some are being paid today. Universities had better make-up their minds what they are. Institutions of higher learning, or the minor leagues for professional sports!