Syracuse University Athletics could pay at least 25 percent of the Big East conference exit fee: the $7.5 million cost for switching conferences that sparked debate in the spring.

“I’m willing to say, given the assumption of what the university’s priorities and desires are, this is about as good a deal as we could get,” said Craig Dudczak, chair of the University Senate Committee on Budget and Fiscal Affairs, which reached a compromise with the administration about the exit fee. This will be presented during the senate’s Wednesday meeting.

The Board of Trustees initially approved having non-athletic areas pay most of the exit fee, arguing that the move to the Atlantic Coast Conference would benefit the entire university. But in April, the senate passed a resolution calling for SU Athletics to absorb the cost. In May, the board put its plan on hold, and allowed representatives from the administration and senate budget committee to negotiate.

Part of the disagreement seemed to be about principle: if athletics was to benefit from joining the ACC, why should SU’s schools and colleges be charged most of the cost for switching conferences?

After a series of seven meetings during the summer, the committee now accepts the switch to the ACC benefits the entire university financially. And though not everyone is in agreement, members of the administration and senate budget committee who worked out the compromise say the proposal is reasonable.

Dudczak said committee members originally thought the fee would be charged within one year. It was not conveyed to the committee the fee would be charged during 10 years, he said.

He said they also didn’t know the full financial benefits for other parts of the university from ACC membership. It’s estimated that non-athletic areas would benefit $20 million throughout 10 years. About $17 million would benefit the schools and colleges, according to the report.

“We knew there would be a benefit; we didn’t know what the benefit would be,” Dudczak said. “That became clearer after we entered into this process.”

He and two members of the committee met with representatives from the administration during the summer.

They got additional information during these meetings, according to the report. This information and athletics’ five-year budget projections showed it could not bear the full cost of the fee, according to the committee’s report. Without the move to the ACC, Dudczak said, athletics would’ve likely continued running a deficit for the foreseeable future.

“There’s no question that if the athletic department hadn’t moved to the ACC, they’d really be in bad shape,” he said. “If we would’ve shifted all the cost to them, then that would’ve probably compromised other things that were anticipated for their budget,” he added.

When the full committee voted, support for the compromise was strong, Dudczak said.

The university will pay the exit fee and will charge each “responsibility center” during a 10-year period to allocate the cost, said Lou Marcoccia, SU’s executive vice president and chief financial officer.

In the university’s budgeting model, a responsibility center is an area that generates revenue. That includes the schools and colleges, but also SU Food Services, SU Health Services and the SU Bookstore, to name some examples.

SU has made two exit fee payments so far: an initial $2.5 million and an additional $1 million, Marcoccia said. The university will pay $1 million in each of the next four years.

With the agreement, SU Athletics’ contribution toward paying the exit fee will increase from $375,000 — or 5 percent — to a minimum of $1.875 million during 10 years.

That’s because the compromise includes an agreement about what to do if there’s “windfall unrestricted revenue” — new, additional money that isn’t predicted in athletics’ budget plan. An example would be a new TV contract.

If there’s a windfall, 15 percent will go toward reducing the remaining balance other centers will be charged for the fee, Marcoccia said.

After 10 years, the centers will not be charged the cost of the exit fee anymore, Marcoccia said. But, he said they will continue getting benefits from increased athletic revenue.

SU Athletics will get about $14 million from ACC membership this fiscal year. This is an increase of about $6-$7 million from the Big East’s estimated payout to SU during the last fiscal year, he said.

Athletics had anticipated that the Big East would get a new TV contract that had a higher distribution, and that the conference would stay together, he said.  This didn’t happen, but athletics had already put a budget into place that anticipated this revenue, he said.

Athletics, in effect, has no reserves, he said.

“It wasn’t a budget picture that gave you confidence that, ‘Boy, I could hit them really hard, and still have them have a manageable budget,’” Marcoccia said. “It doesn’t do any good to put (centers) into big negative budgets, because sooner or later you have to correct that.”

Joe Giansante, executive senior associate athletics director, didn’t respond to seven calls and two emails seeking an interview or statement from Athletic Director Daryl Gross or Terry Donovan, SU Athletics’ chief financial officer.

Joanne Alper, chair of the Board of Trustees Budget Committee, said the agreement is “a good accomplishment for the university going forward.”

“I think that’s really the key takeaway,” Alper said. “When each side — through any kind of an issue — disagrees with the other, if they have enough respect and patience to listen to the other side and to work together, you can reach a resolution.”

She said the Board of Trustees Budget Committee approved the compromise on Sept. 17. Alper said the compromise will probably be presented to the full board. She said she’s not sure whether it will require a full vote.

Because the Board of Trustees Budget Committee has already approved the compromise, there would unlikely “be any problems” as long as the senate approves it, she said.

Robert Van Gulick, the senator who introduced the resolution calling for SU Athletics to pay the full cost of the fee, said the compromise is the wrong decision.

Athletics is being given preferential treatment, he said.

The College of Arts and Sciences, he said, has increased enrollment during the past few years. This generates more revenue, but Arts and Sciences is expected to cover the costs that come with expansion, such as hiring more professors, Van Gulick said.

“In a university, if there’s going to be preferential treatment, it should be academics over other things,” Van Gulick said. “Are we an athletic institution that happens to have some schools and colleges on the side? Or are we an academic institution that happens to have some athletic teams?” he added.

While Van Gulick said he’s disappointed, he said he isn’t surprised. He acknowledged $7.5 million isn’t a lot of money — given the university’s budget is about $1.2 billion — and that the decision likely won’t change.

Van Gulick said it’s good the administration made some concessions and that the senate budget committee was able to talk to the trustees.

“Even though I don’t agree with the bottom line outcome,” he said, “I think the fact that those conversations took place is a good thing.”

Published on October 9, 2013 at 2:06 am

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