Big-Time Money

Winston-Salem State University is finding that a move to the NCAA's top division comes at a steep price.

And that cost is starting to put a crimp in the school's overall budget as the transition to full membership in Division I continues.

In the first two years of the five-year transition period, the WSSU athletics department had deficits of $163,400 in 2006-07 and $768,244 in 2007-08 -- amounts that were covered by the school's general fund, according to Chancellor Donald Reaves.

The projected deficit for athletics this year -- according to a copy of the university's budget obtained by the Journal -- is $1.5 million. That would raise the total deficit for the first three years to nearly $2.6 million.

Reaves says that this year's expected $1.5 million deficit should be the greatest WSSU will face, because fewer scholarships will have to be added in the final years of the transition. Also, a number of sports will be at full scholarship levels by the end of the school year.

"You eventually want your program to be self-sufficient," Reaves said. "You want to cut costs and hopefully bring that number down. That's what we need to work on over the next couple of years. At some point, we will reach the maximum on scholarships, so those costs will level out in the future."

Nobody associated with the university expected an easy road when WSSU, under the direction of Chancellor Harold Martin, decided in 2003 to start the move out of Division II.

Reaves, who replaced Martin in February 2007, said that the move will continue but that there are questions to be answered, including where the needed money will come from.

"This is the year we will get a very good sense of what we are going to do, then we'll make some decisions," Reaves said before a football game last month against South Carolina State that drew only about 3,000 fans to Bowman Gray Stadium.

Reaves said that money used the last two years to make up the athletics deficits was not state money.

"It's not state dollars; we make money doing other things," he said. "But I don't want to keep spending that on athletics."

Reaves says that for now, WSSU is committed to continuing its move to Division I, but he did not rule out a return to Division II if progress slows.

"We are still committed to doing this," Reaves said before a recent football game at Florida A&M. "We will look at things after this year, but right now, we are still committed to going to Division I."

Revenue sources

One of WSSU's problems, Reaves said, is that the athletics department is limited in the ways it can generate revenue. Another is that, unlike some schools, WSSU does not own its football stadium and basketball arena and must pay rental fees to the city. Athletics Director Chico Caldwell said that WSSU averages paying about $15,000 a game to rent Bowman Gray Stadium and about $3,500 to rent Joel Coliseum or the Coliseum Annex.

WSSU's biggest source of income is student athletics fees, which generated $2.5 million last year and are projected to generate $2.9 million this year. The fees are built into tuition costs for each of the school's 6,400 or so students.

Revenue also comes from ticket and program sales, charges for tailgating at football games, guarantees from games against bigger schools, miscellaneous income (fundraising), royalty income and academic support, which is money that helps pay the salaries of coaches who also teach classes.

"There's really no revenue diversification," Reaves said. "It's disproportional on student fees because we don't own this place (Bowman Gray Stadium), we don't own the Coliseum. So, unlike other universities who own their own venues, we don't get anything from concessions the way the contract is set up. We make very little money from parking … we just don't raise a lot of money for athletics."

WSSU also falls short, Reaves said, in fundraising. To remedy that, Caldwell has hired two people to work strictly as fundraisers for athletics -- a move believed to be a first for the school.

"We just don't have a history of healthy fundraising at this school for athletics," Reaves said. "And we're going to have to step that up."

WSSU brought in $50,000 for athletics through private donations in 2006-07 and $39,640 in 2007-08. This year's budget projects $100,000 in donations.

Caldwell said that a down economy has hurt the school's ability to raise money from alumni. The late Big House Gaines seemed to know that this day would come. Gaines said at the 2003 press conference announcing WSSU's move to Division I that "folks are going to have to write checks."

Caldwell said that having two full-time fundraisers will help.

"We were over budget," he said. "But that's the case of about 80 percent of all schools (in the Mid-Eastern Athletic Conference). I'm always disappointed that we went over budget."

Caldwell said that some monetary issues are out of WSSU's control, such as the cap the University of North Carolina system puts on student fees. Students in the system pay four fees a year, including one for athletics. The combined amounts of those fees cannot increase more than 6.5 percent from year to year, so if a school raises its athletics fee by 10 percent, for example, it must reduce another fee to stay within the limit. At WSSU, the fee for athletics for the current school year is about $575 per full-time student.

"To kind of minimize the impact of the cap on student fees, we have to have better fundraising, but that's hard to do in a down economy," Caldwell said. "That's going to be a challenge for every athletic director in the country this year."

WSSU's budget for athletics during the last school year was $4.6 million. With increased scholarships for football, the budget for the current year is nearly $5.8 million. WSSU had 51 scholarships for football last year, has 57 this year and hopes to offer the Football Championship Subdivision maximum of 63 by 2010.

Although football costs money, the program also can bring in money by playing big-name schools, a path Caldwell said that WSSU probably will follow over the next two years. S.C. State, for example, played Clemson last month for a payout of $235,000. The downside? Clemson won 54-0.

Reaves says that generating revenue by playing big-name schools is a must.

"We have to do that," he said. "Everybody is doing that to help their budgets in athletics, and we have to do it. It's not out of the ordinary to do that."

Baseball on hold

One casualty of the increasing athletics deficit is a delay in resurrecting the WSSU baseball program. Caldwell said that it's not feasible to start another sport that would most likely cost an additional $200,000.

He didn't rule out starting a baseball program in the future, but said that it won't happen anytime soon.

"That was attached to the provisional agreement for MEAC membership," Caldwell said. "There are several schools in the MEAC that do not have baseball. With us adding baseball, it would help the conference get into better position to have a championship. I think you need six teams, and they have five right now, so I'm sure everybody was hoping we'd bring it in."

"The plan would have been to have those (baseball) coaches in place by last spring. But looking at the budget and all the changes now with the unpredictability of the economy, it would stretch the budget too far. The final decision has not been discussed with the conference, but that program is on a delay."

Commissioner Dennis Thomas of the MEAC said that the lack of a baseball program at the start would not affect WSSU's conference membership.

"They are in the conference," Thomas said. "And we expect them to be in compliance with the NCAA and then be eligible for our championships."

WSSU already offers 15 sports, one more than the minimum needed for Division I membership, so it doesn't have to add baseball immediately.

Delay and change

WSSU's move to Division I hit another bump in the road after an NCAA review found under-funding for scholarships in tennis and track and field and added a year to the transition period.

WSSU was originally scheduled to be in full compliance with the NCAA and eligible for MEAC championships in March 2010.

The delay is a blow to the MEAC, which expected WSSU to compete in its 2010 basketball tournaments at Joel Coliseum. The MEAC has a three-year contract with the city to play its basketball tournaments at Joel starting next March, but because of the added transition year, WSSU will not be eligible until 2011.

The NCAA violations occurred when students who had signed letters-of-intent with WSSU did not enroll, for various reasons. Under NCAA rules, Caldwell said, the scholarship money for those students should have been redirected to other students but was not, leading to the "under-funding" ruling.

"I agree with Dr. Reaves and Dr. Caldwell in that we are all disappointed," the MEAC's Thomas said of the delay. "We know they are doing all of the right things to continue the transition."

The MEAC and WSSU are appealing the NCAA's decision and, Thomas said, "we are exploring all of our options."

WSSU's athletics department has changed drastically since Caldwell came on as athletics director in 2000. The school had just nine sports and 22 athletics-department employees then. Now, it has 15 sports and more than 50 employees in athletics, changes that have increased the cost of running the program. Sports added in the last four years are men's and women's indoor and outdoor track and field and men's golf.

Reaves says that the former administration's planning for the move to Division I wasn't as thorough as it could have been. Martin, now the senior vice president for academic affairs for the UNC system, did not return calls.

"Yeah, it's tight, and the cost of moving to Division I is a lot more than projected," Reaves said. "We're trying to find that money to make up for it. We are pretty far down the road in this move to Division I, so we don't want to go back."

■ John Dell can be reached at 727-4081 or at jdell@wsjournal.com.