Proceedings of the Board of Regents (1999-2000)

July Meeting, 1999

been addressed, and the next stage, involving reporting lines, communications, and the role
of the Board in Control of Intercollegiate Athletics, is yet to be completed. Executive Vice
President Kasdin clarified that the first report of the committee addressed the question of
whether the Department of Athletics is in financial equilibrium, and the second stage, which
is to be completed in the coming months, will be addressing issues of governance.
Regent Newman said that she did not mean to imply that Mr. Goss had provided
misinformation to the Regents. Rather, she was addressing the lack of information that
had been provided about issues that came to light in press coverage.
Regent Taylor observed that a recent newspaper article implied that the $2 million
deficit will have a profound impact, but his understanding is that this is untrue and the deficit
will not affect any planned programs. Mr. Goss confirmed this, noting that the department
has healthy reserves to cover the deficit.
Regent White commented that she is pleased that the department is approaching
gender equity. She noted that achieving gender equity can be expensive, and these
efforts could be contributing to the department's financial situation. However, she
commended the department's progress over the past two years.
Regent Brandon inquired at what point did the department realize that there would
be a deficit. Mr. Goss responded that the department had received a letter from its
licensing company on March 16, indicating that licensing revenues would be off by
about $2.1 million from the previous year. At that point, with 90 days left in the fiscal
year, adjustments had to be made very quickly. He noted that ticket prices are one of the
few revenue sources that the department can control, and thus ticket price increases are
critical to the department if it is to be a leader in building teams that can be nationally
competitive. Corporate sponsorships, which involve contracts, are the other predictable
source of income. He pointed out that costs are easier to control than revenues, and that
the management team is focusing on this aspect.
Regent Deitch commented that budget making is reflective of, and a driver of, policy
decisions, as exemplified by Provost Cantor's presentation of the General Fund budget. He
observed that policy choices involving both revenues and expenditures have influenced the
athletic department budget, in a manner similar to policy decisions that have driven the
Health System budget. However, the Health System operates in a simpler, more
businesslike environment than has been imposed on the Department of Athletics.
For example, to increase revenues, Regent Deitch observed that the department
could institute a number of measures, such as adding additional football games, adding
sky boxes and seat licenses, and naming arenas for corporate sponsors. However, due
to academic and other considerations, University leadership has consciously decided
against pursuing these revenue enhancement options.
On the issue of football ticket prices, Regent Deitch noted that an increase from
$27 to $35 had been proposed earlier in the year. This was ultimately rolled back,
which had a revenue implication of $2 million per year. He believes the decisiobelieves to roll
back prices was wrong, due to the fact that Michigan athletics is an entertainment
product, and that this fact ought to determine pricing. Students are the only consumers,
he believes, who deserve subsidized, below-market prices and complete access to

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