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Preparing for O’Bannon

Pat Haden made headlines when he said to Sports Illustrated’s Stuart Mandel that the O’Bannon lawsuit was not a slam dunk for the NCAA and that schools needed to start preparing for a loss:

“The context of the lawsuit has changed. What do we do if we lost?” Haden said of the NCAA’s side. “All of a sudden your television revenue – let’s say it’s $20 million a year [for a school]. Now if they win, it’s $10 million a year. How do you make your 21 sports work on half the revenue?”

Haden is right that the case is not a slam dunk for the NCAA. And each day that passes makes the chances of anything less than total victory for either side seem less likely. None of the parties seem interested in settling this case, meaning that everyone looks to be making all-in bets on a case that could go either way.

What Haden did not mention is how an athletic department should be getting reading for the post-O’Bannon world that is not sure to ever arrive. Cutting sports now to avoid having to cut sports later is too drastic at this point. Not doing anything would be whistling past the graveyard. So how can athletic directors strike the balance between running the athletic department in the short term and preparing for the long-term implications of a case that might be the better part of a decade away from a final resolution?

Build Support for More Institutional Funding

The safest and most secure pot of money athletic departments have is funding that comes from the school to athletics. An athletic department may not be able to count on the university making up the entire shortfall should O’Bannon win, but it could help a significant chunk. But building support for that takes time. Starting the process now means the money or cost savings (like forgiveness of debt for facilities or not charging for scholarships) is more likely to be there in time.

Step Up Fundraising Efforts

Donations would also be one of the last places that athletes could make an argument for getting a cut, but they could become competitors in a few years should publicity rights enable payments from boosters. A fundraising campaign now could put away money for a coming rainy day. Specifically, schools should look to endow as many things as possible, be it scholarships, coaching or administrative positions, even operational expenses. Endowments can, in effect, take expenses off the books, if a large upfront cash influx is available.

Freeze Spending

A school cannot afford to start cutting spending drastically right now. The case is too uncertain and there is something to be said for appearing as strong as possible if/when there is a game-changing verdict in the O’Bannon case. But schools can take a step back from the arms race for the moment, especially if they have recently completed new facilities or given big budget boosts. Budgets could be frozen or rise more slowly (with inflation) and coaches simply asked to make do with not less, but the same.

Trim Some Fat

Athletic departments are not as bloated as they might seem, but there is some waste and overhead that can be eliminated. That could mean eliminating some positions, centralizing some functions, relying on the graduate or student workforce for more functions, and cutting back on travel parties and perks, especially for administrative staff.

Prepare to Cut Sports

If a school suddenly finds itself with $10 million less in revenue than before, it may have no choice but to cut sports. Cutting sports brings with it a host of additional problems, including terrible PR and the threat of Title IX lawsuits if women’s teams are eliminated. Schools should know which sports are the most expensive, which will draw the most ire from alumni if they have have to be eliminated, and exactly what the Title IX compliance situation is and is projected to be over the next few years.

Prepare to Reclassify

Part of the plaintiff’s proposal in the O’Bannon lawsuit would see larger conferences given both the ability and the obligation to pay more to student-athletes. That may tip the scales too far in their favor, resulting in schools not being able to compete or the big schools breaking away to form their own association. Either way, all but the very largest and richest athletic departments should prepare to no longer be in the top level of college athletics. Those preparations include how to break the news to the university community and what the athletic department might look like in a new division or a new look Division I.

Are you ready for the NEXT STEP!