Athletic directors' bonuses raise conflict questions

Administrators in charge of compliance also have incentive to win

6/3/2012

The Ohio State football team’s run to the 2011 Sugar Bowl was sustained by a cover-up that left behind a trail of damage.

But the guardian of the athletic department earned a $61,500 bonus for the Buckeyes’ postseason trip to New Orleans — an incentive OSU athletic director Gene Smith did not have to return when the 2010 season was vacated.

Though no evidence suggests Smith was complicit in any wrongdoing, the bonus for a season in which success came at the expense of major NCAA infractions highlights an inherent potential conflict, according to some academic leaders.

CONTRACTS:

These higher education officials question whether the growing trend of schools padding athletic director contracts with incentives tied to the between-the-lines achievement of individual programs undermines the executive’s ability to act as an objective watchdog.

The pressure on athletic directors for their high-profile sports to succeed is already great — Smith, for instance, earns a guaranteed $1.07 million annually, with his performance measured in large part by the win-loss record of the Buckeyes’ football team. Adding incentives for benchmarks like bowl game appearances only raises the stakes.

A review of the contracts of the athletic directors at Ohio State, Michigan, Toledo, and Bowling Green reveals language common at Division I universities. Each stands to cash in when their teams win.

Smith earns a bonus amounting to four weeks of his base salary of $800,000 if the OSU football team reaches a Bowl Championship Series game. UT athletic director Mike O’Brien collects $9,200 if one of the men’s basketball teams advances to the National Invitation Tournament or NCAA tournament. And BGSU’s Greg Christopher receives $11,000 if the hockey team sweeps the CCHA regular-season and tournament titles.

Perception of conflict

Ellen Staurowsky, a former college athletic director and a sport management professor at Drexel University, said linking payments to the success of programs is a “classic formula for conflict.” Noted higher education attorney Sheldon Steinbach called the bonuses disconcerting.

“The concern I have is that the athletic director might have a tendency to look the other way at potential infractions and other legal, moral, and ethical obligations that the school should enforce in order to ensure the institution has a winning program,” Steinbach said.

Smith disagrees the incentives present a conflict, though he understands the perception.

“The thing that bothers me about that question is that it implies and assumes a lack of integrity,” Smith said in a phone interview. “That’s the thing that really bothers me. To think that I would make a decision in order to gain whatever my bonus is says I have no integrity.

“And secondly, if I did do something like that — lacked integrity — then I would be risking my base. So it just doesn’t make business sense, if you look at it that way.”

An upended culture

The scandal at Ohio State further fueled perceptions of a tail-wagging-the-dog culture at major universities, where administrators look the other way as long as the golden goose athletics program is reeling in wins and dollars.

The Buckeyes’ 12-1 season in 2010 was built on deceit.

Jim Tressel resigned May 30, 2011. In December, the NCAA charged Ohio State with failing to monitor its football program. OSU faces a bowl ban this season, scholarship reductions, and three years of probation. The school was forced to vacate the 2010 season and forfeit the $338,811 it received through the Big Ten for appearing in the Sugar Bowl. OSU also was required to send its Sugar Bowl trophy to the NCAA, according to the public infractions report.

Smith, however, was not required to return his bonus. OSU president Gordon Gee, who declined to comment for this story through a university spokesman, has repeatedly praised Smith’s handling of the scandal.

Smith said a contract incentive tied to the athletic performance of a team has never colored his decision-making.

“Why would I make a decision that could get me fired and risk losing my base salary?” Smith said.

A common practice

Athletic directors note their reward-based deals are similar to executive contracts in other businesses, and that team performance incentives are just one component of the bonus formula.

“This is no different than any management position at various companies,” O’Brien said.

Athletic directors are also measured by compliance with NCAA rules, how much money the athletic department raises, and athletes’ academic performance.

O’Brien receives an annual bonus of five percent of his $183,855 base salary if the Rockets’ athletic department is not charged with a major violation of NCAA or MAC rules.

Christopher’s contract includes seven pages outlining incentives worth up to $340,500 — the largest maximum bonus in the MAC and the seventh-largest among ADs at public universities. (The annual bonus Christopher earns is more standard; the peak amount would require every Falcons team to win a national championship among other yardsticks).

He can earn up to $46,000 on top of his base salary of $173,665 for meeting specified fund-raising and marketing goals. Christopher receives a $7,500 bonus if the number of major gifts — donations of at least $50,000 — he “personally closed” or helped secure increased by 10 percent from the previous year and $10,000 if the athletic department’s net fund-raising revenue rose by 20 percent from the previous year.

Smith cashes in when players graduate, though the standards are lower for the department’s revenue-generating programs — a difference in part attributable to football and men’s basketball players leaving OSU early for professional opportunities.

Winning a priority

Ultimately, however, athletic directors are hired to produce winning teams, and their contracts reflect this priority.

Michigan athletic director Dave Brandon is rewarded up to 35 percent of a $165,000 bonus pool for his “overall performance” — a category linked in part to the success of the Wolverines’ athletics programs. (Brandon’s other incentive clauses are tied to financial and capital issues). A UM spokesman said the bonus is not attached to the success of specific teams, though there was no record available of the criteria Brandon must meet. Appraisal of his performance is “in the discretion of” UM president Mary Sue Coleman, according to Brandon’s contract.

“A significant aspect of the responsibility of any AD is to hire good coaches who recruit talented student-athletes and build teams that are competitive and relevant in the quest for championships. It is not the only measure — but certainly is an important one,” Brandon said in a statement. “To have some aspect of performance pay attached to these desired outcomes seems most appropriate.”

At BGSU, Christopher earns a $4,000 bonus each time the football, men’s and women’s basketball, and hockey teams win a regular-season conference championship and additional incentives for postseason success. With the basketball teams, for instance, he receives $4,000 for a MAC tournament title, $3,000 for a bid to the NCAA tournament and $1,000 for each tournament victory.

Christopher is also rewarded when BGSU’s Olympic sports programs win — $2,500 for a MAC regular-season or tournament championship; $2,500 for a postseason appearance.

“I believe in the general concept of incentivizing staff, but I also believe that my time allocation is not influenced necessarily by the incentives,” said Christopher, who came to Bowling Green in 2006. “I probably spend my time virtually like other Division I ADs. The contract that I have was put together by [former president Sidney] Ribeau when I arrived at BGSU. Being a first-time AD, I frankly didn’t think a whole lot about what was in there.”

Christopher added: “You can certainly argue the merits of any one incentive that might be in my contract or in any of the coaches’ contracts. But I think incentives are, for better or worse, commonplace in athletics.”

They are indeed part of the college athletics culture. Bonuses are a matter of course for coaches. John Calipari, for instance, collected an additional $750,000 for leading the Kentucky basketball team to this year’s national championship. And according to a USA Today poll, 16 of the 22 athletic directors at MAC and Big Ten schools subject to open-records requests had incentive clauses, many of which are linked to winning.

Steinbach, however, draws a line between administrator and coaches bonuses. “The only reason to be critical of athletic directors rather than coaches is at the end of the day the athletic director is the master of the manor and should not be deterred from making appropriate decisions because he or she has a financial interest in the outcome,” said Steinbach, the longtime former staff counsel for the American Council on Education.

UCLA’s Dan Guerrero, president of the National Association of Collegiate Directors of Athletics, did not return a message for comment.

Smith, who can earn a maximum of $100,000 in bonuses tied to the success of OSU teams, said he has never heard of a financial carrot influencing a decision by a fellow AD.

“That would be a great roundtable discussion at our national association meeting,” Smith said.