The University Record, March 13, 2000

Martin meets the press first day on the job

By Jane R. Elgass

Interim athletic director Bill Martin (right) made a point of personally introducing himself to all of those attending his March 6 press conference. Photo by Bob Kalmbach
With a cheery smile reflecting the sparkling blue skies of an unseasonably spring-like day outside, Bill Martin talked with a small group of reporters March 6 at his first official meeting with the media since being recommended as interim athletic director on March 3 by President Lee C. Bollinger. His appointment will be acted on by the Regents at their March 20 meeting.

Martin told those assembled in the television studio at Crisler Arena that he considers it “an honor and privilege to serve the people of the state of Michigan” and that he will base his actions as interim athletic director “on the fundamental mission of the University—education.”

“The student-athletes are first and foremost in my mind,” he said, even though other issues, such as another projected budget deficit reported by the Ann Arbor News March 3 and ongoing problems with the basketball program and the NCAA, claim the media’s attention.

Martin has been serving since last spring on an advisory committee appointed by Bollinger to review the Athletic Department’s finances and governance, so he was well-briefed on the most recent deficit potential prior to the Ann Arbor News article. “I’m very familiar with each line item in the budget,” he said.

Martin is familiar with sports financing, having served on the U.S. Olympic Committee’s budget committee. He noted that, in contrast to the U-M’s problems, the Olympics’ $125 million budget is something of “an embarrassment of riches. We have a hard time spending it.”

Martin at his March 6 press conference. Photo by Bob Kalmbach
Martin said that while the Athletic Department “is doing a pretty good job on the cost side,” the revenues in such “soft” areas as licensing, gifts and advertising income are a problem. “The projections have been based on royalties and licensing, and I don’t want to budget that way,” he stated.

The financing of collegiate athletics is becoming more difficult nationwide, Martin noted, and the U-M is not immune to those problems. An interim report of the advisory committee, released last June, noted that athletic departments are under increasing financial pressure, reflecting the expense of adding new sports, few of which produce enough income to cover expenses, with the revenue-generating sports bearing an increasingly large financial burden. “Even for the revenue sports, the future is uncertain,” the report stated, adding, “The revenue impact . . . cannot be predicted and therefore adds even more uncertainty and risk.”

Martin also stated that there will be no “quick fixes” for the budget deficit. “I’m not taking a short-term view. I want to put in place a program that puts us in the right position over the next few years. I want to work on [finances] from a long-term perspective, to get a foundation in place for the permanent director.”

Asked what kind of authority he had, Martin said it is the same as a permanent director would have. “I can do everything; that was my number one requirement. I’m not a caretaker and I’ll do whatever is necessary to do the job.”

Martin said his list of priorities is nearly identical to one Bollinger had drafted:

  • Rebuild the staff where necessary. “One of my first priorities is to get a good management team.”

  • Create mechanisms to ensure financial stability.

  • Clear up the problems with the NCAA and the basketball program.

  • Address low morale in both the department and among the alumni base.

  • Ensure the well-being of the student-athletes “by offering them the best academic training and counseling we can.”

    Martin feels the low staff morale is partly due to lack of communication and he plans to send out e-mail messages every week or so about what has happened and what is coming up.

    He had already met with several key staff members prior to the press gathering and was to meet with all of the staff on March 7. He’s counting on the staff, which he described as “bright, loyal and committed,” to offer cost-cutting suggestions, and will be handing them cards to jot down those ideas at the March 7 meeting.

    He did tell the reporters that an increase in football ticket prices will not be one of the ways in which the deficit will be addressed.

    Asked how the job offer came about, Martin told reporters he was asked by Bollinger a couple of weeks ago to take on the job during a discussion about the U-M review committee’s work. “He [Bollinger] said, ‘Of course I’d like you to serve as interim director . . .’ That was not on my radar scope,” Martin said, “and I told him I’d have to talk with my family and staff. That was Thursday and I called him back on Monday.”

    Martin said he accepted the position as “payback. This University has meant an awful lot to me. I was accepted as an M.B.A. candidate and I was marginal. It led me to a rewarding profession. I met my wife in Ann Arbor and I’ve raised my kids here. I’ve enjoyed the benefits of the city and the University. My business runs perfectly. Payback is the real answer.”

    Martin is not accepting any compensation for the position. He plans, in fact, to reimburse the University for all meals, plane tickets, etc., that come about as a result of his position.

    He also is not a candidate for the permanent position and will have “no role whatsoever” in the search for a permanent director except to brief final candidates on what the job is about, should they ask.

    The deficit

    Lower-than-projected revenue from gifts, licensing and radio advertising are contributing to an unexpected Athletic Department potential deficit of up to $3 million for the year ending June 30, the Ann Arbor News reported March 3. The anticipated deficit is based on interim financial reports through the end of January.

    The department had last fall predicted an $880,000 surplus for the year.

    The latest projected deficit follows on the heels of a $3.8 million deficit for fiscal year 1998–99, $2.8 million in operating expenses (reported in September 1999) and an additional $1 million in capital expenditures and transfers. Among the elements that contributed to that shortfall, which was made up from reserve funds, were a $1.35 million decrease in licensing royalties, a $400,000 drop in men’s basketball ticket sales (a $200,000 decrease was budgeted), the $500,000 cost of the project ($350,000 more than was budgeted), unrealized income from the unsuccessful M-Vision project, $500,000 less in gift revenues, and increased facilities and post-season expenses.

    In February 1999, President Lee C. Bollinger asked Robert Kasdin, executive vice president and chief financial officer, to head an ad hoc committee to advise him on the long-term financial planning and governance of the Athletic Department. The committee, of which Bill Martin, the newly-appointed interim athletic director, is a member, issued an interim report June 23 with several recommendations related to finances, including advance planning to fund facilities renovation and a focus on controlling expenses, rather than counting on ever-growing revenue.

    The “broadly held perception that we are insulated from national trends, that the Athletic Department is a ‘money machine,’ and that any financial challenges simply reflect unfortunate specific decisions, is not the case,” the report stated. Rather, the report said, the department’s avoidance of financial problems was due to luck, increased licensing royalties in years when U-M teams won national championships, and the periodic addition of an extra football game.

    “Despite years of concern” about expense trends, the report said, “insufficient action has been taken over time. That hesitation to grapple with unfavorable long-term trends in expenses is understandable in light of continuing surpluses. In fiscal year 1999, the music has stopped.”

    Among the recommendations made in the interim report were:

  • Development of a comprehensive capital plan addressing physical plant renovation and repair in a timely manner, with money for the projects a line-item in the annual budget.

  • Projection and delivery of a balanced budget “by carefully controlling expenses and being less dependent upon nonrecurring revenue events.” Funds to ensure any program, staff or faculty expansion must be identified in advance.

  • Development of “greater financial flexibility to address needs and shortfalls during the course of the year in a way that ensures no losses from operations at year-end.” This might include holding the allocation of some funds until mid-year. Currently, the report noted, the only means of making adjustments is cutting costs of spring programs. “This seems unfair and unwise.”

  • Use of the same budgeting and financial analysis systems as those used by the University as a whole.

  • As its audiences begin to understand its needs, the department should seek opportunities “to identify benefactors for gifts that are targeted to help the department attain its highest priorities.”

    In addition to Kasdin and Martin, other members of the committee, which now is reviewing governance issues, are Elizabeth M. Barry, associate vice president and deputy general counsel, and Percy Bates, professor of education, member of the Board in Control of Intercollegiate Athletics and the U-M’s faculty representative to the Big Ten and NCAA.