Innovative Funding for College Athletics
The college athletics arms race has shown no sign of abating in recent years. In fact, the contrary is true despite the almost monthly bemoaning by Myles Brand of the NCAA and the annual crying of the Knight Commission. The simple fact remains that college athletics at the Division I-A level is big business and needs more and more money to compete. It is the job of athletic directors to find that money and the creative ones are finding new ways tap alumni and friends of the university all the time.
In a very interesting article in today's Wall Street Journal special March Madness section, which unfortunately is only available online to subscribers, the Journal described how a select few universities had established venture capital investment programs to benefit their athletic programs. Now, many, if not most, colleges and universities with sizable endowments invest a portion of that endowment in alternative investment vehicle that often include venture capital funds. What makes these particular funds unique is that they are set up solely to benefit the athletic department of the particular university and are designed in a manner in which the donor group of investors receive tax benefits.
Four universities were highlighted in the sidebar to the article which focused on a program being established at Duke. The program at Duke was too new to determine its success, but the donors had essentially guaranteed Duke against loss, which would cast some doubt in my mind as to the deductibility of their gift. Anyway, the three schools featured in the sidebar in addition to Duke were UCLA, Northwestern and Stanford.
UCLA began its program in 2000 with $400,00 and still has $400,000 in it with none having gone to the athletic program as of yet. It is too early to judge it.
Northwestern began its program in 1996 with $500,000 and it now has $2.5 million. It has paid out many benefits to the department in including new weight room for the football team and new turf fields for the women's national champion lacrosse team and field hockey team.
Stanford began its program in 1982 with $100,000 and it now has $85 million. It has paid out considerable benefits including funding for men's volleyball and women's synchronized swimming. It just made an allocation of $30 million to the renovation of Stanford Stadium. It is a significant reason why Stanford is the annual winner of the Directors' Cup, representing achievement in all sports contested by Division I-A school.
One interesting point is that all four of these schools have, in addition to a collection of deep-pocketed alumni, top-ranked business schools. I don't think it's a coincidence. I also don't think for a minute that it's just a coincidence that this type of athletic funding was first proposed and saw its greatest expression at Stanford in the heart of Silicon Valley, where venture capital is so ingrained into the day to day culture. There may well have been some of Stanford's Google shares in that pot. It will be interesting to see how many other schools jump on this bandwagon.
In a very interesting article in today's Wall Street Journal special March Madness section, which unfortunately is only available online to subscribers, the Journal described how a select few universities had established venture capital investment programs to benefit their athletic programs. Now, many, if not most, colleges and universities with sizable endowments invest a portion of that endowment in alternative investment vehicle that often include venture capital funds. What makes these particular funds unique is that they are set up solely to benefit the athletic department of the particular university and are designed in a manner in which the donor group of investors receive tax benefits.
Four universities were highlighted in the sidebar to the article which focused on a program being established at Duke. The program at Duke was too new to determine its success, but the donors had essentially guaranteed Duke against loss, which would cast some doubt in my mind as to the deductibility of their gift. Anyway, the three schools featured in the sidebar in addition to Duke were UCLA, Northwestern and Stanford.
UCLA began its program in 2000 with $400,00 and still has $400,000 in it with none having gone to the athletic program as of yet. It is too early to judge it.
Northwestern began its program in 1996 with $500,000 and it now has $2.5 million. It has paid out many benefits to the department in including new weight room for the football team and new turf fields for the women's national champion lacrosse team and field hockey team.
Stanford began its program in 1982 with $100,000 and it now has $85 million. It has paid out considerable benefits including funding for men's volleyball and women's synchronized swimming. It just made an allocation of $30 million to the renovation of Stanford Stadium. It is a significant reason why Stanford is the annual winner of the Directors' Cup, representing achievement in all sports contested by Division I-A school.
One interesting point is that all four of these schools have, in addition to a collection of deep-pocketed alumni, top-ranked business schools. I don't think it's a coincidence. I also don't think for a minute that it's just a coincidence that this type of athletic funding was first proposed and saw its greatest expression at Stanford in the heart of Silicon Valley, where venture capital is so ingrained into the day to day culture. There may well have been some of Stanford's Google shares in that pot. It will be interesting to see how many other schools jump on this bandwagon.
posted by Mark at 10:03 PM
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