Coaches’ pay puts colleges to the test

Boise State University’s Cinderella football season had just culminated in an improbable overtime win against Oklahoma in the Fiesta Bowl on New Year’s Day. As Broncos fans celebrated, Boise State President Robert Kustra cast a quick glance at Athletic Director Gene Bleymaier -- who knew exactly what his boss was thinking.

“We both realized we must go back to Boise and do something with Coach [Chris] Petersen’s contract,” Kustra said. “This isn’t something we are doing because he asked for it. We know we cannot afford to stand still and not reconsider his contract.”

Petersen, Boise State’s first-year head coach, made more than $660,000 this season, compared with a reported $3.4-million salary for Oklahoma Coach Bob Stoops, whose team lost three games.

Two days after the Broncos completed their 13-0 season, the University of Alabama minted college football’s first $4-million coach by signing Nick Saban away from the NFL’s Miami Dolphins. Saban’s pay dwarfs the $572,620 earned by university President Robert E. Witt.

This rise in coaches’ pay comes as many universities are also taking on millions in debt to add professional-style luxury suites and private clubs to their stadiums and arenas. The heavy spending already has drawn congressional scrutiny.

Concerns about skyrocketing college coaching salaries surfaced two years ago when the University of Florida successfully lured University of Utah football coach Urban Meyer by offering him $2 million, quadrupling his salary. Notre Dame made a similar offer to sign Charlie Weis from the NFL’s New England Patriots -- and later the Fighting Irish gave Weis a 10-year extension that will pay him about $3.5 million annually.

Given the rapid growth in salaries, many sports observers say the price of a winning college coach has nowhere to go but up.

“You’ll soon see someone at $5 million and then $6 million,” said Gary Roberts, director of Tulane University law school’s sports law program. “The figures will keep going up because the dollars that flow from successful football programs are so enormous that universities will keep hiring coaches who they believe will lead them into the promised land.”

The pay for popular coaches is akin to “the laws of the auction,” said Leigh Steinberg, a longtime Newport Beach sports agent. “At certain universities it’s the head football coach, not the president

Said Kustra: “A school like Boise State, which wants to hold on to one of the best football coaches in America, has to reconsider [Petersen’s] salary and be as competitive as possible. Even if we can’t be as extravagantly generous as some of these contracts we’re hearing about.”

A National Collegiate Athletic Assn. task force last fall issued a call for stronger fiscal accountability on college campuses. NCAA President Myles Brand said that spending “is not at a crisis stage, and it is unlikely it will reach that point, but clearly there are athletics programs facing economic stress.”

NCAA data show that only six Division I-A athletic programs regularly generate surplus revenue. Another half-dozen big-time programs receive modest annual university subsidies, and more than half of big-time programs receive annual university subsidies of 5% or more.

As the cost to compete escalates, Brand cautioned, “the pace means ever-increasing subsidies as well as institutional investments for facilities that could have long-term financial impacts.”

The bidding war for college coaches also is fueled by NFL teams. The University of Louisville twice sweetened football coach Bobby Petrino’s contract, but it couldn’t stop him from leaving for a five-year, $24-million contract with the Atlanta Falcons, making him one of the highest-paid NFL coaches.

Salaries for college football coaches already are augmented by such perks as courtesy cars, private jets, country club memberships and bonuses for improved graduation rates, conference championships and postseason bowl play.

More worrisome, critics say, is the building boom in college football stadiums and basketball arenas.

“When you hire a coach, a long-term contract means perhaps five years,” said Peter Likens, president emeritus at the University of Arizona and chairman of the recent NCAA task force. “But when you commit $100 million in bonded indebtedness to build or renovate a football stadium or basketball arena, you’re talking a 30-year commitment.

“These institutions are betting ... that the trends of recent years showing very dramatic growth in revenue will be sustained for 20 to 30 years,” Likens said. “Economically, that long-term debt is really a very, very serious issue.”

NCAA data show that spending at big-time college athletics programs has increased at two to four times the rate of spending elsewhere on campus -- even as the rate of revenue increases slows.

Sports economists continue to debate the costs of what’s known as the “Flutie Effect.” It refers to a jump in Boston College admission applications sparked by quarterback Doug Flutie’s Hail Mary pass in 1984 that gave his team a last-second victory over the University of Miami in a nationally televised game.

Most economists agree that the Flutie Effect is felt, at least temporarily, but questions linger about whether the cost of building a winning sports program generates a long-term financial benefit.

Universities can expect additional scrutiny from lawmakers who question whether big-time athletics programs merit tax-exempt funding. Some lawmakers also wonder if well-heeled alumni deserve tax deductions for donations to help build sports suites that ultimately guarantee them luxury seats.

In October, the House Ways and Means Committee sent Brand a seven-page letter with questions about an amateur sports system in which the Division I men’s basketball tournament generates the bulk of the NCAA’s $521 million annual budget, along with the $1.2 billion that will be shared during the coming decade by college football conferences that send teams to postseason bowl games. The NCAA’s response filled 66 pages.

Word of Saban’s big contract also rekindled debate on whether college athletes are getting their fair share of the wealth.

Colleges continue to ignore that “players are generating the money,” said David Berri, an associate professor of applied economics at Cal State Bakersfield and a co-author of “The Wages of Win,” a book about modern sports. “The money for coaches is coming from players. When you put it that way, it really is a reverse Robin Hood effect -- rob from the poor, give to the rich.”

Some critics are demanding a salary cap for colleges akin to what pro leagues have instituted for players. But the chances of that occurring are slim. During the 1980s, federal courts found that the NCAA had run afoul of antitrust law when it capped salaries of assistant coaches.

Likens argues that, whether it’s a coach jumping to a school or an athlete turning pro, the free market shouldn’t be impeded. But he worries that controversy created by big-time athletics could hurt thousands of college athletes who compete outside the narrow confines of basketball and football.

“If athletics were a business, you’d shut down the swim team and eliminate volleyball because they don’t make money,” said Likens, a former NCAA wrestler. “But college athletics is not a business and it shouldn’t be managed as a business.”

Boise State’s Kustra, who is overseeing a $36-million stadium renovation that will add luxury suites and an improved press box, acknowledged the conundrum facing university administrators, board members and alumni.

“I don’t have any silver bullets for how to control these costs,” Kustra said. “But the discussion is taking place at the wrong place, if you’re counting on the NCAA.... The solution is going to come about when governance boards at universities across the country get the message, understand what’s going on here and then decide to do something about it.”

Kustra expressed confidence that Boise State would not endanger its overall finances with a reckless sports spending spree.

“Coach Stoops at Oklahoma earns more in a year than the entire cost of our football program,” Kustra said. “Which raises the question of why the big dogs need to spend the kind of money they’re spending when we can reach this level of success.”

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greg.johnson@latimes.com

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Top-paid college football coaches

The highest paid college football coaches don’t come near the top NFL coaches (Seattle Seahawks Coach Mike Holmgren will make $8 million this year, for example), but they still make more than their colleges’ presidents. While USC’s coach is in the top 10, UCLA Coach Karl Dorrell’s $881,000 compensation is also more than his school’s chancellor makes.

*--* Coach’s President’s Football annual School’s annual School coach comp. president comp. U of Alabama Nick Saban $4,000,000 Robert E. Witt $572,620 U of Oklahoma Bob Stoops 3,450,000 David L. Boren 523,094 U of Iowa Kirk Ferentz 2,840,000 Gary Fethke 324,050 U of So Cal Pete Carroll 2,782,320 Steven B. 768,480 Sample U of Texas Mack Brown 2,664,000 William C. 599,727 Powers Jr U of Notre Dame Charlie Weis 2,500,000 Edward A. 476,325 Malloy* Auburn U Tommy 2,231,000 Edward R. 342,600 Tuberville Richardson U of Tennessee Phillip 2,050,000 Loren W. 316,931 Fulmer Crabtree Ohio State U Jim Tressel 2,012,700 Karen A. 600,527 Holbrook Texas A&M; U Dennis 2,012,200 Robert M. 621,181 Franchione Gates*

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* No longer president

** 2004-05

Sources: USA Today, Chronicle of Higher Education. Graphics reporting by Scott Wilson