FINAL REPORT OF THE

ATHLETICS REVIEW WORKING GROUP (ARWG)

THE UNIVERSITY OF AKRON

July 1, 2021

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THE UNIVERSITY OF AKRON

To: Gary L. Miller, President From: Matthew Juravich, Ph.D., Associate Professor, Management Date: July 1, 2021 Re: Athletics Review Working Group Final Report President Miller, On behalf of the Athletics Review Working Group (ARWG), I submit this report which provides a detailed evaluation of as well as recommendation(s) for The University of Akron’s (UA) athletics program. At your direction, the ARWG commenced on September 9, 2020 and proceeded to meet nine times during the 2020-2021 fiscal year (FY). During these 60-minute sessions, the group focused on data review and information sharing relative to our athletic department structure, operation(s), budget, and value proposition. We also focused on contextualizing our athletics operation with respect to UA’s overall budget as well as our placement within the Mid-American Conference (MAC) and the NCAA. These discussions culminated with sessions dedicated to critically examining opportunities and recommendations to optimize and improve our operations moving forward. It should also be noted that our discussions were informed by The University’s Board of Trustees (BOT) who communicated a “strong determination to continue the Akron Zips NCAA Division I athletics program” to members of the ARWG during our deliberations. In summary, the ARWG recommends the implementation of strategies focused on reducing General Fund (GF) support for athletics. Several were explicated in this report and should serve as a foundation for further strategic improvement(s) for our program. While continued cost control measures will be a vital part of this, we feel the focus should be on developing a plan for strategic investment in conjunction with appropriate incentives for revenue generation. As such, targeted investment to optimize human resources is a necessary first step in building a foundation to strategically increase revenues in a sustainable way for UA athletics. This certifies that the membership of the ARWG has endorsed and approved this report.

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The ARWG looks forward to working together to better optimize, leverage, and align UA athletics to serve the campus community more effectively and strategically moving forward. Please let me know if you have any questions. Best, Matthew Juravich, Ph.D. Associate Professor, Management

ATHLETICS REVIEW WORKING GROUP (ARWG)

Chair:

• Dr. Matthew Juravich – Associate Professor, Management; Faculty Athletics Representative

Membership:

• The Honorable Deborah L. Cook – Senior United States Circuit Judge of the United States Court of Appeals for the Sixth Circuit

• Ms. Cindy Crotty – The University of Akron Board of Trustees • Mr. Michael Dowling – The University of Akron Board of Trustees • Mr. Kevin Feezel – President, Undergraduate Student Government • Dr. Tonia Ferrell - Director, Prospect Development and Campaigns, The University of

Akron Foundation • Mr. Jeffrey Franks – Professor of Bibliography • Mr. David Harris – President, UA National Alumni Board • Mr. Oliver Huffman – President, Student-Athlete Advisory Committee (SAAC) • Ms. Melissa Jackson – UA Women’s Basketball Head Coach • Mr. Nathan Mortimer – Vice President, Operations • Dr. John Queener – Professor, Counseling Psychology • Dr. Rolando Ramirez – Associate Professor, Biology; Chair of Faculty Senate Athletics

Committee • Mr. Stanley Smith – Associate Professor of Practice, Disaster Science and Emergency

Services • Mr. Glen Stephens – President, G. Stephens, Inc.; former UA football player • Ms. Deborah Stone – Interim Director, Academic Achievement Programs • Dr. John Wiencek – Executive Vice President and Provost • Mr. Larry Williams – Director of Athletics

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Overview: The Athletics Review Working Group (ARWG) of The University of Akron commenced on September 9, 2020 at the request of President Gary L. Miller. At the time, Miller noted "Zips athletics is an important student opportunity and community connector for the University. It is vital we understand how best to configure the program to be competitive and supportive of the University in this time of great change. It is clear that we need a better strategy with a significantly lower cost profile, and I am confident this group of students, faculty, administrative and community leaders will give us sound advice for the future. I want to thank them for their commitment to the University and our student athletes." The ARWG met nine times during the 2020-2021 fiscal year (FY) on the following dates: September 14, October 20, November 12, December 8, January 21, February 18, March 16, April 22, and June 9. During these 60-minute sessions, much of our effort was focused on data and information sharing relative to our Athletics Department structure, operation(s), budget, and value proposition. We also focused on contextualizing our athletics operation with respect to The University of Akron’s (UA’s) overall budget as well as our placement within the Mid-American Conference (MAC) and the NCAA. These discussions culminated with sessions dedicated to critically examining recommendations/opportunities to optimize and improve our operations moving forward. As part of this broader discussion, the ARWG noted that in the context of the MAC, we allocate nearly $2.00 per student to athletics (inclusive of facility debt service which is regarded as a University obligation even though the budget allocates it to athletics) while other schools in the conference operate within a range from $1.09 - $1.64 per student. Athletics Department Summary:

Organizational Chart:

Athletic Director

Sr. Assoc. A.D.Institutional

Services (vacant)

Assoc. A.D. Internal Operations

Assoc. A.D. External Operations

Assoc. A.D.Facilities & Events

Sr. Assoc. A.D.Development

Administrative Assistant (vacant)

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Sports:

Men’s Women’s Co-ed Baseball Basketball Rifle

Basketball Golf Football Lacrosse Soccer Soccer

Track & Field Softball Swimming & Diving Track & Field, Cross Country Volleyball

465 student-athletes

• 113 Full athletic scholarship • 175 Partial athletic scholarship • 177 No athletic scholarship

Sport-by-sport summary:

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Demographic data:

Student-Athlete Value Proposition (SAVP) As part of our discussions, the ARWG identified and discussed our Student-Athlete Value Proposition (SAVP) which asserts that UA student-athletes: Enhance the academic experience for our student body through:

• Diversity (racial and gender) o 40% minority, many first-generation college students

• Connection to UA (pride) o Social engagement (watching/attending games)

• Opportunity o Approximately 350 additional students (through band, dance, cheer, experiential

learning opportunities, etc.)

Augment the academic experience for our faculty and staff via:

• Participation o Various majors (across programs, departments, colleges)

• Pacesetting in the classroom o High GPAs (above UA average) o 5% of Dean’s List o Approximately 80 Williams Honors College Scholars

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• Diversity (gender, race, experiential) • Enhanced graduation success rate (GSR)

o Significantly higher than non-SAs

Benefit The University of Akron:

• As “a conduit to campus” o Approximately 300,000 unique visitors in FY2016

• Through recognition and brand awareness o Media publicity, national TV exposure o $ from MAC media contract

• Enhanced recruitment potential o Allows UA to be competitive with peer institutions on student experience

• Unique fundraising opportunities o 20% of alumni give to athletics o $ in targeted giving (approx. $3,000,000 in FY2019)

• Tuition revenue earned o Approximately 70% of SAs receive some or no scholarship aid

Connect to our community through:

• Outreach opportunities o Service to Akron and surrounding area

Literacy education Mentoring Volunteering

• Social gatherings o UA Alumni Association watch parties

• Access to partners o Philanthropic endeavors o Corporate sponsorships

• Fan experience o Build community pride o Connect with region and state o Generate passion for UA (current students, alumni and friends)

The Cost of Athletics at The University of Akron Review summary The ARWG reviewed the athletics budget and financial data for the University and other MAC institutions to examine and contextualize the costs/expenses of running our athletics program as well as earned revenues attributable to Zips athletics. During our review of budget and finances, the approximately $5 million annual debt payment for InfoCision Stadium and the Louis and Freda

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Stile Athletics Field House was acknowledged as a recurring expense. This debt is a commitment of the University (not athletics alone, even though it is recorded in athletics’ financials) and cannot be alleviated prior to previously established pay-off date(s). From a budgeting standpoint, the ARWG’s goal was to review FY2021 in the context of FY2020 (actual performance). The University’s stated goal for FY2021 was to reduce the General Fund’s operating support for athletics by $4.4 million through some combination of athletics revenue increase(s) or expenditure reduction(s). The University's actual overall revenues (attributable to athletics) decreased by $2.6 million (from $7.3 million in FY2020 to $4.7 million in FY2021), primarily due to COVID-related reductions. Additionally, and most importantly, the University recognized an actual year-over-year expenditure decrease (i.e., University financial support of athletics) of $6.3 million from FY2020 ($27.3 million) to FY2021 (approximately $21 million). The ARWG notes that the approved FY2022 budget maintains a similar level of operating support as compared to the FY2021 original operating budget. See Appendix A for a full budget summary for FY2020-FY2022. In comparison to other MAC schools, the group reviewed annual expenditures and revenues in comparison to four Ohio institutions (Ohio University, The University of Toledo, Kent State University, and Bowling Green State University) using data reported by NCAA Agreed Upon Procedures for FY2019. These data are provided in Appendix B1 (expenditures) and B2 (revenues) and can best be summarized by stating that continued reduction in institutional support (via the General Fund) via targeted athletics-specific revenue increases are needed to further optimize our athletics program. As such, specific recommendations (e.g., increased fundraising, optimized scholarship allocations, etc.) are detailed in subsequent sections of this report. Football An ongoing discussion has centered on UA either dropping its football program altogether or dropping to a lower level of competition (i.e., FCS or Division II). The ARWG did not spend significant time investigating these options for two important reasons. First, The University of Akron Board of Trustees (BOT) communicated a “strong determination to continue the Akron Zips NCAA Division I athletics program” to members of the ARWG during our deliberations. Relatedly, data were shared on this issue during labor negotiations between the University and Akron-AAUP in 2020. Here, an understanding was developed that it is not possible for a member of the MAC to drop to FCS/Division II football and remain in the MAC to compete at the Division I level in other sports. This is due to the MAC requiring its schools to offer Division I Football Bowl Subdivision (FBS) football as a condition of membership. Previously shared data indicated that to exit the MAC, the University would face costs of approximately $18 million (see below) as well as the payment of an entrance fee to a new conference. Relatedly, annual revenue loss was estimated to be approximately $5 million (see below) if such a move were to occur.

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Direct and Immediate Costs

• $3,700,000 MAC withdrawal fee and penalties • $12,725,000 Liquidated damages in football contracts FY2022-FY2027 • $2,000,000 New conference entry fee

Total: $18,425,000 exit/re-entry costs

Annual Revenue Forfeited

• $2,120,000 Game guarantees received (five-year average FY2021-FY2025) • $1,500,000 Conference revenue distribution (broadcast rights, basketball incentives,

College Football Playoff) • $350,000 Naming rights payment reduction (estimated) • $350,000 Sponsorships reduction (estimated) • $300,000 Fundraising reduction (estimated) • $250,000 Ticket sales reduction (estimated) • $25,000 Concessions reduction (estimated) • $60,000 NCAA scholarship support reduction, due to decreased scholarship offerings

Total: $4,955,000 foregone revenue Finally, any financial savings that might be achieved by moving to a lower level (estimated $638,000 in reduced scholarships and $200,000 from reduced coaching staff salaries) would be offset by estimated increased travel expenses ($800,000). Also, the nearly $5 million in lost revenue would be an additional financial burden to the University. Given the well-publicized financial challenges at UA, the ARWG does not feel the institution is able to seriously entertain incurring these significant expenses at this time. Thus, due to the BOT’s commitment to remain a Division I athletics program, as well as the agreed-upon financial consequences of dropping down a level, the ARWG did not pursue this as a viable opportunity at this time given UA’s financial position. The ARWG also notes that impending changes at the NCAA level due to imminent name image and likeness (NIL) legislation as well as ongoing deliberations on the definition of amateurism by the Supreme Court of the United States (SCOTUS) will likely have a profound impact on this issue in the near future. Opportunities/Recommendations

Broadly, it was apparent to the ARWG that Athletic Department revenue generation (primarily driven by ticket sales, MAC and NCAA distributions, and game contract guarantees) lags our MAC counterparts. Specifically, while athletics generated revenue ranges from $0.56 to $1.08 per $1.00 of direct support (across the MAC), UA is only leveraging $0.43 for each $1.00 of direct support. As such, UA should strive to enhance revenue generation such that we first approach, then exceed the median of other MAC schools. To do so, improvements leading to a ratio of $0.65- $0.75 independent revenue per $1.00 of direct support should be the target.

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The ARWG has developed recommendations focused on enhancing revenue generation in conjunction with optimizing operations. Target area #1: Philanthropy/fundraising Current situation/opportunity: Fundraising through athletics is an area of opportunity for strategic investment to enhance revenue generation. Specifically, by optimizing the fundraising operation specific to athletics, efficiencies and productivity could be increased. Currently, the University provides support for fundraising efforts for athletics. Since FY2018, athletics fundraising has been either the largest or second largest area of targeted support among UA donors in comparison to other areas of giving (e.g., academics, general scholarships, etc.). Further, fundraising staffing levels at the University are below full-time employee (FTE) and staff averages across the MAC. Thus, through targeted and strategic investment in staffing as well as optimizing operations, there is an opportunity to enhance athletics fundraising to increase support of programs, facilities, and student-athlete (SA) scholarships. Specifically, the ARWG feels this represents an opportunity to increase giving if proper priority is given to staffing and incentivizing UAF personnel. The ARWG feels that the Athletics Department (and the UAF) needs to make athletics-targeted fundraising a priority. Recommendation(s): Over the next four FYs, increase annual fundraising goal to $4 million (from approximately $3 million in FY2019). Specific targets to include:

1. Invest in additional staffing for fundraising for athletics at UA.

a. Hire a full-time Annual Fund Director. The annual fund helps build the pipeline for the major and principal giving donor base, which is needed to support greater fundraising goals as recommended. A full-time employee with sole focus on the effort would increase fundraising more quickly and yield greater results over time. The position could also serve as an events manager for golf outings or other events with fundraising components or stewardship. Currently, there is less than one FTE working to build up and re-establish the Z-Fund annual fundraising program.

b. Identify/hire a Director of Development/Assistant Director of Development.

c. Hire at least one additional fundraiser so that more donor prospects can be qualified,

cultivated and solicited for support. More fundraisers can provide focused support to specific coaches/sports to maximize fundraising results by team and would bring us more in line with our peers in the MAC.

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2. Develop a strategic fundraising plan for athletics.

a. A strategic plan will provide the roadmap for building the case for support among the donor base and establish priorities that fundraisers can present as opportunities to donor prospects.

b. Specifically address how to better utilize head coaches in coordinated and targeted fundraising efforts. Men’s soccer could be a template here.

3. Endowment a. Focus on endowed scholarships to offset University support for scholarships.

b. Earmarked funds for operating support for sports to alleviate pressure on support

from the General Fund.

c. Endowed positions (e.g., athletic director, head coaches, etc.) to supplement/ replace funding already directed toward these positions or additive to allow discretionary funds to continue to elevate program(s).

4. Optimize leveraging of central development fundraising operation (e.g., fundraisers,

support staff, resources, etc.) to maximize support for athletics among donor base, particularly in major and principal giving. a. Coordinate with Alumni Association to better connect with alumni.

5. External relationships a. Pursue corporate sponsorship of promotional games.

b. Coordinate with (city of) Akron, businesses for events and branding opportunities.

Target area #2: Scholarship support/allocation Current situation/opportunity: Upon review of financials, student aid/scholarship support does not appear to be out-of-line with other MAC schools. However, the UA athletics’ operation is on the high end in terms of annual expenses which is most directly attributable to facilities debt service and support staff/ administration, compensation, benefits and bonuses. Approximately half (i.e., 200-250) of UA student-athletes receive some form of scholarship support, representing $5-7 million annually of scholarship discount that the University charges to the athletics’ budget. The student-athlete discount accounts for about ten percent of the total discount bill at the University each year. As a practice, discounting reduces net revenue generated/received via tuition dollars. However, it is a tool that all universities use to attract and

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retain students. Reducing the discount can help the University’s bottom line; however, we need to be cognizant of NCAA and MAC requirements as well as the need to remain Title IX compliant. Increased fundraising in the area of endowed scholarships, and to a lesser extent annual scholarship support, will help with the situation (see Philanthropy/Fundraising section above). There are possible opportunities within scholarship support/allocation to provide budget relief. Specifically, the ARWG feels this represents an opportunity to leverage fundraising specific to scholarship support. Recommendation(s): With respect to optimizing our scholarship operation, the ARWG recommends focusing on leveraging fundraising for student support to reduce reliance on the General Fund. To motivate all involved, there could be a sport-by-sport leveraging of funds raised for student support (against available general funds). Coaches would then view fundraising as an important component of their job role if the number of scholarships available to them could be directly impacted by their ability to fundraise some portion of those scholarships. Over the next four FYs, decrease Athletic Department scholarship expenditures by $400,000. Specific targets to include:

1. Evaluate charging in-state tuition to all student-athletes. (The difference is approximately $3,500 between in-state and out-of-state tuition).

a. Consideration will need to be given for partial scholarships.

2. Investigate prioritizing/tiering of scholarships among our offered sports (i.e., similar to

baseball and women’s lacrosse).

a. Tiering scholarships could reduce or eliminate institutionally funded scholarships for certain sports.

3. Feasibility assessment of using tuition waivers, if allowed by the State of Ohio, for merit, including athletics, as a scholarship allocation solution.

a. The State of Illinois permits universities to offer tuition waivers based on a

variety of scenarios, including merit athletics.

(1) Waivers are capped at a certain percentage of total undergraduate tuition revenue, and the process is transparent per rules established by the state.

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Target area #3: Athletics as a marketing/recruiting supplement (for the University) Current situation/opportunity: Many consider athletics as the “front porch” to an institution, as a university’s brand is typically tethered to its sport programs. Relatedly, athletics can be considered as an extension of an institution’s marketing and recruitment efforts in terms of visibility by providing connections to community members, employees, students, alumni, and prospective students through viewing and attending athletic contests and by supporting student-athletes. Further, there is evidence that applications and enrollment can increase with greater athletic success and exposure. Finally, data suggest that most accepted students who do not ultimately enroll at UA choose another Division I institution in Ohio. Recommendation(s):

1. Streamline UA branding

a. One logo, one brand, one identity, etc.

2. Engage coaches in recruitment efforts for the University

a. When coaches visit high schools, distribute admission materials to guidance counselors.

3. Leverage athletics during regular recruitment events

a. Establish and optimize intra-campus partnerships (e.g., between admissions and athletics).

b. Collaborate directly with UA Admission’s Office.

c. Target on-campus events, particularly when those events include middle school or high school students.

d. Coordinate campus tours for families during sporting events to showcase campus experience.

e. Promote upcoming UA visit days for high school students during sporting events. 4. Better coordinated University advertising and promotion to showcase and promote UA

during broadcasts

a. Better promote UA athletic success to enhance brand image and reputation.

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5. Maximize InfoCision Stadium-Summa Field utilization

a. Targeted events focused on high school-aged prospective Zips.

(1) Concerts, high school band competition, etc.

Other Target Areas: Formal strategic planning In addition to recommending the development of a strategic fundraising plan for athletics (see page 9 above), the group feels that an all-encompassing, comprehensive strategic plan (covering the entirety of our Athletics Department) should be initiated. Many examples of such plans exist, but the ARWG recommends a five-year plan for consideration as a starting point. Here, the department’s goals can be identified/defined with full consideration given to prioritization, resource allocation and alignment, and data collection and utilization strategies. Sport prioritization Examination of an athletics model where sports are prioritized based upon revenue generation potential (with consideration given to associated expenditures). Most sports are providing the maximum number of scholarships allowed. Given the realities, we may need some sports to rely more on walk-on athletes and recruit talent that do not need a scholarship to get them to UA to compete in Division I sports. This may reduce our competitiveness in those sports and ultimately, provide two tracks for athletics – one focused on competition (e.g., football and basketball – where revenues can be substantial) and the others focused on broad participation of non-scholarship athletes. Also, consideration would need to be given to any potential Title IX implications. Additionally, there could be an even larger emphasis on recruiting Ohio talent. Positives for Ohio talent include in-state tuition, increased attendance, and higher retention rates. Increasing number of “buy games” for football It should be noted that during FY 2021-2022, our football team will play a second “buy game” which will positively impact revenue generation in the form of an additional game guarantee. Moving forward, this revenue source could be further leveraged by adding a third “buy game” to our annual football schedule. Several schools in Group of Five conferences currently do this (e.g., Kent State University) to generate additional revenue. However, it should be noted that these games are often scheduled many years in advance so there would likely be a gap between adopting such a strategy and realizing the additional revenue. In addition, there are concerns related to student-athlete safety that would need full consideration prior to adoption. Enhancing rental income from facilities UA does not currently employ an individual tasked exclusively with coordinating stadium programming and usage. Also, athletics may not currently be incentivized to rent facilities. The ARWG recommends exploring innovative methods of revenue generation based upon greater utilization of InfoCision Stadium-Summa Field for special events.

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Academic success modeling UA athletics model of providing academic support has been extremely successful. Consider using this program as a template for promoting student success for our general student population. Investment required would need to be assessed versus anticipated gains in retention, persistence, new student recruitment, etc. This should also be considered in conjunction with University-wide new student recruitment plans/initiatives. If the strategy is to grow enrollment by adding students at the margins, this becomes a much more prudent consideration as these students will need a clearly defined support system to promote their success as a UA student. Building bridge(s) between athletics and academics Several opportunities exist to further integrate UA athletics into our academic community. First, a series of brown bag lunches/information sessions could be established where faculty and staff are invited to join representatives from athletics (e.g., coaches, administrators) for conversations and data sharing sessions. Another potential option could center on experiential learning/internship opportunities connecting academic departments with functional areas in athletics. For example, the School of Communication could provide students to assist in media and social media support for our athletics operation. Similar arrangements could be developed with other departments to provide real-world experience to UA students while also supporting the operations of our Athletics Department. Increasing sport portfolio Consideration of adding sports to positively impact enrollment. It is anticipated that additional sports would rely heavily on walk-on/ partial scholarship student-athletes. As such, revenue from tuition payments, housing, etc., could positively impact the bottom line of the University’s budget, assuming start-up and operational costs associated with each new program were kept to a minimum. Modernize accounting procedures The ARWG also suggests an analysis of current accounting procedures and conventions (as dictated by the NCAA) versus alternatives (that could be more representative of the reality of Athletic Department budgeting at “under-capacity” institutions like UA). Currently the NCAA forces members to utilize the common accounting methodology known as Agreed Upon Procedures (AUP) which can create a divergence when computing accounting vs. true economic costs. For example, as many athletic programs across Division 1 have cut teams in the past year to “reduce costs,” one of the great unanswered questions is whether these decisions considered the consequences of lost tuition revenue paid by non-scholarship/partial scholarship athletes associated with these eliminated programs, as following AUP convention does not provide a framework for properly accounting for this important revenue source. As this revenue is not typically included as team-specific athletic department revenue, this approach paints an incomplete picture of the expense to revenue relationship for an individual team. The ARWG feels that further investigation is warranted here.

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Conclusion:

In summary, the ARWG recommends the implementation of strategies focused on reducing General Fund support for athletics. Several were explicated in this report and should serve as a foundation for further strategic improvement(s) for our program. While continued cost control measures will be a vital part of this, we feel the focus should be on developing a plan for strategic investment in conjunction with appropriate incentives for revenue generation. As such, targeted investment to optimize human resources is a necessary first step in building a foundation to strategically increase revenues in a sustainable way for UA athletics.

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Appendix A

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Appendix B1

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Appendix B2