Worth the Millions to Iowa

By Richard Recchia

Ferentz wants Iowa students to put football in perspective. (Photo: Google Images)

Ferentz wants Iowa students to put football in perspective. (Photo: Google Images)

In 1981, Iowa football coach Kirk Ferentz arrived at the university, where he became the offensive line coach.  The state didn’t have a major league team and college football was the dominant sport.  “When the football season started, we were the Steelers of the entire state,” Ferentz said.

The NFL’s Pittsburgh Steelers are Kirk Ferentz’s benchmark for a rabid fan base.  He remembers the way Pittsburgh embraced the Steelers in the 1960s and 70s. He attended Upper St. Clair High School in Upper St. Clair, Pennsylvania, about 11 miles from Three Rivers Stadium.  In 1972, the Steelers reached the playoffs for the first time in a quarter-century.  Ferentz was 17 years old at the time.  The Steelers won four Super Bowls in the 1970s while Ferentz played linebacker at the University of Connecticut, where he later began his coaching career.

“The city just went Steeler crazy,” Ferentz said in a telephone interview.  “It really uplifted the city, and the city was going through some tough times with the steel industry.”

Following nine years as the offensive line coach, Ferentz was hired for his first head coaching job at the University of Maine.  He then spent time as an offensive line coach in the NFL, with the Cleveland Browns and Baltimore Ravens, before returning to Iowa in 1999 as the team’s head coach.

Ferentz has led the Hawkeyes to two Big Ten championships and a victory in the 2010 Orange Bowl over Georgia Tech.  For his efforts, Ferentz’s salary is among the highest in college football.  His total compensation was $3.985 million in 2013, according to the University of Iowa’s public records department.  Ferentz is the highest paid employee at the University.  The next highest salary is that of basketball coach Fran McCaffery, who makes $900,000, according to the University of Iowa’s public records website.  Sally Mason, the President of the University of Iowa, has a salary of $513,003.  Mason declined an interview request for this story.

“My salary is just a reflection of what the University has decided my value is to them,” Ferentz said.  “That’s a decision every school and every business makes, fundamentally.  How much are you going to pay your employees, and is it worth it to them?”

John Siegfried is an economics professor at Vanderbilt University and the co-author of What Does Intercollegiate Athletics Do To or For Colleges and Universities?, which was published in The Oxford Handbook of Sports Economics.   “Salaries aren’t based on fairness,” Siegfried said, in an email.  “They are based on supply and demand.  So long as there is a rat-race to win, and so long as winning cannot be improved, salaries will be bid up to the point of exhausting the revenues.”

“Whatever the marketplace was, I would want Kirk to be our coach,” said Iowa athletic director Gary Barta, in a phone interview.  “In America, we run amateur athletics differently than they do in most countries…we’ve created, what we call, the collegiate model.  If the federal government said, ‘we believe in the collegiate model but we want to fix salaries, because we’re not comfortable having an open marketplace in a college sports environment,’ they would have to make that decision.”

Incentives in Ferentz’s contract include: $1 million for winning a national championship, a $250,000 bonus for finishing in the Top 10 of the AP Top 25 Poll and $250,000 for winning the Big Ten Championship or going undefeated in the Big Ten regular season.  Those terms are according to his contract, which was obtained from the University of Iowa’s public records department.

There is an incentive for academic success, as well.  If the football team’s graduation rate is over 70 percent, Ferentz receives a $100,000 bonus.

“The salaries are outrageous, especially so since most of the coaches next best alternatives would not even pay them $100,000,” Siegfried said.  “If all coaching opportunities vanished, most coaches could not earn anything near their current salaries, demonstrating how much of their salaries is pure rent, compensation that is not required to elicit their efforts.”

“I came here for a salary much less than what I make now and I approach it the same,” Ferentz said.

None of Ferentz’s salary comes from the University of Iowa’s general fund.  The revenue generated from the football program compensates Ferentz.  At the end of the 2009 season, when the Hawkeyes won the Orange Bowl, the football program’s expenses totaled $26,902,080, and it had a profit of $11,994,154, according to the University of Iowa’s public records department.  Following the Orange Bowl victory, the expenses for the football team dropped to $18,468,732 and it had a gross profit of $27,386,032.  In 2013, the profit was $34,151,310.  The football program pays for itself.

Ferentz's intensity isn't restricted to Saturdays in the fall. (Photo: Google Images)

Ferentz’s intensity isn’t restricted to Saturdays in the fall. (Photo: Google Images)

“We all take pride in the fact that we’re not burdening the school at all,” Ferentz said.

“Some presidents don’t realize how much big-time commercial sports costs them,” Siegfried said.  “They tend to look only at what is gained, and not at what it costs.  Could more donations have been raised if the subsidy to the sports program went to hire more professional fund raisers?”

A majority of the revenue generated by the football program stays within the athletic department.  For fiscal year 2014, the University of Iowa athletic department contributed $18,987,867 to other university entities,  $10,317,000 of which went to scholarships for student-athletes.

“Athletics is not the most important thing that happens on our campus, but it is the most visible,” Barta said.  “The ability to run a first-class athletic program, and to do it in a manner that’s self-sustaining, it’s one of our core values, it’s one of the things that’s important to us.”

“The thinking is winning sports teams brings students and money to schools,” said Fred Abraham, a professor at the University of Northern Iowa who heads its departments of economics and finance, in an email.  “As long as that thinking prevails, I see the trend in the other direction: more for sports, not less. An arms race.”

In an article published in the Journal of Sports Economics in May 2012, authors Devin G. Pope and Jaren C. Pope explored the correlation between the success of collegiate athletic programs and the impact that success has on academics.  The article — titled Understanding College Application Decisions: Why College Sports Success Matters — suggests that “The better the sports team performs, the more applications a college will receive in the year or two following the sports victory, but that these effects fade away fairly quickly.”

For college football, the results suggested that if a team finished in the top 20 in the Associated Press poll at the conclusion of the season, the school would see a two percent increase in sent SAT scores the following year.  A top 10 finish would lead to a five percent increase, and winning the national championship would lead to an 11 percent increase in scores sent the following year.

The 2009 Iowa football team finished with an 11-2 record and was ranked seventh in the final Associated Press poll.  The school received 15,060 freshmen/first-year applications in 2009, and 17,220 in 2010, according to the public records department at the university. The Hawkeyes have not finished a season ranked in the Top 25 of the Associated Press poll since the 2009 season, but have still had application increases of 9.9 percent, 2.5 percent and 11.3 percent in 2011, 2012 and 2013, respectively.

“The good thing is if sports are a window to the university, and if that will help attract good people to come look at the university, then that’s real positive,” Ferentz said.

“No university charter states that providing entertainment on Saturday afternoons is a goal of the institution,” Siegfried said.  “This would be like General Mills also operating a bowling alley.”

Authors Devin and Jaren Pope wrote that “If students are simply placing a large weight on sports success…when making application decisions, then there is little need for changes to current education policy.  However, if students are responding to sports success due to the lack of information about college options, this may suggest that high school students are not being well guided in their college application decisions.”

Iowa apparently feels Ferentz is worth his high salary. (Photo: Google Images)

Iowa apparently feels Ferentz is worth his high salary. (Photo: Google Images)

“You definitely don’t want a student to base his college decision on what our record was or what our uniforms look like,” Ferentz said.  “It’s part of the experience, but it’s not everything.”

Cody Goodwin is a junior at the University of Iowa, and he’s a writer for the Daily Iowan, a student newspaper. Goodwin covers the football team, but says it wasn’t a reason he chose to attend.  “I liked to joke and say the 2010 Insight Bowl played a role in my decision to attend Iowa — I grew up a huge Mizzou fan; originally from Kansas City, Missouri — but the athletics didn’t really play any role in my decision to attend Iowa,” Goodwin said, in an email.  “I was more about the education.”

Richard Benne, a business form salesman for DFI, a printing company, has contributed nearly $200,000 to the University of Iowa since graduating in 1965.  Benne has not missed a Hawkeyes home game in 47 years.  “Football is our rallying point,” Benne said in a telephone interview.  “I don’t think in Iowa the football program and the University can be separate from one another.  It is the focal point for all graduates.”

“Hopefully they’re looking at the core things that are going to be critical to their experience,” Ferentz said.  “What are the academic opportunities, what kind of support will they get, what’s the culture.”

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