Sunday newspaper coupons: It’s always a good idea to read and take into account the fine print associated with little asterisks. Here’s the fine print for this seemingly enticing coupon: “Does not include fees associated with athlete recruiting, room/board, stipends, scholarships and overseas trips for competition. Beard-Eaves Coliseum slated for eventual demolition. Offer valid only in rural Alabama.” Hmm. You might want to think long and hard about cashing in that coupon if you don’t have the resources for what else is needed.
No one has volunteered to explain why a Residency Program at Auburn is the best way forward for USA Team Handball. One reason touted, though, is the great financial benefit. Here’s why that supposed financial benefit is in reality a negative.
The Premise: Auburn University is reportedly providing very valuable “Value In Kind” (VIK) funding for the use of their facilities for practice as well as athletic training and some degree of medical support. Anybody who has participated in a Residency Program knows exactly how important it is to have a legitimate practice facility and athletic trainers available to help athletes prepare for and recuperate from training. These are big ticket items and they are critical to running a successful Residency Program. The actual value of these items can be debated. In USA Team Handball 2015 High Performance Plan Auburn’s support this VIK was listed at $400K and a recent recruiting notice on USA Team Handball’s webpage trumpeted a value of over $1,000,000. (I’m thinking both numbers are a bit on the high side, but I’d have to price out gym rentals and medical options to be sure.)
And, USA Team Handball has not only obtained these services for “free” they have done so at a major college institution that’s part of the one of the most prestigious NCAA conferences. Better yet, in October, 2015 Auburn was designated by the USOC as an official Olympic Training Site for Team Handball. As one USA Team Handball Board Member put it, Auburn, “is a big value in kind and costs almost nothing for USATH.”
This isn’t the first time that I’ve heard or read similar sentiments. On the face of it, it seems like a proverbial no brainer, but let’s take a critical look at the “Value” associated with this Value in Kind (VIK) funding. Or to put it another way:
How much is $1,000,000/yearly Value In Kind (VIK) funding really worth?
ANSWER: $1,000,000?: Perhaps you are thinking, “Is this a trick question? Duh, $1M is worth $1M.” Well, this is really only true if the $1M is actual cash that can be spent anyway USATH wants to. Or, alternatively, the $1M VIK provides something that USATH would unquestionably be paying $1M for anyway.
As I’ve elaborated on in numerous commentaries, though, it’s highly questionable to simply declare that a Residency Program at Auburn is an automatic no brainer. Something that the USA should spend or would be spending on anyway, so that the $1M VIK is indeed worth exactly $1M. For sure, if $1M in cash magically appeared at the Federation doorstep I’d like to think that money would not be blindly poured into the residency program.
An appropriate analogy here is that big fat section of coupons that come with the Sunday newspaper. All full of discounts and bargains for things you don’t really need. I suppose every once in a while there is a coupon for something you regularly buy, but it is the exception not the rule. For sure, everyone prefers cold, hard cash to a coupon.
ANSWER: $0.00: Well, all right you’re thinking. Maybe it’s not worth $1M, but a Residency Program is still a great thing and what’s being provided doesn’t cost anything. Oh, if only that were true.
Now, another analogy is appropriate. Ever read about somebody being “gifted” something they can’t afford? A fancy car or house that they can’t maintain or pay the taxes on? What happens? They end up selling the house or in some cases even refusing the gift outright. Either that or they spend every penny of their limited income trying to maintain a big house they can’t afford.
USA Team Handball is currently in a similar boat. A place to practice and medical support are nice, but if you’re going to run a Residency Program properly you will also need funding for recruiting, coaching, athlete housing, athlete board, overseas trips, stipends and scholarships. As the board minutes highlight some additional funding has been raised for coaching, but all of these other needs are still left wanting. The Residency Programs unfortunately are way too austere and it will take a lot more funding before the “austere” description can be justifiably removed.
ANSWER: Negative $150,000/yr: OK. So perhaps now you’re reluctantly thinking, well Ryan has a point, but even if there is a cost, it’s small or “almost nothing.“ Oh, again, if only that were true. Up until last year, $120,000/year was being paid out of the Federation budget for coaching. This might seem like peanuts, but for a Federation with a budget of only around $500K/yearly that’s about 25% of the budget. Throw in National Team travel costs and “almost nothing” keeps getting a bit higher and higher.
Apparently, I’m not the only one to recognize this and if you read past Board Meeting Minutes you’ll see a few comments regarding Auburn’s need to fund itself. Further, the Oct 2015 Minutes even highlight an “Auburn Account” and a “Colorado Springs Account” as if they were or could/should be separate entities. Perhaps some aspects can be walled off from each other, but they can’t help but bleed into each other. Funding for travel has come from the National office in the past and will likely come from there again. Surely, there are other items as well that at least in part can be attributable to Auburn.
Certainly management man-hours have to be directed towards Auburn. The CEO for USATH, by the title’s definition is responsible for all aspects of USATH Handball operations. And, one can rightly assess that a CEO is going to do everything in ther power to ensure that the most visible part of USATH operations runs smoothly. There’s a cost associated with ever hour that is spent assessing the program, checking in with coaches, fundraising, etc. And, this also applies to volunteer hours from Board Members and others. It’s hard to put a cash value on what all these costs have totaled up to, but don’t kid yourself that it’s “almost nothing.” You would have to review the financial books closely, break down each line item and the man-hours being spent, but I’ll peg the book costs plus the overall hidden costs the past few years to be at least $150,000/year. That would total up to around $450,000 for the past 3 years. And, it could very well be more. It all depends on you would do the accounting.
ANSWER: Negative $300,000/yr: And, unfortunately we haven’t even factored in opportunity costs yet. In my opinion this is the biggest cost of all. Every dollar and man-hour expended towards trying to make the Residency Programs at Auburn work is a dollar and man-hour that could have been spent on something else. Funding to expand an already existing and successful youth program in suburban Chicago. Funding to send the handful of legitimate prospects that USATH might actually have to Aarhus, Denmark where they could get training, weekly competition and exposure to potentially sign a professional contract. Funding to beef up the Northeast Team Handball League and to better support leagues in other parts of the country. Man-hours that could be spent physically sitting down with beIN Sports to work out a sponsorship deal for their EHF Champions League TV broadcasts. Man-hours that could have been spent developing and implementing a promotion plan to maximize the buzz associated with the 2016 Olympics. These are just a few possibilities. Yes, take the “almost nothing” whatever it is and you could maybe double the cost to account for the potential lost opportunities that haven’t been pursued.
ANSWER: Negative (Even More $$?): But, it doesn’t stop there. Right now, USA Team Handball’s income from various sources is only around $500K/year. That’s paltry and relatively insignificant in the big scheme of things. But, what if Olympics buzz and sponsorships start to roll in. What if the budget was a more respectable $1M or $2M year? Even more? Where would that additional money go? Well, as I highlighted in this commentary if you have an austere Residency Program there is a huge moral obligation to the athletes to make that program less austere. The Federation might want to spend elsewhere, but it will be tough to justify doing so. And, while some might look at such a would be windfall as finally getting the resources to do a residency program right, I would simply look at it as turning a minor loss into a major loss.
Lessons from the Past
Now let’s sit back and reflect for a moment on the Residency Programs of the 80s and 90s. How many millions of dollars were spent over several years narrowly focused on training around (I’ll be generous here) 200 total athletes (Men’s and Women’s National Team’s combined)? Depends on how many years you want to figure, and what % of the overall federation budget was being devoted on a year by year basis but I’ll estimate the total cost as somewhere around $5M to $10M over a 20 year period. Factor inflation in and that dollar value balloons up even more.
What was the Return on Investment?: Kind of hard to quantify, but let’s acknowledge that in terms of sustainable grass roots development for the sport “Return” was pretty low. Really, it’s practically nothing. Whatever buzz respectable/competitive performances provided didn’t last very long and didn’t have much of a trickle down effect. In terms of the 200 or so athletes perhaps 30 of them have gone on to spread the handball gospel in a variety of ways, but for the most part they punched their ticket and moved on. Kind of to be expected, though, because the objective of the Residency Programs wasn’t sustainable grass roots, it was to develop and prepare National Teams for competition.
Now, obviously the Federation had to field National Teams, particularly when our nation was hosting an Olympics in 1984 and 1996. But, what if those Residency Programs had been scaled back and a greater portion of the overall budget had been spent on Grass Roots? Let’s say only half of the scores of overseas trips were taken or that less experienced, less expensive coaches were hired. And, then all of that time and money had been instead focused on some effective and sustainable grass roots programs.
- We would have 40 solid collegiate programs today instead of 3 or 4.
- Maybe there would be a solid foothold in one geographical location of this nation where youth programs have been thriving for 20 years.
- Maybe we’d already have a real club championship worthy of TV Broadcast.
- Maybe we’d be developing 2 to 3 USA based athletes/yearly worthy of a significant pro contract instead of 1 (Gary Hines) in the past 20 years.
- Maybe International investors would have already seen enough growth to provide more financial assistance.
- Maybe ESPN would be broadcasting Champions League matches and showing Sports Center highlights that would be feeding grass roots interest.
For sure these are all “maybes.” No one can say whether any of these possibilities would have ever come to fruition.
What I can unequivocally state, though, is we’ve got almost nothing to show for all the resources that were spent in the past on National Team Residency Programs. For sure, we need to provide some level of support to our National Teams, but the decision of how much to spend has to factor in the opportunity costs of neglecting grass roots. It would be nice to have Residency Programs that indeed cost almost nothing, but don’t kid yourself for a second, the real costs are significant. And, if history is our guide the lost opportunity costs will be staggering.