Insights

College Athletics Departments of All Sizes Take Stock of Finances

September 18, 2020 – Media Mention
Front Office Sports

Front Office Sports interviewed Irwin Kishner, co-chair of Herrick's Sports Law Group on how the coronavirus pandemic has affected the economic model for college athletics. The article reports that college athletic departments of all sizes have implemented layoffs as a result of revenue losses noting that the financial bleed for many of these institutions began with the cancelation of "March Madness" that was exacerbated with the loss of football.  

The article notes that some schools are using the pandemic as an excuse to implement restructuring strategies that they have contemplated since before the pandemic. In response, Kishner said “I’ve heard very intelligent and business-minded people say things like, ‘You never want to squander an opportunity which a crisis could present.'” Kishner added, “If not now, when?” Kishner noting that this phenomenon is not exclusive to the college sports industry.

Kishner emphasized that the he does not believe that the business model of athletic departments is inherently precarious, given that it is built to funnel money to athletic resources. He further noted that it is "hard to blame athletic departments for not planning in advance for a once-in-a-century pandemic." 

Kishner then discussed the internal process that might occur to determine whether layoffs are necessary, which includes taking stock of expenses, reviewing logical areas to cut down and evaluating revenue losses. Adding that it may be "logical for employees with more lucrative salaries to take pay cuts, rather than eliminating lower-salaried positions, many coaches or athletic directors have contracts that don’t allow for an athletic department to cut salaries due to a pandemic." In addition, Kishner noted that he might advise a client to consider taking out private loans, which might eliminate the need for cost cutting measures like layoffs. 

Kishner emphasized the need to maintain as much normalcy in staffing and strategy as possible, given that eventually, sports with fans will return. “This too shall pass,” he said.