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Hogan's Comments to Panel

grizpack

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Here is the text of Hogan's comments to the Panel last Friday. Kind of long, but paints an interesting picture.

REMARKS BY WAYNE HOGAN , APRIL 23, 2004 / PANEL ON UM ATHLETICS

Good Morning Madam Chair and Members of the Panel. Thank you for the invitation to visit with you today.

During the past few weeks I have had an opportunity to re-construct the timeline that led to my resignation as Director of Athletics at the University of Montana on March 3, 2004. While I have not backed off in my resolve to shoulder the blame for the deficit I think it is important that you all have my perspective on the series of events which I believe contributed to this current state of affairs. I do this with the great hope that this panel can make substantive recommendations that will insure the continued success of Grizzly Athletics.

First, I need to give you some historical background. As early as 1996 I began to have a consistent annual give and take with President George Dennison with regard to athletic funding. I recently unearthed documents from those early years in which I repeatedly asked the President to increase our institutional support lest athletics would face never-ending deficits. I was particularly dismayed that because funding decisions were made independently at each of Montana’s university campuses, my counterparts at Montana State University were receiving and spending approximately $1.5 million more from the state general fund annually on athletics. It was a fact that the more money UM Athletics generated through its own sources, other schools would simply keep pace by increasing institutional support. By comparison, I estimate that during my tenure as AD at Montana, MSU has expended approximately $12 million of state funds more on intercollegiate athletics than UM.

In 1996, President Dennison and then Vice President Jim Todd unveiled plans to perform a $24 million renovation of the Harry Adams Field House. That renovation was designed by a renowned architectural firm out of Kansas City, which based the remodel figure on enhancing the arena to maximize revenue streams which would be used to cover an annual debt payment of $1.2 million. The breakdown called for a $16 million bond issue, with the additional $8 million coming from private or corporate support. For the better part of a year I personally made many pitches to involve corporate entities. In the end we found no takers.

Hurriedly, a redesign was ordered by entities within Main Hall, cutting the $24 million proposal to $16 million, all of which would be bonded. The new design eliminated many of the elements that would create a revenue stream to pay the debt. Some of those cutbacks included points of sale for concessions and novelties, individual VIP suites were eliminated and a redesign and relocation of the ramp which provides easier floor access for major concerts and shows was scrapped. The number of prime seats between the baskets and close to the floor was diminished. More seats were forced into the end zones, making them less attractive thus commanding a lower ticket price.

Already facing the daunting task of balancing the athletic budget, I advised President Dennison and Vice President Todd that I was opposed to the scaled down renovation. I saw the debt service of $1.2 million annually as financial suicide for athletics. I estimated and shared with President Dennison in an August, 1997 letter, that Athletics would need an infusion of $3 million over the two year renovation period to cover bond payments, relocation costs, lost revenue from being out of the arena, and increased staffing. No such commitment was made, but the University chose to move forward with the project and I was asked to carry out the plan, which I did with great vigor. The building was dark for a year during the renovation process and as the doors re-opened in 1999 we, not surprisingly, found a deficit problem that was at least the published amount of around $1 million. In a January, 2000 letter to president Dennison, I stated that we now had “a new car without the engine that generates the revenue.”

At this point President Dennison called in long-time budget strategist Sylvia Weisenburger to assess the problem and assist in a plan to manage the $1.2 annual debt as well as keep athletics afloat. It was at this point, Adams Center was spun off to create its own entity, taking with it the $1.2 million debt. However, athletics was not absolved of responsibility altogether. Adams Center took all food and beverage revenue (including Washington-Grizzly Stadium concessions), collected money from all rental of space in the facility and athletics was assessed $425,000 in annual rent. It should be noted here that including the loss of concessions revenue the Athletics contribution to Adams Center today exceeds $700,000 annually.

On June 30, 2000, with the help of some significant one-time bailout funds from the university, it was determined the combined Athletics/Adams Center deficit was $487,000. In fact the problem was much worse because inflation in the costs of tuition and travel were mounting and together, the two entities could not possibly generate enough revenue to pay the debt on the renovation, recover from the deficit and keep up with rising costs. Even so, on May 12, 2000, President Dennison presented to then Higher Education Commissioner Ray Crofts a “deficit reduction plan.”

Contained in the plan was a commitment of $400,000 in additional general fund support to come in two $200,000 increments in FY 02 and FY 03. However, through increases in tickets prices, Grizzly Scholarship Association (GSA) dues, corporate sponsorships, etc, Athletics would be responsible for finding an additional $900,000 annually by 2003 in self generated revenue. President Dennison also promised that Athletics would make $125,000 in expense cuts, pay $425,000 for rent to Adams Center and Mrs. Weisenburger would be assigned to the Athletic Department.

During 2000 and 2001 Mrs. Weisenburger worked in concert with Main Hall in maintaining the carefully orchestrated deficit reduction plan. With Mrs. Weisenburger’s impending retirement in late 2001, she identified and strongly recommended the hiring of Rob Edwards as her replacement. He was hired in September of 2001.

By mid-May, 2003 things began to unravel. The main culprit, according to Mr. Edwards, was a shortfall in operational revenue with respect to our development efforts. Although we had raised roughly $1 million for the year in private donations, almost all of it was tied to capital improvement projects. This is money we could not use for operations. The problem was that we had budgeted $200,000 in anticipated revenue from Development for operations that did not materialize. I made a pitch to the National Advisory Board for Grizzly Athletics. I asked that each of the 30 members make a commitment of $11,000 each by June 15 to the Athletics Opportunity Fund. I knew that we could use a good portion of those commitments to cover shortages due to tuition increases and summer school tuitions not included in the amounts allocated as scholarships in FY 03, and also to lessen similar impacts in FY 04.

Thankfully, nearly 20 people made the commitment and by late June we are able to secure $165,000 in unrestricted funds which was deposited in our scholarship account. Unfortunately, it was far too little to make things balance as it developed there were other surprises and miscalculations. Ultimately, the University found it necessary to make a one-time transfer of approximately $325,000 in order to meet President Dennison’s obligation of a balanced budget.

During the months of July and August 2003 Mr. Edwards reported making at least weekly trips to Main Hall to work with Mr. Duringer and his staff. The purpose, he told Marie Porter and me, was to construct a realistic budget and produce an “Operating Plan” for FY 04. This plan would require quarterly reports on budget status, essentially giving us a far better look at the ever changing landscape and preventing, in theory, a repeat of the last minute chaos experienced in June, 2003.

Sometime in early September 2003, Mr. Edwards and I were required to present an Operating Unit Budget Plan for FY 04 to President Dennison. Mr. Edwards prepared a power point presentation. It was my firm belief that he was receiving advice and help from Mr. Duringer’s staff in the preparation of this document and that they concurred with his assessment of our status. In short, this Budget Plan showed athletics healthy and prosperous for FY 04. I recall Mr. Duringer, Rosie Keller and Bill Muse sitting in the room as Mr. Edwards and I made our presentation to the President. No significant questions or concerns arose in this meeting.

During this period I observed Mr. Edwards was becoming increasingly pressured and agitated. On Friday, September 26, 2003 Mr. Edwards informed me that it would be best for all concerned for him to resign his position. It is critical to note that at the time of Mr. Edwards’ departure no one in Intercollegiate Athletics had any indication that the department had any sort of budget problem.

At this point, I requested from President Dennison assistance from Mr. Duringer’s staff in assessing our fiscal status and maintaining the day to day fiscal operations. Mr. Duringer’s assistants Rosi Keller and Michelle Jensen were dispatched to reconstruct and assess our current and ongoing budget status. I asked former Athletics CFO Chuck Maes to also assist in this process. Between October 1 and early January, Mrs. Keller, Mrs. Jensen, Mr. Maes, Mrs. Porter, Athletic bookkeepers Patty Dwight and Heather Alexander and myself began to unearth the components of a structural imbalance of approximately $600,000.

The other part of the existing problem, though, was bubbling to the surface simultaneously. This involved some accounting entries that were made in the final moments of FY 03. These transactions were made without my signature or authority. Suddenly, in January, we are now aware that the balanced athletics budget of FY 03 was, in fact, at least $281,000 short as a result of these entries. Add to that the University’s $325,000 one time transfer and the one-time NABGA collection of $165,000 the real FY 03 athletics imbalance was about $771,000.

Finally, there was one more shoe to drop. In a routine annual independent audit of the Grizzly Scholarship Association, it was discovered that there had been advance payments – funds collected for a particular fiscal year, but used to cover a scholarship shortfall in the previous year. I believe this practice to have started on a small scale under Mrs.Weisenburger’s watch, growing larger annually. Why auditors didn’t surface this as a concern in previous years is a mystery to me. Auditors said UM must “re-pay” the GSA in order to get the funds replaced into the correct fiscal year.

Having completed the full discovery process in early February, I could clearly see we had three separate issues: 1). an ongoing structural deficiency of around $650,000; 2). A GSA audit issue and 3). the accounting entry errors of late FY 03. It was my belief that the structural issue should be separated from the accounting and audit issues. I believed they needed to be dealt with and solved in different ways. After all, the structural imbalance was historical and ongoing. It absolutely had to be resolved if athletics were to continue to survive and flourish. The other issues were of a one time nature, not pleasant, nevertheless explainable and repairable. Proper handling of this disclosure was critical.

I felt it important to deal first with the most critical issue – the structural imbalance in athletic funding that has been identified at approximately $650,000 annually. Had I been given the University administration’s support to properly and systematically explain the issues, install safeguards and attack the debt repayment, there would have been minimal disruption to this $50 million impact engine. In addition, my administration’s credibility would have remained in tact, allowing me to once again identify revenue streams to fix the ongoing imbalance that would allow the program to continue as a national power.

To that end, I prepared an executive summary to explain how inflationary factors, NCAA requirements such as Title IX and Division I mandates were far outpacing our ability to create revenue streams. I prepared two easy-to-understand charts which I shared with President Dennison and Mr. Duringer. I began to share this information publically, first with the Missoulian and then with UM student leaders. Even today the logic stands firm. My sincere belief was, and still is, that we needed to address a good deal of the imbalance through an increase to the student athletic fee, woefully behind the national average and one-half that of Montana State’s beginning next year. I had discussed increases to the fee through the years with President Dennison and wrote an op-ed piece on the subject that appeared in the Kaimin on February 9, 2000. The fee had not been increased since its inception in 1994.

I urge you all at this point to understand the underlying issue of the funding imbalance. I believe we are at a great crossroads today. I have dealt with this in my own private way for eight years. There are those who would have us solve this by changing the culture of intercollegiate athletics. You can certainly do away with courtesy cars, complimentary tickets and put your football team on buses and so forth. You can cut staff, cut recruiting budgets and cut scholarships. You can all support the theory that the problem is “overspending” and not “under-funding.” I submit to you today that this program is not only under-funded, but under-staffed if our expectations continue to be winning National Championships.

Your panel and, indeed, all of Montana has had an opportunity to critique the way we have conducted our business. I have no apologies. Everything we have done during my tenure has been designed to strengthen this program to be the very best. Grizzly football won 93 games and lost only 22. We have built a season-ticket base of 17,000 fans. We represent a 50 million dollar per year economic impact for the Missoula business community. We made the playoffs every year – a record 11 straight times altogether. We have won two National Championships and have made four appearances in the title game. Meanwhile, virtually all of our roughly 300 student-athletes are flourishing and content. We graduate student athletes at a rate higher than the institution as a whole. Generally, we look far more like some 1-A programs you may be familiar with like Wyoming, Nevada and Boise State, whose budgets push $20 million. I suspect they are asking every day, how does Montana do it on $9 million?

I am proud that we have been able to raise more than $10 million dollars in private donations. We have expanded Washington Grizzly Stadium twice, installed state of the art synthetic turf, a $2 million video screen and scoreboard system in Washington Grizzly Stadium and the Adams Center, completely remodeled Dornblaser Track, designed and opened a magnificent Hall of Champions, improved the Grizzly Soccer facility, afforded to our student athletes the Jacobson Academic Center, and completed the John C. Hoyt Athletic Office Complex. Keep in mind, at the same time our university provided Athletics with at least 12 million fewer dollars in state taxpayer funds than our counterpart received. These monumental accomplishments were achieved with limited resources and manpower during an economically challenging period in our state’s history.

I urge you to quickly and prudently suggest a course to solve the imbalance of which I speak. I believe this panel has an opportunity of monumental and historical proportions. I urge you to save this great phenomenon in our state and resist the temptation to publicly dismantle it piece by piece. I know you are aware of what is at stake. Your good sense and understanding of the big picture is the path that will restore confidence and pride in Grizzly Athletics. The dedicated, hard-working and honest men and women of Grizzly Athletics deserve your positive recommendations and support.
 
I urge you to save this great phenomenon in our state and resist the temptation to publicly dismantle it piece by piece.

Sounds like Hogan's worried that the panel will recommend a downgrade in Griz athletics. Fewer scholarships maybe? Sticking close to home for OOC games, S. Utah, Central Washington, N. Colorado, and Montana Tech. No more Maine type games. Maybe a big payday game against a top Pac Ten school? Reduce coaches pay and perks? Could be disasterous for the Football program as we couldn't attract quality coaching.

Well, I don't know where all this will lead. How many out there will keep their season tickets if we become a 6-6 1AA football team? How manty seats will be sold for games? What about a drop back to Div. II which would solve all the budget problems. How many of you would still attend the games?
 
There are a lot of people in the athletic department (and a couple on the committee) that are concerned that some on the committee want a "pound of flesh" to go along with the findings. There is significant concern that rather than fix the budget problem, there will be a certain level of punishment that goes along with it.
 
All I have to say to this is that there will be people unfairly slaughtered to hide the real problem. The real problem is our longest serving president in UofM history. He builds things with no one left to pay the bills. Why do you think the board of regents are forced to increase student fees...Dennison wanted a legacy,...we got a school that has decreased in stature but increased in pretty little buildings with nothing in side of them. I knew a long time ago that it wasn't Hogan that was to blame.

Yet heads will roll, and budgets cut, and Hogan will look like he will be crying wolf just to save his own butt when in the long run, he has been always right on this issue.
 
Something that has bothered me about this whole situtation is where scholarships come into the accounting equation.
Athletic scholarships make up a part of the 9 million dollar budget, as we fund 300 student athletes. The athletic department considers this to be an expense. Then, the state of Montana kicks in athletic funding and says it is supporting athletics. What is really going on is that Montana is choosing to help deserving students through college, based on athletic ability, yet everything in the accounting equation considering this to be an expense. It is not, in the economic sense, an expense, but really a transfer payment and an investment in education.
My point is that Grizzly athletics gives many Montana students the opportunity to go to college, and that we should not consider that spending on athletics.
Grizfan24- I agree. Dennison has been a lame duck that has managed to survive for far too long. The athletic department should serve the students, not the other way around. Dennison fundamentally views students as an income source for the University, not the University as a service to students.
 
Gecko - on the Athletic Department's books, it is an expense. In reality it is a transfer of funds within the same institution, but the money has to be there to be transferred. That is primarily what the GSA does. Raises money to pay scholarships. In otherwords, private funds get transferred into the University's general fund to pay for whatever it wants.

That is a huge part of the problem. Scholarships are going up by an average of about 13% for the next year, so Athletics will need to boost the scholarship part of the budget by at least that just to keep even. However, they will not get more state funding if the current trend holds.

The University gets 13% more from Athletics, but doesn't increase athletic's funding. Something wrong here???
 
grizpack said:
Here is the text of Hogan's comments to the Panel last Friday. Kind of long, but paints an interesting picture...
Geez, it makes one even more sad that Wayne is gone. Hogan for President!
 
ronbo said:
What about a drop back to Div. II which would solve all the budget problems.

In no way is this an attack or argument one way or the other on your post ronbo. This statement just makes me wonder.

Given that the football program already receives considerably less funding from the general fund than other schools get from theirs, would it make sense to assume Dennison would cut that funding even further in a drop to Div.II being that the program no longer needs '1-AA' money? Or maybe the regents? Donors?

I have no idea what the differences in expenses are (excluding the obvious drop in scholarship expenses). So I wonder and am just trying to understand this entire situation to the best of my ability.
 
No I would get an ulcer if we dropped back. I actually like the idea of moving up for more revenue. I was just wondering out loud what "dismantling the program" meant. And schools such as Grand Valley State come to mind with 21,000 students that claim they won't move to 1AA because it's too expensive.
 
If Hogan's statements to the panel are factual and I have no reason to believe that they are not, then it seems to me that Hogan has been trying to fix this problem all along. The stumbling block (head) is Dennison. He has been made aware of the problems for some time and chosen not to address them. If heads roll, it should start with Dennison and maybe end there. I get sick to my stomach when I think about what all this crap could mean to Griz Football and athletics in general.

We definitely need a change of administration!!! I think Dennison has had his head up his a.. :eek: for a long time and it has grown shut :fist: . Time for some surgery at the U of M... we have a cancerous growth in the Main Hall. Hogan could end up being a martyr in all this... :angel: We could all become "Hogan's Heros" :drinking:
 
One note of caution - my grandpa always used to say that there were three versions of the truth to every story like this. In this case, that would be Hogan's version, Dennison's version and the truth. I'm not saying that the things in Hogan's statement aren't true, but they might not be the whole story. For example, Duringer is basically saying that once the problem came to light Hogan advocated keeping the news internal and not telling the regents. If true, that is a very, very bad thing. Personally, I don't think that any of the administrators are completely innocent in this.

There are a few things aout this whole situation that are very typical of the way that the U works and they should piss everyone off. The whole Adams Center fiasco is a prime example. Why was the rennovation pushed once the revenue model collapsed? Why do the concession sales from Washington Grizzly go to the Adams Center? Why does a significant percentage of the cash raised from the sales of Griz Gear flow into Dennison's office and not stay in the athletic department?

In the end, the light that is shining on Griz athletics will be a good thing.

And for those of you that want Dennison gone, rest assured that he is most likely Mercer's prime target. Mercer does not like him personally and he really doesn't like the way he conducts business at the U. His head would be a pretty big notch on Mercer's gun belt.
 
now, now greenie - you seem to be blaming the whole problem on mercer. ok, so he might've tattled on wayne et al, and nobody likes a tattle tail. but let's not get carried away with defending wayne, even though he is your buddy, he clearly wasn't doing his job in terms of overseeing the work of those under him. couple that with the fact that he was a public employee, and i'd say it was the right of the people to know about the deficit, and his part in it, even if some of the 'facts' got distorted by the newspaper (big surprise there...). you seem to be advocating his "working behind the scenes", and i don't really understand why, except that doing so would have probably saved his job. sure, he could have had one of your buddies toss in the chump-change million bucks to cover his problems, and all the problems would have seemingly gone away. but is that the "right" thing to do, or the "convenient" one? granted, wayne was apparently adept at "convenient" solutions, such as his address to the committee where he discussed every griz financial problem under the sun, other than the issue of why he didn't do his job and oversee his department correctly. i really don't see how sending king george memos regarding impending financial problems washes wayne of his sins in not running his department properly. can you please explain that to me?
 
The problem is that Mercer dislikes Dennison for the wrong reasons. Both Mercer and Dennison don't give a damn about Montana students getting a college education at an affordable rate. Dennison has always wanted to hit in-state students with tuition increases, rather than the out of state tustafarians. Lest we forget, his great idea to save money at the University of Montana was to, de facto, fire the Universitiy's adjunct professors. Buildings mean more to him then education. Yet, he doesn't go far enough for Mercer.
Mercer was born with a silver spoon up his @$$, and supports private funding of college education for the same reason. He has the same political mindsets, and complete inability to understand economics, as Judy Martz. He does not believe in public education. He would turn U Montana into a private corporation in a heartbeat, then act surprized when tuition goes up 400% while quality of education goes down, but still spout a bunch of bullcrap about "free market capitalism fixes everything." Not only that, but he would use the money formerly used to fund the education of Montana students and give it in tax breaks to out of state corps that screw over Montana residents and Montana businesses when it is good for the bottom line. Wait, we have been doing that for the past thirty years! No wonder our economy is last in the nation.
Someday, the people of Montana are going to realize how poorly our state has been governed, how politicians have shown more concern for corporations from back east than their own constituients. When that day comes, there will be hell to pay.
 
why don't you 'hawks' relocate to north korea? i hear selfish totalitarianism is all the rage there.
 
theblackgecko said:
Someday, the people of Montana are going to realize how poorly our state has been governed, how politicians have shown more concern for corporations from back east than their own constituients. When that day comes, there will be hell to pay.

Good thing we'll all be dead (not to mention our children too) before that day comes! Progress in Montana is changing your belt buckle every thirty years, and as long as people like Judy Martz are put in charge, our great state will continue to move down the list of economic prosperity. LOL
 
You know, NEGrizFan, Missoula if full of liberals. You would know that if you ever took the time to visit the Garden City, beyond a football stadium and a few bars. You would know that if you have ever been in a University of Montana academic building. Liberals don't have to go to France, we do just fine in Missoula. While most do not share my extreme economic views (and I do tend to be an economic extremist), we have a lot of concern in education in the Garden City.
BozoneCat, you made my morning with your humorous spin.
 
Bozone... you're a Republican? 8) and a Bobcat? 8) Living in MISSOULA? :eek: Geez.. wouldn't you feel more comfortable being an American living in Baghdad? Eh? :-?
 
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