… confused. And in the case of Missouri State’s new basketball arena, she just does not get it.
Unfortunately, after studying the numbers with care, Mr UD, a math whiz, doesn’t get it either.
This seems to be a story about a university president who fell somewhat short of the truth when claiming that in its first year the arena was in the black. An economics professor at MSU, Reed Olsen, ran the numbers and came to the conclusion that it was in the red – hundreds of thousands in the red.
Part of what makes this story difficult to understand — beyond the whirling numbers — is the odd way the Springfield News-Leader has chosen to present it.
One half of its page features the news that the university is now reviewing the arena’s finances. Oh, and there’s a new president. The old one suddenly left. Didn’t say why.
Check out the other half of the page for the hard numbers.
You don’t have to read Andrew Zimbalist to know that many university athletic programs … is cook the books too strong? There’s obviously lots of numbers-shifting going on here as the university now seems to acknowledge that it was wrong to claim a profit… But I really don’t know. I’ve emailed Professor Olsen about it.
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Update: Professor Olsen responds:
After my report to the senate and a subsequent followup with the president, the newspaper dug up more information that showed that the arena was doing even worse than I had originally thought. They were hiding costs by allocating costs to the old arena, whose costs more [than] doubled when it quit being used. So on net it seems that the arena was losing about 2 M.
I’ve gone on to ask him several more questions. I’ll report some of his answers when I hear back from him.
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From the News-Leader’s comment thread:
I and many others told you so. Now, the admission – this thing ain’t paid for.
And, the News Leader buries the story as a sideline.
What many of us said when this boondoggle was announced, what the students reported in their paper when it was learned their academic fees were being stolen, and what the faculty found by analyzing the accounting is all true – this ego pacifier for boosters who want to be like Mizzou is a financial lie.
This is not the end of the scandal. This “2 million” from athletics is a shell game. Athletics already operates with about $5-7 million (admitted) in state funds to make up the yearly deficit, so this is STATE MONEY. Once again the state and students are made to pay for the sports fantasies of wannabe boosters.
I’m pressing this story on University Diaries because, like the scandal at Western Kentucky, it’s shaping up to be the paradigmatic corrupt university sports story — it’s turning into a classic case of the destruction of a university via its sports program. Its apparent elements, shared with virtually all other death-by-sports university stories:
1. Corrupt, sports-mad leaders who cannot think about the improvement of their university in terms other than athletic. (Jealousy of a higher-profile neighboring university also seems at work in these stories.)
2. Toadying faculty willing to lie along with the president and the athletic director about the sports budget.
3. Students who sense what’s happening but don’t have sufficient power and knowledge to fight it.
4. One or two brave faculty members willing to fight against the lies.
5. An inept local press whose boosterism allows it to be manipulated by the leadership of the university.
August 1st, 2010 at 5:20PM
There are people in the business world who have gone to prison for *very* long terms for doing or approving various forms of alchemy which converted losses into profits…for example, treating certain costs as “capital investment”, to be depreciated over many years, rather than as “expense”, to be charged against profit in the current year. I can’t think of very many reasons why a university official, especially one who is directly responsible for taxpayer money, should be treated more gently. There need to be formal standards for how costs and revenues are allocated when claiming “profit” for a football team or basketball arena, or whatever, and there need to be very severe consequences for failure to follow these standards.
August 2nd, 2010 at 2:33PM
Plus there’s this: “The fee expects to generate $90,000 in 2010-2011.” Well of course it does — fees have self-esteem too, you know. But the estimate would carry more weight if it were attributed to an actual person.
August 4th, 2010 at 12:33PM
Look on the bright side, Mr. Punch: “the fee expects” is active voice. If we deny the opportunity to attribute the revenue to a non-human’s active expectation, I fear our writer will lapse into passive voice.
March 27th, 2013 at 8:46AM
[…] There’s a big new useless stadium about whose profitability the university lied (details here and here and here and here and here and […]
March 22nd, 2016 at 6:02AM
[…] basketball arena was not in the black (as the school was thrilled to announce), but deeply in the red. Among the tricks MSU played, Olsen singled out this […]