Future of Division III

[IC798891]

This update does not sound promising at all

https://www.wpr.org/education/higher-education/declaring-financial-emergency-northland-college-delays-decision-on-whether-to-close

[WashJeff68]

The Chronicle of Higher Education has just released a study titled The Athletic Advantage - How Intercollegiate Sports Can Rejuvenate D-III Colleges

Basic premises is that athletic programs can be a tool for recruiting students by significantly expanding rosters for current sports and adding new sports. They also identify key potential issues related to this strategy that need to be considered.

Adrian College is the example cited of one school successfully doing this. They offer 45 sports with aggregate rosters of 1,259 student athletes.  Unique offerings and roster size include Cornhole (15), Bass Fishing (26) eSports (42) 7 different levels of Ice Hockey (198) plus every "normal" sport you could imagine. Total undergraduates 1,865. So, not allowing for students who play more than 1 sport, 68% of the student body is engaged in playing a "varsity" intercollegiate sport.

Adrian has developed a mathematical formula they use when making decisions to add a sport, which takes into account ALL expenses associated with the sport and all revenue generated, basically tuition and room & board to calculate the ROI.

Of course, there are potential downsides to this approach, and as noted above, Adrian is one of the schools that has one of those Dept of Ag loans,

As a side note, Jeff Docking, who has been President of Adrian since 2005 was previously in a leadership role at my alma mater where he established a varsity Ice Hockey program - since discontinued.

[WashJeff68]

As I think more about this the ROI for Cornhole, Bass Fishing and eSports must be HUGE!

[Kuiper]

The Chronicle of Higher Education has just released a study titled The Athletic Advantage - How Intercollegiate Sports Can Rejuvenate D-III Colleges

Basic premises is that athletic programs can be a tool for recruiting students by significantly expanding rosters for current sports and adding new sports. They also identify key potential issues related to this strategy that need to be considered.

Adrian College is the example cited of one school successfully doing this. They offer 45 sports with aggregate rosters of 1,259 student athletes.  Unique offerings and roster size include Cornhole (15), Bass Fishing (26) eSports (42) 7 different levels of Ice Hockey (198) plus every "normal" sport you could imagine. Total undergraduates 1,865. So, not allowing for students who play more than 1 sport, 68% of the student body is engaged in playing a "varsity" intercollegiate sport.

Adrian has developed a mathematical formula they use when making decisions to add a sport, which takes into account ALL expenses associated with the sport and all revenue generated, basically tuition and room & board to calculate the ROI.

Of course, there are potential downsides to this approach, and as noted above, Adrian is one of the schools that has one of those Dept of Ag loans,

As a side note, Jeff Docking, who has been President of Adrian since 2005 was previously in a leadership role at my alma mater where he established a varsity Ice Hockey program - since discontinued.

The Podcast "All Things DIII Soccer" interviewed Jeffrey Docking of Adrian a few months ago.  He spoke about his strategy.  He also mentioned treating marching band as like a sport, which provides an avenue for getting an entirely different type of student, while still supporting the athletic program and creating the school spirit culture that continues to attract students.  He also noted that Adrian isn't really competing with other small liberal arts colleges in the area, but rather they are all competing to get a few more kids to go to their school rather than University of Michigan or Michigan State.  Athletics and band and school spirit is one way to do that.

Here is the episode

https://www.youtube.com/watch?v=1fucnBDA0Fg

I tend to think that Docking's model is effective, but its effectiveness is declining.  He was an early mover.  It's much harder now to catch up.  He also mentioned that Adrian is trying to essentially partner with other schools and an outside group to provide some courses that everyone can use, which is both controversial (because he reportedly has an interest in the company doing this and because the goal is to reduce certain staff/departments) and an indication that the demographic cliff is going to require more than athletics to prop up many schools.

[Ron Boerger]

Adrian's most recent audit shows a net loss in total assets of $14M (to $156M) and an increase in short-term borrowings from $2.5M to $7.5M.  The discount rate for tuition/fees was 66.62%.  Their income from "Sales and services of auxiliary enterprises", at $18.8M, was almost as great as their income from tuition and fees ($21.9M).  Accounts Receivable (money due in the future) dropped from $6M to $2.2M, largely due to an increase in "doubtful collection of student accounts" - e.g. funds that won't be repaid - from $1.4M to $2.9M.  Long-term debt was reduced by $2M. In terms of yearly results, according to their most recent Form 990, Adrian swung from earning $8.5m in 2021 to losing $1.5M in 2022 thanks to an $10.5M increase in annual spend on relatively flat revenue. 

If you're bringing in a bunch of students to play garbage sports, but you're footing 2/3rds of the bill and relying on "auxiliary enterprise" to make ends meet, is that truly a sustainable model other colleges can use?  Adrian's notes say "Auxiliary enterprises include the operations of the campus bookstore, student residence and dining halls, summer conference programs (principally housing and dining), and use of other miscellaneous student facilities" so apparently room and board is where a lot of that money comes from. 

As a data point, according to a Inside Higher Ed story, NACUBO's discounting study pegged the average tuition discount rate for private college undergraduates at 49.0% in the 2021-22 school year.

[WashJeff68]

In 2022 Jeff Docking was paid $737,958

W&J's president was paid $388,604

[Kuiper]

Just in case you thought the financial problems threatening DIII schools were limited to the small private liberal arts colleges

"Financially distressed" New Jersey City University is looking for a merger to survive

https://www.nj.com/hudson/2024/04/financially-distressed-njcu-needs-a-partner-but-which-university-can-afford-to-take-on-the-school.html

[Gray Fox]

The Chronicle of Higher Education has just released a study titled The Athletic Advantage - How Intercollegiate Sports Can Rejuvenate D-III Colleges

Basic premises is that athletic programs can be a tool for recruiting students by significantly expanding rosters for current sports and adding new sports. They also identify key potential issues related to this strategy that need to be considered.

Roster size gets limited if a player doesn't actually gets to play.

[Kuiper]

Northland Updates

Last week, Northland's faculty submitted a curriculum restructuring proposal

https://www.northland.edu/fund-a-new-northland-appeal/financial-exigency-update-2/

On April 12, Faculty Council approved a curricular proposal that the Faculty Ad Hoc Exigency Committee submitted to the Chair of the Board and the President, today, April 16. The proposal outlines a revised set of academic programs that are aligned with Northland's mission, address enrollment demand, and are financially feasible. The draft plan would require Northland to end some of the existing academic programs and respective courses.

The Operations and Budget Committee has also conducted a comprehensive analysis into the College's operating expenses and leadership of this committee has been meeting regularly with the President. Together, they have identified areas to streamline and reduce expenses that would free up critical funds for both the short and long term.

The Board and College leadership have been collaborating with the committees to answer questions, share information, and offer feedback, attending several meetings since Wednesday April 8.

Fundraising efforts continue with individual donors and foundations to help bridge the deficit for the remaining academic year and garner support for a path forward.

Northland College is scheduled to release an update today (4/23) about "what's next" for the college

https://www.northland.edu/fund-a-new-northland-appeal/financial-exigency-update-041824/

Today, April 18, Northland College's Board of Trustees shared a brief update regarding next steps for the financial exigency process with the campus community. The Board understands that there is a great deal of continued uncertainty, anticipation, and a need for clarity about Northland's future. This has been an intense process and timeline, and it is critical for the Board to give the faculty proposal the due diligence it deserves.
Timeline

    Today, April 18: Board representatives met with the Faculty Ad Hoc Exigency Committee to discuss and review the faculty's proposal for a new curriculum.
    Friday–Monday, April 19–22: The Board is meeting several times over the next few days to review the faculty proposal alongside other options being explored and evaluated, such as potential partnerships and other funding sources. The Board will vote on a decision early next week.
    By Tuesday, April 23: The Board will share what's next for Northland.

The Board would like to thank the extended Northland community—students, employees, alumni, friends, and Chequamegon Bay-area residents—for your patience as we give this process the time needed.

[Ron Boerger]

And, of course, Northland did not release a "what's next" update yesterday, preferring to once again kick the can down the road and keep all their students (incoming and otherwise) up in the air about their future.  I truly hope that all have secured something else for next year.

In the last twenty-four hours, Northland College has received several transformative donor gifts [ed. - but we're not going to tell you how transformative]. While Northland is still short of its total funding needs, these gifts considerably impact what is possible. In light of this, the Board of Trustees believes the right thing to do is to reconvene with the Faculty Ad Hoc Exigency and Operations and Budget Committees to continue the work of bringing together proposed adjustments and the new budget realities. This will continue to require a strategic academic re-prioritization and the need for serious decisions, but we are hopeful about the future.

The Board recognizes that this creates continued uncertainty for our students, faculty, staff, alumni, friends, and neighbors, and it is committed to advancing this work as quickly as possible with a decision shared by the end of next week. [ed. - unless it isn't]

[Kuiper]

And, of course, Northland did not release a "what's next" update yesterday, preferring to once again kick the can down the road and keep all their students (incoming and otherwise) up in the air about their future.  I truly hope that all have secured something else for next year.

In the last twenty-four hours, Northland College has received several transformative donor gifts [ed. - but we're not going to tell you how transformative]. While Northland is still short of its total funding needs, these gifts considerably impact what is possible. In light of this, the Board of Trustees believes the right thing to do is to reconvene with the Faculty Ad Hoc Exigency and Operations and Budget Committees to continue the work of bringing together proposed adjustments and the new budget realities. This will continue to require a strategic academic re-prioritization and the need for serious decisions, but we are hopeful about the future.

The Board recognizes that this creates continued uncertainty for our students, faculty, staff, alumni, friends, and neighbors, and it is committed to advancing this work as quickly as possible with a decision shared by the end of next week. [ed. - unless it isn't]

Actually, they did, but it came late in the day.

https://www.northland.edu/fund-a-new-northland-appeal/sharing-positive-developments-financial-exigency-update-april-23-2024/

In the last twenty-four hours, Northland College has received several transformative donor gifts. While Northland is still short of its total funding needs, these gifts considerably impact what is possible. In light of this, the Board of Trustees believes the right thing to do is to reconvene with the Faculty Ad Hoc Exigency and Operations and Budget Committees to continue the work of bringing together proposed adjustments and the new budget realities. This will continue to require a strategic academic re-prioritization and the need for serious decisions, but we are hopeful about the future.

The Board recognizes that this creates continued uncertainty for our students, faculty, staff, alumni, friends, and neighbors, and it is committed to advancing this work as quickly as possible with a decision shared by the end of next week. We thank the Northland community for their continued support and appreciate the positive work of our faculty and staff.

What they didn't say is that they are staying open next year, let alone provide details on what they are cutting in this "academic re-prioritization" so affected students and faculty can make alternative arrangements (especially if they wait until the end of next week, which would be after the May 1 deadline at some schools).  The result might be that they will lose enough students and faculty that it won't matter anymore.   

[Gray Fox]

Colleges are closing at a pace of one per week.

https://www.washingtonpost.com/education/2024/04/26/college-closures-student-impact/?fbclid=IwZXh0bgNhZW0CMTEAAR3DuHpX6EUC8qaIYeYrk5wm2-m8qThEo7-DfCAu7CU8ZUHZayykQ4XRsR0_aem_Adl284Od2AQHksfjRzQmGHGzrnjfvwWQWRr3wcr_kXtPUTGCCJTMi62Tk247xCPAWBrhJjmMSjhFTuBNbnl5A42N

[Kuiper]

Wells announces it is closing at the end of the academic year

https://www.wells.edu/announcement-of-closure/

Mostly the same message you hear in other closing announcements, but they do have a "preferred" close out partner in Manhattanville that makes it sound like Wells might be in talks to transfer some remaining endowment assets in exchange for some preservation of the Wells name

"The Board is committed to the legacy and educational mission of Wells College. As such, we have entered into an agreement with Manhattanville University where it will become our preferred teach-out partner. This partnership further will help ensure that Wells' current students matriculate and our institutional mission and legacy continue. Manhattanville is developing dedicated housing for Wells students and will be partners in supporting our students with transfer plans. Manhattanville has also expressed interest in developing a legacy agreement that would integrate the Wells College name and history into the Manhattanville community. We have developed additional teach-out agreements with these other teach-out partners: Excelsior University, Hobart and William Smith Colleges, Keuka College, Le Moyne College, Mercy University, SUNY Brockport."

[Ron Boerger]

They won't have much of an endowment left to offer.  Looking at their most recent audit, they had increased the annual drawdown from 5% to 7%, and making matters worse it was on their average endowment over a period of time (which was higher than current).  It decreased from $33.2M to $28.8M during the school year ending 6/30/22, and given their trend it likely went down by at least that much each of the following two years. 

[Kuiper]

Interesting article from Forbes about college closures. 

It provides a startling statistic about the impact on DIII athletics:

This trend is beginning to have a substantial effect on Division III college athletics. While some colleges have added teams and sports, an underreported story has been the number of athletes who have lost opportunities since 2020: 282 teams have been lost, with 200 of them coming from campuses that have closed

.

In other words, even if the number of schools that have closed is still relatively small (13 since 2000), there have also been 82 sports teams dropped on net among schools that remain in existence.  For example, Whittier College dropped football, men's and women's golf, and men's lacrosse a few year ago.  Even if we had no more school closures, we may see more teams dropped as demographic declines simply reduce the recruitable pool of students interested in playing at a school in that sport.  That will continue to affect conference affiliations, which could increase travel costs and make the sports non-viable at those schools too.