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UNO officials see a long-term financial upside in the school's step up to Division I in athletics. But the first bills for the change are coming due.
Sometime this month, the University of Nebraska at Omaha expects to send a check for $1.4 million to the NCAA, a one-time application fee for the opportunity to transition its athletic department from Division II to Division I.
The school also recently completed severance packages totaling nearly $1 million for the football and wrestling coaches who were left without jobs or teams when the school dropped their sports. Those payments will go out at the end of this month.
In all, UNO anticipates transition costs of at least $2.7 million. The school expects to cover them through its existing athletic budget — primarily by savings from cutting football — along with some upfront support from the private University of Nebraska Foundation.
Whatever those final transition costs end up being, Athletic Director Trev Alberts and Chancellor John Christensen say the benefits of the Mavericks' move to Division I are worth it.
“We feel so strongly this is a move we had to make,” Alberts said last week.
UNO will become the first school ever to pay the $1.4 million application fee to the NCAA — a cost that was known to university officials but was not widely discussed during the controversy and debate over the school's athletic plans.
Previously a school making such a step up paid a fee of only $20,000, Alberts said. But four years ago, concern that schools not capable of competing at Division I were making rash decisions to move up led the NCAA to put a moratorium on such reclassifications. During the interim, the NCAA put new standards in place to make it tougher to initiate such changes.
One was to require any school stepping up to have a bona fide offer of membership from an existing Division I conference. That's why UNO's invitation to join the Summit League was so critical, Alberts said.
As an additional hurdle, the NCAA created the $1.4 million fee. It's based on the average annual share of championship revenue the NCAA divvies out to Division I members, though schools in lower-level conferences such as the Summit generally receive far less than that — in the hundreds of thousands annually.
“There's a concerted effort to stop institutions from reclassifying,” Alberts said. “The NCAA hopes to eliminate those who would ultimately dilute the overall brand and (the NCAA's) ability to distribute (dollars) to its members.”
Though the fee was not raised by either side in the public debate over whether UNO should go to Division I, Christensen said he and members of the NU Board of Regents were well aware of it. It was accepted as a short-term cost that is far-exceeded by the long-term benefits of Division I membership, including UNO's ability to receive future NCAA championship payouts.
And the fee apparently won't be a big hurdle for UNO.
School officials expect the NCAA to have the check in hand June 1, the NCAA's deadline for schools hoping to reclassify during the 2011-12 school year. It appears UNO is the only school in the country that has announced plans to move up in the coming year under the rules.
UNO officials announced in early March the school was stepping up to the highest level of college athletics with a move to the Division I Summit League. As part of the move, the school eliminated its century-old football team and a powerhouse wrestling program coming off its third straight Division II national championship.
Football was dropped for budget reasons. Officials said wrestling was cut to better align UNO's athletic department with the sports offerings of the Summit League. UNO plans to replace wrestling with men's soccer and golf teams.
Alberts and Christensen have faced criticism for making the far-reaching decisions without public input and for springing the change on the affected coaches and athletes. UNO officials say there was no easy way or good time to make changes needed to preserve athletics at UNO in the face of longtime budget challenges.
Some 21 head coaches and graduate assistants lost jobs. Recently the school completed negotiations on severance packages totaling $903,768.
They ranged from $276,634 to head football coach Pat Behrns — the winningest football coach in the school's history — to just more than $1,000 to a pair of student assistants.
UNO head wrestling coach Mike Denney is to receive $121,078. The seven-time national championship coach, his staff and the bulk of his wrestlers have already moved on, starting a new Division II wrestling program at Maryville University near St. Louis.
New jobs for any of the coaches do not affect their severance payout from UNO.
As a Division II school, the UNO severance payments pale in comparison with the combined $5 million the University of Nebraska-Lincoln spent four years ago to buy out the contracts of fired football coach Bill Callahan and Athletic Director Steve Pederson.
UNO officials say they were legally obligated to provide 90 days of severance to the coaches. But they had said in March that, given the suddenness and timing of the announcement, their plan was to give coaches a full year's salary — to provide ample time for them to find new jobs.
Given personnel rules and confidentiality clauses in the agreements, Alberts said last week that UNO could legally provide little detail on the packages other than to release the names of recipients and amounts to be paid. Most of the deals, however, appear generally to be based on annual pay.
“We tried to be as aggressive as we could, especially considering the timing,” Alberts said. “This was a special circumstance.”
Behrns' severance was substantially larger than the others and is well over his annual salary, recently listed in university records as $93,000. Alberts did note, however, that Behrns had two years left on a five-year coaching contract — the only coach working under a contract.
The coaches' last official day on the job was Friday. The severance money will be part of their final paychecks on May 31.
UNO also soon expects to pay $80,000 to the Mid-America Intercollegiate Athletics Association, its former Division II league. The MIAA recently sent UNO a bill for that amount, the school's contractual penalty for leaving.
UNO also owes $250,000 to the Summit League as an entry fee, though that payment won't be completely due for four years.
One other transitional cost UNO faces has yet to be determined: the cost of providing continued aid for scholarship wrestlers and football players who decide to end their competitive careers and complete their educations at UNO. That won't be fully known until athletes make enrollment decisions between now and August.
And the transition costs are separate from the dollars it will take to upgrade existing sports so they can compete in the Summit League. For example, it's anticipated the budget for UNO men's basketball will increase from $364,000 to $778,000, though Alberts says part of that difference will be made up by new revenues unavailable to the team as a Division II school.
So how will UNO pay for it all?
With the decision to drop football and wrestling, Alberts says, all the money to ultimately pay for the transition should be available within the school's $10 million athletic budget.
Alberts said UNO will save $1.3 million a year by dropping football, while the net savings by cutting wrestling approaches $400,000.
Part of those combined savings will be offset by the $450,000 budgeted for the new soccer and golf teams. But that will still leave $1.25 million in net annual savings from the reshuffling of UNO's sports lineup, Alberts said.
In the school's budget over the five-year transition to Division I, those savings amount to more than $6 million — enough to pay transition-related costs plus provide significant dollars to upgrade other sports.
But to cash-flow the front-loaded transition costs, UNO anticipates needing to borrow money from the NU Foundation. Alberts said the understanding is that any money borrowed would be paid back with the future budget savings.
Clary Castner, president of the NU Foundation, said last week the plan for covering the $1.4 million NCAA fee and other costs is still in the works. But he expects the foundation will play a role.
“We're working with UNO to figure out how we can help in the transition,” Castner said. “The reality is that's got to be paid.”
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