Maryland athletics has for years struggled to raise funds and sell tickets. Its move to the Big Ten Conference in 2014, seen as a path to profitability for a department that was facing a multimillion-dollar annual deficit, has resulted in just enough revenue to break even. Now some stakeholders and analysts project that the financial fallout from the crisis within the football program could reach into eight figures.
The economic peril could extend to multiple fronts:
●A legal settlement with the family of Jordan McNair, the 19-year-old player who died in June after suffering heatstroke during a team workout.
●Contract buyouts for coaches and administrators, including Coach DJ Durkin and two other football staffers who remain on administrative leave.
●The subsequent hiring of a new football coaching staff.
●A decrease in financial support from donors and fans, many of whom already have been reluctant to help pay off the remaining tab for a $196 million indoor football facility and who could stay away in droves from the Maryland Stadium stands this fall while the school continues to sort out the mess.
“With [potential] buyouts . . . I think you have already paid a price in terms of ticket sales, donations,” said one high-level booster, who spoke on the condition of anonymity because of the sensitive and unsettled nature of the matters. “Then you have to factor in, what do you end up paying the McNair family? And for how long do the ramifications of it last? It easily has got be $25 million and probably more than that.”
While the school has admitted to mistakes that led to McNair’s death, it’s also spending money to better understand the circumstances surrounding the tragedy. Maryland contracted with the consulting firm Walters Inc. for at least $24,000 to examine what happened at the team workout May 29 at which McNair collapsed. A broader — and probably more expensive — probe is being run by an eight-person commission that will report its findings to the University System of Maryland Board of Regents, perhaps by the end of this month.
That investigation will focus on the culture within the football program, and while many details have not been released, it is not expected to be cheap. Robert L. Caret, chancellor of the University System of Maryland, said the eight commission members are being paid for their services — a handshake agreement but not a formal contract at this point. Much of the groundwork for the investigation is being done by DLA Piper, one of the largest law firms in the country. It has been using a team of high-priced associates to interview players, coaches and staff.
In making decisions on the future of the Maryland program, the regents will consider the financial implications but won’t be ruled by them, Caret said. He likened the associated costs to “data points you’re keeping in mind as you move forward.”
“The board will make decisions based on principle,” he said. “The financial part will be what they have to live with, if they have to live with it.”
The university is probably bracing for a sizable settlement with McNair’s family. Wallace D. Loh, the university president, stated publicly last month that the school will accept “moral and legal responsibility” for McNair’s death.
The family recently filed three claims with the state treasurer giving notice of its intent to sue the school. Those filings, on behalf of the player’s estate, his mother and his father, triggered a review by the state attorney general’s office, which is conducting its own probe of the facts surrounding McNair’s death, according to a spokesman for that office.
“They always — when there’s any potential lawsuit — do their own investigation,” Caret said. “So they’ll look at everything separately. From what I know, my understanding is they’ll go in any direction they need to go. They’ll retrace some of the steps themselves. I’m sure they’ll interview a number of the same people.”
Wrongful-death charges involving university students can be costly. Universities typically carry insurance to help absorb such costs, though a school spokesman was unable to provide any details this week on Maryland’s coverage.
Derek Sheely collapsed and died after he suffered a brain injury during a football practice at Frostburg State in 2011. His family filed a wrongful-death suit and eventually reached a $1.2 million settlement. The NCAA picked up more than $1 million of that, and the state of Maryland paid $50,000.
Settlement amounts related to wrongful death on college campuses can vary. A 2014 case involving an Ohio University student resulted in a $1 million settlement, and a 2017 case involving a Clemson student resulted in a $250,000 settlement.
In addition, some prominent boosters and alumni have called for the ousters of Loh and Athletic Director Damon Evans, both of whom carry lucrative contracts. Loh received a $75,000 raise last fall that increased his annual salary to $675,000; Evans signed a six-year deal for $720,000 annually shortly after he was hired in July. But the school’s most expensive potential buyout could be Durkin’s contract.
The coach’s contract outlines five reasons he could be fired with cause, which means he would not receive any further compensation from the university, including conduct that is “inconsistent with professional standards of conduct of an intercollegiate head football coach.”
Maryland would owe Durkin nothing if it fired him with cause. But if Maryland fired him without cause, it would be on the hook for a $5.8 million buyout. Because Durkin is on leave, he received one-fourth of his annual supplemental income share — worth $500,000 — on Sept. 1, the same day the Terrapins opened their season with a 34-29 upset of Texas.
There is also the possibility that Durkin negotiates a settlement with the university, a path the school took when it parted ways with strength and conditioning coach Rick Court in August. Court, who made $285,000 annually at Maryland, received $315,000 as his settlement. The university could take that route with other football staff members in the wake of McNair’s death; trainers Steve Nordwall and Wes Robinson are also on administrative leave.
But the costs only would begin there. The school would need to find replacements for its departures, including Durkin, who signed a five-year, $12.5 million deal in December 2015, making him the second-highest paid state employee behind Maryland men’s basketball Coach Mark Turgeon.
It’s possible that Maryland would have to seek state approval. The regents provide oversight of athletic budgets, and the board’s policy states, “It is mandatory that there be transparency in fiscal reporting.
“The Board of Regents is to be kept informed of any long-term financial commitments that may affect the budget in future years.”
Any public dollars used to address the situation could become subject to scrutiny by elected officials as well. At a state Board of Public Works meeting last month, Maryland Comptroller Peter Franchot (D) noted that he had seen media reports about the university’s settlement with Court but the school had yet to publicly acknowledge the contract buyout.
“It’s is my sincere hope that the university intends on bringing the settlement, should there be one, before this board,” he said.
The coaching costs don’t end there, and turnover is never an inexpensive undertaking. A new head coach would probably come with a seven-figure salary, and the school might have to buy out some members of Durkin’s staff to allow a new coach to bring in his own people.
For any contract buyout, the school often has to find the money in its existing budget. If a school aims to avoid using public money, it could turn to its donors, who often help cover costs when a school makes a big coaching change. But many of Maryland’s top sports boosters have thrown their support firmly behind Durkin and urged the school to retain him. The Champions Club, a group of the school’s highest-level athletic donors, sent a letter last week to the regents voicing its support for retaining Durkin.
Maryland’s athletic department is not flush with cash. It cut seven sports in 2012, and it has been criticized both internally and externally in recent years for its finances and bookkeeping decisions.
“Maryland athletics is a billion-dollar asset, and we have people running it like a corner drugstore,” one of the department’s top donors said in an interview.
Membership in the Big Ten brought in $37 million in revenue last year, and that will increase as the university gains a full member’s share within the next three years. Still, the school essentially broke even in fiscal year 2017.
The department had an operating budget of $94.8 million and generated just more than $80 million in revenue, plus an additional $14.5 million gained from student fees and direct institutional subsidies, according to documents obtained by The Washington Post.
The move to the conference, which was celebrated at the time as something as a panacea for an athletic department that had long stood on shaky financial ground, also prompted Maryland to join the arms race of major college football. In 2015, the school broke ground on renovations to turn Cole Field House into an indoor football facility; Maryland became the final Big Ten school to have such a facility. Its price tag was bumped up 25 percent to $196 million last summer, $19 million of which the athletic department is on the hook for. An athletic department spokesman said the school had raised two-thirds of the money for the project, although analysts believe fundraising efforts across the board will lose traction in the wake of the scandal.
“There will be some alums who don’t give as much as they would’ve otherwise given. There will be boosters who don’t give as much money. There might be some reduction in ticket sales to football games in particular,” said Andrew Zimbalist, a Smith College professor and noted sports economist. “Whether it’s a 5 percent hit in revenue or some other number, I just don’t know.”
Evans took the job already facing other considerable fundraising challenges, including improving the football game-day atmosphere, which has lagged since the team joined the Big Ten. The program fell from 10th in attendance in the 14-team league to 12th for each of the past three seasons. A year ago, it was ahead of only Illinois and Northwestern. Maryland Stadium’s 54,000 seats were filled to just 76.5 percent capacity in 2017, a number bolstered by visits from the massive fan bases of Michigan and Penn State for the final two home games.
The school has not released season-ticket sales figures for the 2018 season, but some boosters believe the attendance numbers during this upcoming season could be the lowest in Maryland’s five-year tenure in the Big Ten. But revving up support in the stands isn’t necessarily a top priority in the wake of McNair’s death.
“I think the guiding principle from the school, the administration and the department is to do what’s right,” said Marcos Bronfman, president of the Terrapin Club and a member of the alumni association’s board of governors. “If that means money has to be spent, I imagine they’ll do that because it’s the right thing to do and just suffer the consequences of having to spend the money.”