From the "Cut out" front page article:
"We understand that Duke cannot possibly offer him as much money as Tennessee can."
This is simply an excuse to not hire the best, and is completely false.
Tennessee endowment: $710 million
Duke endowment: $4.9 BILLION
Highest head football coach salary: ~$5 million
Tennessee head football coach salary: $2 million
Duke head football coach salary: $1.5 million
So for $3.5 million, Duke could be the highest-paying football program in the nation.
That is .071 percent of the annual endowment, to hire the very best coach and potentially become a very good program.
The endowment would go from $4,900,000,000 to $4,896,500,000, a simple rounding error.
Is $3.5 million an investment worth making to bring in an incredible coach and the money that would come along with that? A no-brainer.
Saying things like "no way can duke offer as much money as school X" is simply false. For the absurd amount of money put into facilities (which is necessary, no doubt), for much less we could offer someone like Pete Carroll Seahawks-level money ($7 mill) to come to Durham. Why not?
This was just an aside; I am completely stoked that Cut is staying in Durham. We should pay the man.
But you grossly misunderstand the way that endowments work. They are not intended as simple repositories of cash. They generate annual cash flow by way of interest yield. Moreover, endowments generally do not go to pay athletic department salaries; rather, they are intended for an institution's core academic pursuits. Athletic salaries are much more contained within an athletic department's separate budget, which generally derives from income from revenue sports (nearly everywhere, this means basketball and football). Added into this are booster donations, something that especially shouldn't be discounted at a place like Tennessee.
You're right that, at first blush, it seems that Duke can far better afford to pay a football coach $3 million or more than can Tennessee. However, you're really talking apples and oranges here.
Lastly, we pay Coach K something on the order of $2.2 million a year. There is no way we will ever pay a football coach more than Coach K. Ever. Thus, to pay a new football coach, say, $3.5 million, would actually cost something like $4 million additional: a $2 million increase over Cut's current salary, plus another $2 million or so for K (I theorize that K would still have to be a marked step above the football coach salary-wise...even the prospect of paying him and the football coach the same amount just ain't ever gonna wash in Durham).
Of course, $4 million is still just a drop in Duke's endowment bucket. But again, your read of the situation is based on misconception.
Last edited by wilson; 01-15-2010 at 10:59 AM.
A bad idea? Maybe. A good idea? Probably not. But an idea nonetheless
The Duke Endowment is not some cash extension of Duke University. It is a private foundation that was set up by James B. Duke in order to support a number of institutions including Duke, Davidson, Furman, etc, and other institutions devoted to health care and child welfare, etc.
Duke University does have its own endowment fund.
Read more here.
In addition to all the good points made above, if Duke started dipping into their endowments to throw millions more at coaches, it would just lead to an arms race in that regard. Once others start doing it to it would just turn ugly and a huge waste of $ for everyone involved, money that would be better spent on butter, errr, I mean academics.
But endowments today actively play stocks and other high-risk investments. Look at endowment growth (and drastic decline) the last few years -- that's not from sitting around collecting interest.
So, a $3.5 million "investment" in a head football coach, with the potential for a far greater return based on overall increased prominence of the university, is simply another way to increase the overall capital.
As Duke fans, we of anyone should know this, as applications skyrocketed after Duke won back-to-back titles.
It was "just" basketball, but it brought in a lot more money/prestige to the university as well.
Just because something is not traditionally done, doesn't mean it can't and shouldn't be done.