Can a CIAA school afford the jump to the MEAC/DI?

One of the most consistent conversations in HBCU sports in recent years is the future of the MEAC – namely expansion. 

The MEAC’s recent changes in membership have resulted in plenty of questions about what schools they could solicit for conference membership. One particular option is to invite a Division II school to make the leap to Division I.  This has happened four times since the MEAC was formed primarily from CIAA institutions in 1970, most recently with NC Central moving from the CIAA to the MEAC. Hampton and Norfolk State University made that jump successfully in the mid-1990s while Winston-Salem State’s attempt short-circuited in the late 2000s. 

Candidates that opt to move up from Division II face numerous hurdles in 2022.  One hurdle is the reclassification fee, an amount which has sharply increased in recent years and is based on revenue sharing figures paid by existing Division I schools. That fee in 2022 stands at $1.7 million, paid recently by the University of Southern Indiana in their bid to reclassify. 

Other hurdles remain, including the need to increase coaching and scholarship budgets.  In fact, the NCAA recently sent out a letter to schools that informed them that moving up would likely become more cumbersome soon. Division II allows 36 scholarship maximum in football alone, and that amount increases to a 63 scholarship maximum.  Scholarships can be broken up in Division II, but have to be full scholarships in Division I.  Not many schools fund the full 36 scholarship allotment in Division II.   Moreover, schools have to fund around 55 scholarships to be eligible for BCS opponents to count the game towards bowl eligibility.

Why Virginia State

Since the CIAA has served as a conduit for the MEAC’s expansion efforts in the past, it is worthwhile to entertain what it could take for a present-day CIAA school to potentially make the move.  This analysis includes Virginia State for a couple of reasons. 

• First, financial statements about VSU’s athletics program are publicly available through a state agency called the Auditor of Public Accounts. The agency analyzes intercollegiate athletics across all public colleges and universities throughout the state. 

• Secondly, VSU is frequently considered a move-up candidate in media reports and social media interactions, despite having declined several inquiries.

• Lastly, of the states who are in the CIAA’s footprint, only the State of Virginia publishes enough data to perform a meaningful analysis.

This analysis compares VSU most recent Intercollegiate Activities report from fiscal year 2019 to the 2019, 2020, and 2021 Intercollegiate Athletics report of Division I rival Norfolk State. 

What are the Commonwealth of Virginia’s views around funding?

Virginia Code Section 23.1-1309 governs intercollegiate athletics program activity, including how programs can be funded. The rule restricts how much student fees and other contributions (i.e. direct and indirect institution support) can be used to pay for athletics.  For Division I FCS programs, the rule caps these fees at 70 percent of total operating revenues.  For Division II schools, the rule caps these fees at 81 percent of total operating revenues. 

In 2019, NSU was just over the 70 percent threshold at 70.6 percent, and thus faced additional scrutiny.  The effect of COVID-19, and the increase in direct state support, likely through the CARES Act, helped NSU reduce this percentage to under 70 percent. According to a Washington Post report, Norfolk State’s enrollment has taken a three percent dip since 2019, enrolling 5,458 students in Fall 2021.

In 2019, the writer calculated VSU’s percentage to be around 74-76 percent, depending on how some of the indirect costs are calculated into the state’s formula.  VSU seems to have some room to maneuver if it wanted to dedicate itself to D-II, but needs to raise more revenue outside of fees and institutional support if it wanted to position itself for Division 1 FCS. Virginia State’s enrollment has taken a two percent dip since 2019, hovering at 4,300 according to the same report.

As a percentage, 18 percent of direct institutional support goes to VSU’s revenue in 2019, whereas NSU needed to contribute 26 percent of the revenue stream.

VSU’s budget vs. its MEAC neighbor

There’s no surprise that NSU’s budget at $13,751,000 in 2019 is twice as large as VSU.  Much of the difference is in three areas:

a. Athletic Aid: NSU has to offer more scholarships at the higher level, and faces a conference and NCAA minimum in football just to be a countable opponent for a BCS opponent. Plus, VSU can offer partial scholarships, but NSU’s scholarships have to be full scholarships. NSU spent $2,371,000 more than VSU in 2019.

b. Coach and Support Staff and Benefits: Division I commands more of a salary premium, plus more coaches to be competitive.  Here, NSU spent $2,023,000 more.

c. Travel: The MEAC footprint is larger than the CIAA, plus NSU does travel quite a bit in non-football sports.  Here, NSU spent $667,000 more.

Of note is that VSU actually carries a higher debt burden than NSU on facilities that were financed via bonds. That issue likely because Rogers Stadium is younger than Dick Price Stadium.  VSU paid out $647,000 in payments and has $3,056,000 in remaining debt as of 2019.  This debt is likely to be extinguished in 2026 based on the current paydown schedule.  By comparison, NSU has only $972,000 to service, and those debts should be paid off by 2023.

The Virginia model requires institutions to come up with ways to generate revenue if they want to raise student fees and institutional support.  Thus, NSU has to use additional means to comply with Virginia’s standards.  They do so via:

d. Guarantee games: In 2019, NSU earned $504,000 in guarantees, including $300,000 from football and $180,000 in basketball.  Some of that money went to VSU, as the rivals played football at NSU in 2019.  VSU earned $120,000 in guarantees, with $100,000 coming from football. 

e. NCAA Distributions:  At Division I, these distributions are a lot higher.  VSU’s $22,000 cut in 2019 is meager when compared to $747,000 that NSU earned in 2019.  That amount increased to $900,000 in 2021.  The CIAA also provided VSU with $29,000 in contributions, but again, that barely dents the deficit when compared to NSU’s total figure.

f. Royalties, licensing, ads, and sponsorships: VSU only earned $23,000 here, whereas NSU earned $483,000 in this area. 

In conclusion, this analysis does help to show a breakdown of some of the financial hurdles associated with a CIAA school jumping to the MEAC.  VSU also faces a legislative hurdle if it wanted to jump to Division I, as the school would need to submit a plan to finance the move to the state’s Intercollegiate Athletics Review Commission and approval from Virginia’s General Assembly. 

Sources continue to indicate VSU is not looking to move to Divsion I at this time. For its part, MEAC Commissioner Sonja Stills said earlier this month that the league had conversations with several schools about potentially joining the conference, but said it would have to be the correct fit.

“Anybody wants us at this point is wanting us because we are a strong eight and we’re going to help somebody else,” she told Dr. Cavil’s Inside HBCU Sport last week. “But if we are committed as eight institutions – we’re strong as eight. That’s not to say we’re not looking to grow in the future. Obviously –  we are – but it has to be strategic in what we do in regards to bringing in an institution. It has to be the right fit. It has to be the right time to add an institution. But we can’t be at a place where we are just grabbing institutions just because the changing and the shifting of the landscape is going on.”

Virginia State isn’t the only school thought to be a good fit for the MEAC from the CIAA, but hopefully this analysis will provide more insight on just how much of a jump it actually is.