Navy athletics cutting costs to address budget crunch
By BILL WAGNER | The Capital (Annapolis, Md.) | Published: July 10, 2018
ANNAPOLIS, Md. (Tribune News Service) — Many employees of the Naval Academy Athletic Association have termed it a “budget crisis.”
Athletic director Chet Gladchuk has downplayed the situation, calling it a “course correction.”
What is not in doubt is that Navy athletics has undergone an unprecedented cost-cutting process over the last four to five months.
Both the men’s and women’s basketball head coaches have been told they cannot replace assistants who departed. Other jobs in the athletic department have been eliminated.
Varsity head coaches have been directed to earmark a percentage of summer camp proceeds to the Naval Academy Athletic Association and each sport’s budget was sliced by 15 percent. Retirement plans have been altered to reduce that line item expense.
The Capital spoke to more than a dozen current or former employees of the Naval Academy Athletic Association to paint an accurate picture of the budget.
Multiple individuals who attended a mandatory meeting of all varsity head coaches have stated that Gladchuk cited a $5 million deficit as reason for the belt-tightening. That figure was also included in a subsequent letter sent to select NAAA employees.
In an interview with The Capital, Gladchuk denied there was a deficit and spoke instead about a reduction of cash reserves. The 17th-year athletic director indicated the Naval Academy Athletic Association maintains a certain amount of funds for security purposes and a steady depletion of that account set off the alarm bells.
“Our cash reserves had dwindled to the point we needed to address spending. It’s as simple as that,” Gladchuk said. “This is a normal exercise in business responsibility. We are merely going through a course correction.”
Gladchuk said the $5 million figure referenced in the meeting and subsequent letter was a combination of a challenge to generate $2.5 million in additional revenue and identify $2.5 million in savings.
The budget review began during the 2017 fiscal year, which runs May through May for the Naval Academy Athletic Association. Gladchuk and Colleen Jordan, chief financial officer for NAAA, analyzed revenues and expenditures and concluded in January that reductions needed to be made to put the athletic department back on track.
“In February we made the decision to take a long, hard look at everything to ensure the department was self-sustaining — as it needs to be,” Gladchuk said. “We must be absolutely certain that expenses aligned with revenue streams. Again, it’s a case of Business 101. You cannot spend more than you are taking in.”
The Naval Academy Athletic Association operates as a private, 501C3 non-profit organization with a stated objective to “promote, influence and assist in financing the athletic contests of the midshipmen of the United States Naval Academy.”
Gladchuk explained that NAAA must basically be self-sufficient as it receives “a couple million” dollars from the U.S. government and a small amount of student fees collected by the Naval Academy.
“We are a ship that must sail on its own bottom. Our charge is to generate enough revenue to cover our operational costs,” Gladchuk said.
Vice Admiral Walter “Ted” Carter, superintendent of the Naval Academy, supported the athletic association’s moves to trim costs.
“Like many organizations, NAAA continually evaluates its business model and makes fiscal changes, when appropriate, to ensure it can continue to provide the Naval Academy with the exceptional athletic program support and services as it has for many years,” Carter said in a statement. “We remain confident in NAAA's ability to fulfill its mission.”
In a January 2015 article in The Capital, Gladchuk said the annual operating budget for the Naval Academy Athletic Association was $41 million with about 4 percent coming from federal funding. That story detailed an approaching agreement between the Naval Academy and the NAAA to reduce the amount of government money needed to support varsity sports programs.
As a private entity, the Naval Academy Athletic Association does not fall under the jurisdiction of the U.S. Navy or the Naval Academy. However, past operating agreements gave the academy superintendent authority over NAAA activities.
Gladchuk has said in the past that NAAA employs some 200 people whose salaries are not dependent on any government funds. During the 2015 fiscal year, when the operating budget was $41 million, Gladchuk said the NAAA generated $3 million in profits. Money comes from television and radio agreements, corporate sponsorship, fundraising and ticket sales.
On June 22, Gladchuk said that expenses have outpaced revenues in recent years and therefore reduced the association’s cash reserves that had been built up over time.
By cutting costs now, Gladchuk said he is being proactive rather than reactive in order to avoid a budget crisis. That assertion has been questioned by numerous members of the Naval Academy athletic department based off communications they have received from the longtime athletic director.
“Change is never easy, it causes anxiety,” Gladchuk said in addressing such concerns. “Those people who are complaining need to grow up and get over it.”
Gladchuk emphasized that none of the cost-cutting measures will affect Navy’s ability to compete.
“There is absolutely no threat of jeopardizing the mission,” he said. “We continue to maintain an expect-to-win environment with all 33 varsity sports. Not one thing has changed with regard to the core of what we do and the quality experience of the midshipmen student-athletes.”
Gladchuk said cost-cutting for individual sports mostly involves logistics such as travel and operations. For instance, varsity head coaches have been instructed to schedule away games on a regional, rather than national, basis.
“We cannot have certain sports traveling out west as often as has been the case. That makes no sense,” Gladchuk said. “Instead of flying to California or some other far-flung locale, we need to play an opponent that can be reached by bus.”
Navy and the other major service academies — Army and Air Force — have long fielded more varsity sports than civilian Division I schools. That is largely done to meet the physical mission component of the Naval Academy that requires all midshipmen to participate in some form of exercise program.
In recent years, Navy added varsity sports, establishing women’s tennis, women’s lacrosse and women’s golf. Gladchuk was adamant that no varsity sports will be eliminated in order to reduce the overall athletic department budget.
“Read my lips: We are not cutting any sports. That is never going to happen on my watch,” Gladchuk said. “Bottom line, we don’t need to cut sports. We can continue to operate all 33 varsity programs in a very competitive manner by simply streamlining.”
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