Money ball; High school sports administration is now big business.

Byline: Rich Garven

COLUMN: THE BUSINESS OF HIGH SCHOOL SPORTS

First of 2 parts

FRANKLIN - Managing high school athletics has become a big business ... a very big business.

When it opened shop in 1978, the Massachusetts Interscholastic Athletic Association was a small operation focused solely on running season-end schoolboy sports tournaments.

Today, it has become nearly a $5 million per year enterprise - and it's still growing.

The association charged with organizing, regulating and promoting high school sports in the state was formed because school principals found they were devoting much of their time to athletics at the expense of academics. Since then the MIAA has expanded its reach beyond locker rooms into classrooms.

The MIAA continues to manage the post-season tournaments that led to its founding, but it has branched out to offer leadership, sportsmanship and wellness programs for students, and workshops for coaches, athletic directors and principals.

It's as different as night and day "from when we started 30 years ago," said Executive Director Richard F. Neal, who has been with this nonprofit organization since Day 1. "Our mission has changed to a clearer focus on educational athletics."

"That's the thing, it just grew, developed - whatever word you want to use - into big bucks," said Samuel Pawlak, a former principal at Nashoba Regional High School in Bolton, who spent 39 years working in education and is closing in on 45 years as a basketball referee.

The MIAA started with five employees in rented space in Boston. Today there are about 20 employees, not all of whom are full time and some of whom work for the Massachusetts Secondary School Administrators' Association Inc., a sister group that promotes professional development. The organization owns a spacious facility built in Franklin eight years ago for $2.71 million.

The broad initiatives that now define the organization's mission require financial support for an operating budget that was $4,782,512 in fiscal 2007. The MIAA had a surplus in each of the last two years. It'll be more of the same when the books are closed on fiscal 2008 at the end of the month, since net revenue from tournaments - the MIAA's primary source of income - was on track to end up $270,000 above original budget projections, Mr. Neal said June 5.

It's the latest windfall for an organization that started the fiscal year with $1.17 million in cash and certificates of deposit. That's a lot of dough stuffed in the cookie jar, said Paul Gilligan, an accountant with the firm of Stowe & Degon in Westboro.

"They're on strong financial footing; they have a boatload of cash," said Mr. Gilligan, who reviewed the MIAA's independently audited financial statements for the last three years at the Telegram & Gazette's request.

"It's an organization that's in a healthy state," said Barry Haley, the athletic director at Concord-Carlisle and chairman of the MIAA finance committee.

And one that's currently immune to the belt-tightening many school committees annually deal with. Expenditures increased 17 percent from 2005 to 2007. Mr. Haley said next year's budget expenditures will go up about 6 percent. "We weren't looking at any cuts or any newer initiatives."

The board of directors, which has the final say in money matters and whose membership includes Dudley-Charlton School Superintendent Sean Gilrein and Algonquin Regional Athletic Director Francis Whitten, is OK with writing bigger checks. Marlboro Superintendent/Principal Mary Carlson, who concluded her membership with the board earlier this month, said: "For me it's really about doing what's right for the kids.

"I think you need to know it's not a blind trust," she stressed. "There are questions asked. You do look at things. It's a large fiscal responsibility."

What's important, said MIAA President and Monson Principal James Peters, isn't how much the organization spends, but rather can it afford it.

"I'm really comfortable we're a solvent organization," he said. "We've had some good success over the last two to three years and been able to do some good things."

The last time the MIAA ended a year in the red was 2005, when it finished with a deficit of $288,070. The loss was chiefly due to decreased attendance on the final two weekends of the state basketball tournament.

A March snowstorm that year during the sectional finals led to $100,000 less coming in than anticipated, said Mr. Neal. The next weekend, the state finals were played at the University of Massachusetts as the DCU Center in Worcester and the arena now called the TD Banknorth Garden in Boston were not available. According to Mr. Neal, 10,000 fewer tickets were sold at the Amherst venue than the previous year when the games were played in Boston.

The MIAA still finished with a net surplus of $492,731 on its tournaments, according to its audited financial statement. However, it was far less than expected. By comparison, they made a profit of $999,520 in 2006 and $1,091,843 last year. That doesn't include money from souvenir sales or ball agreements, which amounted to a combined $330,000.

Paradoxically, the MIAA administration has a love/hate relationship with the games themselves. It can't survive without tournament revenue, but is frustrated the public focus is on the sporting events and not on sportsmanship initiatives.

"We're not (just) about conducting tournaments," Mr. Neal said. "Our schools expect us to manage tournaments at the end of each season, so we do that."

That opinion was seconded by Mr. Peters.

"We just need to keep banging away at those things," he said. "That we do stand for more than putting on games and tournaments for kids."

The post-season tournaments the MIAA hosts for roughly 12 weeks allow it to butter its bread for the rest of the year. A little over 75 percent of the total revenue in a given year is derived directly (tickets) or indirectly (souvenir sales, ball agreements, etc.) from those championship events.

According to Mr. Neal, it's an admittedly tenuous way to run an organization, what with site availability, matchups and weather conspiring for a make-or-break year financially on a handful of weekends.

"If we had a second year like '05 we would have been seriously threatened," he said. "But things did turn around in '06, so we were able to almost absorb the $300,000 deficit and carry on business."

That thought was disputed by Mr. Gilligan.

"They're definitely in a healthy state and one or two bad years isn't going to put them out of business," the accountant said, adding, "a major lawsuit might."

The old adage says numbers don't lie. However, it doesn't mean they should be taken at their word.

Take for instance line 18 on the Form 990 for organizations exempt from income tax filed by the MIAA for FY07. It indicates the nonprofit organization finished the year with an increase of $15,599 in net assets. In other words, a small surplus.

However, in August 2006 - 13 months after the MIAA finished with the $288,070 deficit - the board of directors approved a defined post-retirement plan that will pay a portion of medical insurance coverage for eligible retirees. Years of service determine eligibility.

Mr. Gilrein said the idea was to replicate a plan similar to one offered by the Massachusetts Teachers' Retirement Board. In addition, it would be "an incentive to recruit quality people in the future," the Dudley-Charlton school superintendent said.

Either way, it's costly. Last year, a $223,057 payment was made to fund the plan. So while the MIAA claimed a year-end profit of $15,599, it might very well have shown a surplus of $238,656 if not for the expansion of its employee benefits program.

Perhaps nothing reflects the growth of the MIAA more than the buildings it has operated out of over the years.

The MIAA rented in Boston, and then in Ashland, before having a place of its own built in Milford on a 1.1-acre parcel in 1987. The Ashland facility was approximately 4,600 square feet; Milford 7,963.

The Milford building cost $760,000 with the MIAA putting down $160,000 and taking out a mortgage on the balance. The Boston Globe referred to the building as the "new and permanent home" of the MIAA in an article that ran in late August 1987, just a couple of weeks before the organization moved in.

The article also noted that member schools would pay for the building by contributing their share of the tournament net pool for three years. Schools were scheduled to get 30 percent of the net pool in the fourth year, 40 percent in the fifth year and return to the traditional 55 percent share in the sixth and subsequent years.

As it turned out, the Milford building was not a permanent home and the financing method would pave the way for abolishing the sharing of the tournament net pool between the MIAA administration and the member schools.

So in the summer of 2000, the MIAA sold the nearly-paid-off Milford building for $865,000 and relocated to Franklin. The glass-and-brick edifice it now occupies cost $2.71 million, covers 16,767 square feet and offers ample on-site parking on 7.16 acres.

"It tripled our conference space," said Mr. Neal, who estimated the building is used 200 days a year for professional development.

It would appear this time the MIAA has found itself a permanent home. Mr. Neal boasted the building was designed so the footprint can be expanded by another 8,000 square feet.

"That's a strong asset of an association," Mr. Haley said. "I think it was a wise decision to build the building when we did."

Just another step down a road that has taken the Massachusetts Interscholastic Athletic Association from small operation to large enterprise.

Tomorrow: The MIAA's focus has changed from running post-season tournaments to promoting "educational athletics."

ART: PHOTOS; CHARTS

CUTLINE: (1) The Massachusetts Interscholastic Athletic Association and the Massachusetts Secondary School Administrators Association headquarters are located in Franklin. (2) Massachusetts Interscholastic Athletic Association-sanctioned umpire Stan Nolan goes over the rules before a recent state softball tournament game at Worcester State College. (3) T-shirts with the MIAA logo and other souvenirs are sold at a stand during a recent state tournament game. (CHART 1) Massachusetts Interscholastic Athletic Association (CHART 2) MIAA finances (CHART 3) MIAA Expenses (CHART 4) Comparing New England high school sports associations

PHOTOG: (1, 2) T&G Staff/JIM COLLINS (3) ALEX WITKOWICZ (CHARTS) T&G Staff/DON LANDGREN JR.