XOPHIA CHOREGIA

Sport Management International Journal

Scientific Forum in Sport Management

Applying the Balanced Scorecard Strategic Evaluation Method to a University Athletic Department

SMIJ VOL. 4, Number 2, 2008

D.O.I: http:dx.doi.org/10.4127/ch.2008.0032

Thanos Kriemadis, Andreas Kotsovos, Panayiotis Alexopoulos

Department of Sport Management, University of Peloponnese

Abstract
The Balanced Scorecard (BSC) has been extensively used in manufacturing organisations, service organisations, non-profit organisations, and governmental organizations with outstanding results (Kaplan and Norton, 2001b). Performance measures are at the core of the BSC system. However, financial measurement alone does not reflect the organisational mission of governmental and non-profit organisations; rather the mission of government or non-profit organisation should be placed at top of the BSC in measuring whether such an organisation has been successful. Hence, the greatest difference between businesses and nonprofit organisations lies in the achievement of the mission. The purpose of this article is to present the evaluation of the performance of a University Athletic Department using the balanced scorecard strategic approach which includes four dimensions such as: (a) the customer dimension, (b) the financial dimension,(c) the learning and growth dimension and (d) the internal business process dimension.

Key Words: Balanced Scorecard, evaluation, university athletic departments.

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Performance management and evaluation methods and tools such as the Balanced Scorecard (BSC) and Six Sigma have been greatly used to improve business competitiveness as well as the efficiency and effectiveness of educational institutions and non profit organizations in todays global environment (Chen, Yang and Shiau, 2006). Non-profit organisations are focusing on mission, strategy formulation and performance management due to intense competition and new social developments. Financial indicators were firstly used by businesses to formulate appropriate strategies. However, financial indicators are lag indicators and can cause businesses to focus on short-term performance and not on long-term objectives (Chen, Yang and Shiau, 2006; Kaplan and Norton, 2001b; Porter, 1992). Universities need to formulate strategic plans and turn strategy into action. Using the key performance indicators of BSC universities can formulate strategies and allocate resources in a more efficient and effective way. (Kaplan and Norton, 2001a). This study investigates the application of BSC to a university athletic department and in particular, it presents the evaluation of the performance of a university athletic department using the balanced scorecard strategic approach which includes four dimensions such as: (a) the customer dimension, (b) the financial dimension,(c) the learning and growth dimension and (d) the internal business process dimension.

Literature Review
Kaplan and Norton (1996 a, b; 1992; 2001a) established BSC as a performance measurement system, a strategic management system, and a communication tool. The authors have pointed out the role of the customer, the significance of internal processes; and the important process of innovation and learning. The BSC (Figure 1), according to Niven (2002), includes the following four measurement perspectives: (a) Financial perspective, (b) Customer perspective, (c) Internal process perspective, and (d) Employee Learning and Growth perspective. Performance measure indicators (PMIs) are evaluating the achievement of strategic targets and provide direction to employees on how they can contribute to the overall success of the organisation (Niven, 2002). Kaplan and Norton (2001 a, b) argued that the BSC can be implemented by taking into account the organisations particularities (Figure 2). Furthermore, the authors stated that non-profit organisations establish BSC with mission development, followed by the customer perspective, the internal process perspective, the learning and growth perspective, and finally the financial perspective.

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Figure 1: Balanced Scorecard Source: Niven, (2002).

Figure 2: Balanced Scorecard for non-profit organization. Source: Kaplan and Norton (2001b).

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CASE STUDY The Division of Athletics at the University of Connecticut

Background Information The Division of Athletics at the University of Connecticut (UConn) includes 24 sports and more than 650 student-athletes as of 2007 and is known as one of the top athletic programs in the U.S.A. (Delaney, 2008; Uconn Athletics Department, 2008b). They are in Division I of the National Collegiate Athletic Association (NCAA), having a 2007 budget of over $53 million dollars, with several state - of - the - art on and off campus venues and gathers fans from all over the state of Connecticut and the nation (Delaney, 2008; Uconn Athletics Department, 2008b). Football and mens and womens basketball are the three most popular UConn sports in terms of the press and attendance (Delaney, 2008). Division of Athletics Mission Statement The Division of Athletics mission statement emphasizes the development of student-athletes into well-rounded individuals. Student-athletes must succeed academically and be active members of the community at the same time (Delaney, 2008; Uconn Athletics Department Annual Report, 2008b, p.3). Figure 2 provides an adjusted Balanced Scorecard framework applied to the UConn Athletic Department.

Figure 3: BSC for case study. Source: Delane (2008).

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The Customer Dimension of the Balanced Scorecard

Customers The Fans There are two target groups of customers, Husky fans and the student-athletes themselves. Metrics to consider for the funs are the attendance at home venues and support in ticket allotments (Delaney, 2008).

Table 1. Source: UConn Athletics Department (2008b)

Football Total Attendance 275,129 240,000 272,576 227,435 Average Attendance 39,304 40,000 38,939 37,906 Attendance change 2% 3% 3%

Year

# Games

Sell - outs

% Sell - outs

2004 2005 2006 2007

7 6 7 6

6 6 4 3

86% 100% 57% 50%

Football Year 2005 2007 Bowl Motor City Bowl Car Care Bowl Ticket Allotment 10,000 12,500 Sales 6,000 12,500 % Sold 60% 100%

Womens Basketball Year 2004 - 2005 2005 - 2006 2006 - 2007 2007 - 2008 Total Attendance # Games Average Attendance Sell - outs % Sell - outs 217,808 223,503 198,434 178,917 16 19 18 16 13,613 11,763 11,024 11,182 16 4 2 2 100% 21% 11% 13%

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Mens Basketball Year 2004 - 2005 2005 - 2006 2006 - 2007 2007 - 2008 Total Attendance # Games Average Attendance Sell - outs % Sell - outs 234,109 223,176 260,231 202,082 17 16 20 17 13,771 13,949 13,012 11,887 17 15 13 6 100% 94% 65% 35%

All three teams show declining average attendance rates and a declining percentage of games for which all tickets have been sold (see Table 1) (Delaney, 2008). Table 2. Source: UConn Athletics Department (2008b)

Radio, TV and Internet Rights Revenues Year 2004 2005 2006 2007 Total Revenue $867,510 $1,132,379 $1,927,852 $1,936,937 % Increase 30.5% 70.2% 0.5%

Metrics to consider for the interest in the UConn Athletic Department are media revenues from internet, radio, and television. As it is depicted in Table 2, media revenues are still growing since 2004 (Delaney, 2008). Customers The Student Athlete Metrics to consider for the student-athletes are the success of teams and the success of the student-athletes after college (Delaney, 2008). Academic Success Measures Metrics to consider for the student-athlete are grade point averages (GPAs) and the new academic progress rating (APR) system established by

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the NCAA. In what concerns the GPAs, 40% of all student-athletes achieved at least a 3.0. Moreover, the academic retention rate was 99%. Regarding the APR metric used by the NCAA, all 24 UConn teams met the NCAA standards (Delaney, 2008; Uconn Athletics Department, 2008b). Personal Athletic Success Measures UConn has the most active players in the NBA and WNBA among all universities. It has produced 13 mens basketball players in the NBA and 12 women players on WNBA (Delaney, 2008; Uconn Athletics Department, 2008c).

The Financial Dimension of the Balanced Scorecard

Metrics to consider for the financial dimension of the BSC are ticket revenues, proceeds from the Big East or from the NCAA, and donations (Delaney, 2008; Uconn Athletics Department, 2008b). Table 3. Source: UConn Athletics Department (2008b)

Ticket revenue
Basketball (Men) $5,106,315 27% 14% 8% $5,848,354 $5,382,909 $5,806,562 15% 8% 8% Basketball (Women) $3,728,208 $4,227,145 $3,446,333 $2,759,329 13% 18% 20%

ear

Football

%Change

%Change

%Change

Total

%Change

2004 $3,969,196 2005 $5,034,764 2006 $4,339,079 2007 $4,679,827

$12,899,376 $15,181,912 $13,334,815 $13,437,072 18% 12% 1%

Guarantees / Proceeds from Big East and NCAA Year 2004 2005 2006 2007 Total $3,839,050 $6,333,442 $6,078,692 $6,016,287 %Change Total Revenues $44,009,333 $47,195,392 $58,083,007 $52,795,923 Support as % of Revenue 8.7% 13.4% 10.5% 11.4%

65% 4% 1%

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Financial Ticket Revenues Table 3 presents ticket revenues which peaked in 2005 and then declined in 2006 and still have not completely recovered (Delaney, 2008; Uconn Athletics Department, 2008b). It is necessary that the UConn Athletic Department examine new ways of pricing such as differential pricing in order to increase ticket sales.

Financial Conference Distributions Since 2004 revenues generated from Conference distributions have been increased and the successful participation in the postseason will increase the amount of conference earnings infused in UConn as well as the media contracts (Delaney, 2008). Table 4. Source: UConn Athletics Department (2008b)

Donations Summary Beginning Cash Balance $4,793 $2,465 $8,076 $30,648 $30,277,660 $38,085,389 $45,977,604 $45,975,474 Cash Receipts $322,782 $272,671 $309,837 $262,786 $17,217,990 $20,608,298 $18,238,561 $16,092,045 Contribution to the Program $327,575 $267,060 $287,265 $172,268 $9,410,261 $12,716,083 $18,240,691 $15,493,233 Ending Cash Balance $ $8,076 $30,648 $121,066 $38,085,389 $45,977,604 $45,975,474 $46,574,286

Program

Year

UConn Club

2004 2005 2006 2007 2004 2005 2006 2007

Uconn Foundation

Total Donations 2004 2005 2006 2007 $9,737,836 $12,983,143 $18,527,956 $15,665,501

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Financial - Donations Since 2004, donations stemming from UConn Club and UConn Foundation have been increased substantially excluding the season 2006-2007. (Delaney, 2008; Uconn Athletics Department, 2008b).

The Learning and Growth Dimension of the Balanced Scorecard

Learning and Growth Facilities UConn Athletic Department has built new facilities, the Burton Family Football Complex and the Shenkman Training Centre, the new home of the football program. These new facilities will create value for the customer base of UConn (fans and student athletes) and hopefully, will have a positive impact on the financial base of UConn athletic division, by attracting talented student athletes (Delaney, 2008; Uconn Athletics Department, 2008b).

Learning and Growth - Recruiting Metrics to consider for the evaluation of future success of the teams include the average rating of recruits (5 stars for the highest quality of recruiters and 1 for the lowest quality) (Delaney, 2008).

Table 5. Source: UConn Athletics Department (2008b)

Football Year 2004 2005 2006 2007 Average # of Stars 2.04 2.27 2.17 2.24 Best Rating (Number) 3(1) 3(7) 3(4) 4(1)

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Basketball Year 2004 2005 2006 2007 Average # of Stars 4.0 3.8 3.9 3 Best Rating (Number) 5(1) 5(1) 5(2) 3(1)

Learning and Growth Academic Support UConn Athletic Department initiated the Counselling Program for Intercollegiate Athletes (CPIA) which provides not only counselling and tutoring services but also life skills courses and academic advising. (Delaney, 2008).

The Internal Business Process Dimension of the Balanced Scorecard

Customer satisfaction UConn Athletic Department is evaluating student-athletes satisfaction on a continuous basis since the student-athletes are considered as customers. Customer satisfaction is a vital internal process of the university in order to retain the best student athletes (Delaney, 2008)). Table 6. Source: UConn Athletics Department (2008b)

Application Data-Storrs Campus Year Fall Fall Fall Fall Fall Fall 2002 2003 2004 2005 2006 2007 Applicants 13,760 17,666 18,466 18,608 19,778 21,105 % Change Admissions 8,507 9,287 9,319 9,498 10,102 10,429 Admission % 62 53 50 51 51 49

28% 5% 1% 6% 7%

Furthermore, another metric to consider for the Internal Business Process dimension is the number of applications for the Uconns campus. Table 6

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shows that, applications were increased by 28% from 2002 to 2003 and another 5% in 2004 due to the successful seasons of the mens and womens basketball teams (Delaney, 2008; Uconn Athletics Department, 2008).

Conclusions
BSC evaluation criteria can be used to evaluate any nonprofit organisation such as the UConn Athletic Department and contribute to the development of the appropriate strategies in order to adapt to external environment changing circumstances. BSC can also identify strengths, weaknesses, opportunities and threats of the Athletic Departments current strategy and initiate corrective action (Delaney, 2008). In terms of Learning and Growth dimension and Internal Business Processes dimension the UConn Athletic Department can be considered successful. New infrastructure has been developed and UConn has now obtained the fame of producing professional athletes for the NBA, NFL and WNBA. If UConn continues to improve what it provides to student-athletes in terms of education and athletics, then the UConn Athletic Department would succeed in the future (Delaney, 2008). The Customer dimension and the Financial dimension need to be improved. Attendance and revenues will be increased if the Athletic Department can reactivate its fan base. The UConn Athletic Department may apply new ticket pricing strategies such as differential ticket pricing in order to increase revenue and attendance (Delaney, 2008).

References
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Kaplan, R.S. & Norton, D.P. (2001c). Transforming the balanced scorecard from performance measurement to strategic management: part II. Accounting Horizons, 15, 2, 147-160 Kaplan, R.S. & Norton, D.P. (2004). Strategy Maps: Converting Intangible Assets into Tangible Outcomes, Harvard Business School Press, Boston, MA. Niven, P.R. (2002), Balanced Scorecard Step by Step, John Wiley & Sons, New York, NY Porter, M.E. (1992). Capital disadvantage: America failing capital investment System. Harvard Business Review, 70, 65-82 University of Connecticut. Athletics Department (2007, April 13). Geno Auriemma Fact Sheet. Retrieved November 20, 2008, from http://www. uconnhuskies.com/SPORTS/WBasketball/2007/ University of Connecticut. Office of Institutional Research. (2008, January 9). Fact Book 2007-2008. Retrieved November 20, 2008, from http://www. oir.uconn.edu/admissions-07.pdf University of Connecticut. Athletic Department (2008a, April 15). Student Athlete Handbook. Retrieved November 20, 2008, from http://www. uconnhuskies.com/MainLinks/AboutUconn/sabook.htm. University of Connecticut. Athletic Department. (2008b, April 15). Annual Report 2006-2007. Retrieved November 20, 2008, from <http://www.uconnhuskies. com/UConn%20AR2.pdf> University of Connecticut. Athletic Department. (2008c, April 24). UConn in the NFL. Retrieved November 20, 2008, from http://www.uconnhuskies. com/sports/MFootball/Records/NFL/NFL.html University of Connecticut Athletics Department.(2008d, April 24). Huskies in the NBA. Retrieved November 20, 2008, from http://www.uconnhuskies.com/ sports/MBasketball/2007/Huskies%20in%20the%20NBA/NBA%20Huskies.html University of Connecticut. Athletic Department. (2008e, April 24). Media Guide 2007-2008. Retrieved November 20, 2008, from http://uconnhuskies. com/SPORTS/WBasketball/2008/MediaGuide/This%20Is%20UCo University of Connecticut. Athletic Department. (2008f, April 25). CPIA. Counseling Program for Intercollegiate Athletes. Retrieved November 20, 2008, from <http://www.cpia.uconn.edu/about.php>

Address for correspondence: Thanos Kriemadis 3 Lyssandrou Str., Sparta, 23100 Greece e-mail: thanosk@uop.gr