In his final speech as NCAA president earlier this month, Cedric Dempsey lamented the future of collegiate athletics in an era of exploding budgets, construction of extravagant facilities and skyrocketing coaching contracts.

The future arrived three hours later and 1,645 miles away from Dempsey's podium on the campus of Baylor University as the school introduced its new head coach Guy Morriss, who reportedly signed a contract that will pay him $1 million per year.

Around-the-clock money generating and subsequent spending are apparent at the nation's most successful football and basketball schools. But the manifestation of the arms race -- the free-agent salaries paid to coaches and "the bigger, the better" mentality for stadium and arena building -- often rears its head when a lower budget school such as Baylor, awards a coach like Morriss a contract roughly equivalent to 5 percent of the athletic department's total budget. Morriss recently joined a growing group of more than 40 current Division I-A coaches in football and men's basketball that make more than $1 million in total compensation.

Winning At All Costs?

Outgoing NCAA president Cedric Dempsey says it's important that conferences learn to share more revenues so that the have-nots have a better chance to compete. "Competition is sometimes contrary to balance," Dempsey said. "Every professional league tries to maintain parity in some way, but its tough." The Big 12 is a conference in which the more one school can generate, the more it can keep. While football bowl games and basketball postseason revenue is equally divided throughout the conference, member schools that appear on network television such as ABC, ESPN and Fox more than others receive more revenue. Unlike most conferences, Big 12 members don't share ticket revenue, conference commissioner Kevin Weiberg said. The Big Ten and Atlantic Coast Conference also split football bowl game revenue and postseason revenue equally, but distribute total television revenue equally. ACC teams have to give the conference back 30 percent of its gross revenues from home games, with a minimum contribution of $105,000 and a maximum of $225,000. The conference then splits the total revenue nine ways, said Mike Finn, the conference's assistant commissioner for football. The Big Ten has the most equal sharing of all the major Bowl Championship Series conferences since member schools have to contribute 35 percent of all gross revenues for home games to the visiting team, Big Ten spokesperson Sue Lister said. Daniel Fulks, who prepares the bi-annual Revenues and Expenses of Intercollegiate Athletics report, said ticket revenue is typically the No. 1 revenue generator for Division I-A schools, making up 26 percent of total revenues on average. -- Darren Rovell

When have-nots match the coaching contracts being drawn up by the haves, they usually are paying more since higher-profile programs are able to supplement a small base salary with a windfall of outside revenues from apparel companies and networks supporting the highly-rated coach's television show. Florida State, for example, only pays $200,000 of Bobby Bowden's $1.5 million contract, but Baylor doesn't have the scale of bonuses to offer Morriss because the business world isn't investing in the Bears the same way they are in the Seminoles.

"There is no doubt that the schools that do extremely well and have the ability to easily pay for new facilities and new coaches put a lot of pressure on the have-nots," said Dempsey, who has served as NCAA president since 1993 and will step down Dec. 31. "There are 30 schools in Division I-A that are doing extremely well (financially) with their athletic programs. But will we soon be down to 15?"

Although the dream of locking up the next Bob Stoops -- the Oklahoma head football coach who makes $2 million a year -- might drive schools like Baylor to pay up for Morriss, the financial disparity between the Baylors and the Oklahomas of college sports continue to grow. The average financial losses of Division I-A schools have increased from $2.8 million in 1997 to $3.8 million in 2001, according to the recent edition of Revenues of Expenses of Intercollegiate Athletics. Conversely, the report found that Division I-A schools that operated in the black in 1997 managed to increase its positive revenue by 2001, from $1.7 million to $5.3 million. "If Baylor is spending $1 million on a guy that won nine games in two years, that's a real wake-up call that there's a problem here," said Daniel Fulks, the director of the accounting program at Transylvania University, who prepares the bi-annual Revenues and Expenses of Intercollegiate Athletics report for the NCAA.

Along with criticism about low graduation rates and the commercialization of high-profile college athletics at the expense of the unpaid student-athlete, incoming NCAA president Myles Brand will have to oversee the future of the arms race. The problem that Dempsey had soon will be Brand's problem, and the NCAA is virtually powerless to impose reforms, such as salary caps or spending limits on member schools.

"The cost of intercollegiate athletics has gone up faster than the costs related to higher education," said Brand, who will leave his post as president of Indiana University. "But there are difficulties in controlling the salaries of coaches, athletic directors or the costs related to building new facilities due to antitrust legislation."

While the independent Knight Commission on Intercollegiate Athletics has suggested that the NCAA seek relief from federal antitrust laws to limit salaries and spending on facilities, it's unlikely that this will happen. The NCAA already attempted to do this without government intervention and in 1996 paid a $54.5 million settlement to assistant coaches whose salaries were controlled as a result of the NCAA's restricted earnings rule, which capped salaries at $16,000 per year.

"It's a free enterprise system and it will be that way unless there is an antitrust exemption," said Maryland athletics director Debbie Yow, who has hired a football coach (Ralph Friedgen), a women's basketball coach (Brenda Frese) and extended the contract of its men's basketball coach (Gary Williams) over the past two years. "We are in a profit-seeking business with goals related to competitive excellence and schools have to ensure that they have the best programs that they can build." Both Friedgen, whose base salary is $183,820 and Williams, who earns a base of $207,584, should earn $1 million in incentives and outside income by the end of their seasons.

While the pressure put on athletics directors to make their program as successful and profitable as possible drives up the asking price for coaches in revenue-generating sports, the competition for a marketable head coach among the college and professional teams is an equally contributing factor to the meteoric rise in the value of contracts. Very few programs have made a buyout so large for an attractive coach that there have been no takers.

"One program can say, 'Hey, look at us, we can't continue to upgrade facilities or pay these salaries to our coaches,' " said Oklahoma athletics director Joe Castiglione. "And everyone else will quickly acknowledge that school and move on to the current way of doing things."

	“	Whether we bring in $10 million, $50 million or $100 million, we figure out a way to spend it. It seems to me that what happens is the schools don't have shareholders in the same way that a public corporation of profit does, so they pay coaches when they get the money and they want to build tracks, natatoriums, arenas and training facilities. You can always make something better. ”
		— Jim Delany, Big Ten commissioner

But it's easier for the schools with a winning tradition and a large fan base. Oklahoma can only expand Memorial Stadium's capacity next season to more than 90,000 fans because they are sure that it will be sold out. Twenty seven new luxury suites -- that cost $61,000 to $79,000 per season -- as part of a $65 million renovation is only possible with a healthy stock of eager boosters. If Castiglione can find 11 more boosters to agree to buy a luxury suite, he says he'll build 27 more.

Economists like Andrew Zimbalist, author of "Unpaid Professionals: Commercialism and Conflict in Big Time College Sports," says the price schools are paying doesn't make fiscal sense given that their athletics departments generate $20 million to $30 million. NFL teams, which are doling out similar contracts, typically generate 10 times that revenue, Zimbalist says.

Despite this, athletic directors at institutions that are generating a profit are not having any trouble draining their coffers, even without having to pay their athletes.

"Whether we bring in $10 million, $50 million or $100 million, we figure out a way to spend it," Big Ten commissioner Jim Delany said. "It seems to me that what happens is the schools don't have shareholders in the same way that a public corporation of profit does, so they pay coaches when they get the money and they want to build tracks, natatoriums, arenas and training facilities. … You can always make something better."

At the University of Connecticut, three NCAA women's basketball championships and one men's basketball championship over the past seven years have helped the athletics department increase revenues from $7 million in 1990 to a projected $35 million this year. Still, UConn athletics director Lew Perkins, who has added a host of new non-revenue sports during his 12-year tenure, says he intends to spend everything that comes in.

Maryland will be pulling in more revenues than ever before from its men's basketball program thanks to the new 17,590-seat Comcast Center, which opened in October. There are 20 30-person luxury suites in the facility that cost between $5,000 and $20,000 per game for those who want to watch the defending national champions in more comfortable environs than a courtside seat.

"We had a 47-year-old facility in the Cole Field House and we had not planned on doing anything new," Yow said. "But when we did the feasibility study, we found out that renovation would have cost $95 million and a new facility would cost $101 million. So we figured it was worth the extra cost if we could get 50 years of use out of it."

Last year, the University of Florida became the first SEC school to have its own basketball-exclusive practice facility. The $10 million facility includes a 1,900-square-foot weight room and video rooms with theatre seating. Its natatorium underwent an $850,000 renovation last fall, and its football stadium, "The Swamp," is in the midst of a $50 million renovation, which includes 2,900 club seats and 28 skyboxes that will raise its capacity to 90,000 for the 2003 season.

But Florida athletics director Jeremy Foley, whose annual budget approaches $50 million, says he isn't bringing in construction crews to compete with any other program.

"We're not building because some other school has it and now we have to have it," Foley said. "We're building, just like the rest of the campus is, based on needs. If our school needs a new library, they are going to build one and no one's going to say there's an arms race going on there. So I'm not sitting here and seeing that Tennessee has more than 100,000 seats and we have to get closer."

Fulks doesn't buy Foley's argument. After collecting data for his report on the spending habits among college athletic department, he believes schools are comparing how they measure up to other schools.

"Spending millions on a 12,000-square-foot facility isn't going to make athletes train any better than spending $1,000 on a barn with some free weights," Fulks said. "What it's for is to ask the high school recruit whether they'd rather spend 20 hours working out in the state-of-the-art facility or someone else's facility."

Officials at Big Ten Conference schools say the arms race has been exacerbated by the age of their stadiums.

Ohio State, its $79 million athletics department budget is among the highest in the nation, recently completed a $187 million renovation financed by the guarantee of luxury suite and club seat revenue, as well as a ticket surcharge. The school added 82 luxury suites that cost between $50,000 and $75,000 per season and 2,625 club seats, some of which cost $3,000 per seat -- double the price recommended by a school-commissioned PricewaterhouseCoopers study. Its $10 million scoreboard generates $11 million in revenue through sponsorship.

While Ohio State athletics director Andy Geiger admits the new look is a "huge help to the football program" which went 13-0 this season and is heading to the Fiesta Bowl to play the University of Miami for the national championship, he says a large-scale renovation was necessary.

"Because our stadium was built 80 years ago, we weren't compliant with the American(s) (with) Disabilities Act regulations, we didn't have enough bathrooms for our female fans and we were dealing with asbestos and wiring problems," Geiger said. "We kept getting temporary permits, but we soon realized that if we only made little improvements we'd be making them the rest of our lives and throwing money away."

Thanks to the increased seating capacity, the school set its all-time attendance record for its game against Michigan, surpassing 105,500 fans.

"We're able to sustain our program because we have a first-class place to play in and we're able to have a first-class place to play in because we have a powerful program," Geiger said.

Like Ohio State, the University of Wisconsin reasoned it needed a renovation to modernize its stadium. Camp Randall was built in 1917 and is the fourth-oldest college-owned stadium in the country. Its last renovation took place in 1966 when the upper deck was added.

The Wisconsin Board of Regents recently approved a $72.5 million renovation of the stadium. Seventy two luxury suites are being sold at $49,000 a year and more than 600 clubs seats each cost $1,500 a year, not including the price of the game ticket.

"There is no question that these antiquated facilities have to be upgraded, but when they build them today, there's no question they go overboard," said Dempsey. According to last year's Knight Commission report, capital expenditures -- which include mostly facility costs -- have increased by 250 percent among Division I-A schools over the past seven years.

Brand says he believes it is unfair to look at the escalating money being spent on college and university personnel and facilities without looking at what is happening at the rest of the campus.

"Engineering departments are competing with corporations for the best talent, and research departments are competing with the private sector, and that is driving up salaries," Brand said. "And money being raised in federal grants are being spent much in the same way that revenue and donations raised by the athletics departments are being spent."

In the overall scheme of university spending, Brand says the losses aren't as big as they may seem when compared to other departments that are included in a university's entire budget. Indiana University athletics director Michael McNeely resigned last month after the department showed a deficit of $3.2 million, but Brand said it was a blip in the university's $2 billion budget.

Baylor isn't worried about investing a couple million here and there provided it sees a return in the future. Last year, the school's football team, which hasn't had a winning season in seven seasons, unveiled a $2 million, 8,000-square-foot locker room complete with skylights and leather couches.

"This is an area where we can compete for recruits," said Scott Stricklin, Baylor's assistant athletics director for communications. "It's pretty hard to spend more than $2 million on a locker room."

But if history is any indication, some school will find a way to do it.

Darren Rovell, who covers sports business for ESPN.com, can be reached at darren.rovell@espn3.com.