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Messages - jknezek

#1
And so the slow train wreck finally reaches it's end. Alabama is a very interesting place to live. I've never known somewhere so determined to cut off it's own nose to spite it's face. Will be interesting to see what happens to that property. It's an incredible waste if it is left to rot.

What would it take to lure $100 million of economic activity a year? A lot more than a $30 million loan. But when your school system is in the bottom 5 of the country, your population is poverty stricken, you believe anything the government touches is evil, and anywhere in the state that votes blue should be cut off... this is what you get. Oh, also an inability to apply the phrase "Roll Tide" or "War Eagle" doesn't help.

But go Montgomery Whitewater!
#2
Men's soccer / Re: W&L -- Coach Carousel
March 17, 2024, 08:08:20 PM
Definitely a bummer. But that's life in D3. He's been amazing for the program and after 10 years I had hoped he was a lifer.
#3
Quote from: TheProvider on March 14, 2024, 02:56:29 PM
Quote from: jknezek on March 14, 2024, 01:55:49 PM
Quote from: Ron Boerger on March 13, 2024, 09:09:30 PMThey'll need a conference invite (CNU is the required sponsor for exploratory).  Remember Bob Jones went down this path but had to abandon it when they couldn't get into a conference.  Their remoteness may have been an issue.

This is really the problem. The ODAC doesn't seem interested in splitting in half, though some sports are so over-stuffed you'd think it would be on the table. The USASAC might be interested to some degree. The split with the CCS makes it geographically more palatable than it would have been when those were combined.

I think you'll see Regent end up in the CoastToCoast.

I think we have to admit that the C2C is not a conference. It's a waystation and a last resort. I'm pretty sure everyone there wants out as soon as they can find anything else. If that is their best idea, it's a bad one.
#4
Quote from: Ron Boerger on March 13, 2024, 09:09:30 PMThey'll need a conference invite (CNU is the required sponsor for exploratory).  Remember Bob Jones went down this path but had to abandon it when they couldn't get into a conference.  Their remoteness may have been an issue.

This is really the problem. The ODAC doesn't seem interested in splitting in half, though some sports are so over-stuffed you'd think it would be on the table. The USASAC might be interested to some degree. The split with the CCS makes it geographically more palatable than it would have been when those were combined.
#5
Quote from: Ron Boerger on March 14, 2024, 11:03:42 AMWestgate Christian is a totally remote school that has no other sports (they have a track coach listed on their rudimentary athletics site but I've seen no evidence of a team).  I don't know of any fully remote school in all the NCAA. 


Not to mention they'd have to start a heck of a lot more sports programs to be eligible for D3....
#6
It's nice to see another school but Regeant is in Virginia. I wouldn't say there is a shortage of D3 schools in Virginia by any measure. There's got to be almost 20 of them.
#7
I miss the days when W&L's non-conference schedule spanned a large geographic area. From Sewanee in Southern TN, to a myriad of Pennsylvania schools and west to Centre in Kentucky on a regular basis. Usually it was one game local, 2 games geographically spread. This year we have:

Salisbury, Newport News, and Randolph-Macon. W&L's entire season will be played in the mid-atlantic, with Salisbury being a 5 hour trip only because it's a royal pain to get there. Maybe you can exclude Guilford as the mid-atlantic, but only by state boundary, not by any considerable distance margin.

I just can't get excited about this. Not one little bit. Option on option game 1. Uggh. Non-D3 game 2. Double uggh. Conference opponent game 3. Triple uggh.

I know that third opponent is getting hard to find, but it wasn't that long ago we had Johns Hopkins, Sewanee, and C-M-S. Or Averett (pre-ODAC), Sewanee and Centre. Or F&M, Sewanee, and Southern Virginia.

Conference consolidation has just sucked for interesting OOC games. In the ancient times of the late 90s we had 4 or 5 OOC games. I remember going to Johns Hopkins, Davidson, Sewanee, Centre, and Swarthmore (RIP to the program), all in the same home and home 2 season span. We had OOC rivalries and a chance for player parents up and down the whole coast to get to a game easily.

Now... well, it's just uninspiring. I admire the Builders for their program and the challenges they face, but I hate that they are consistently on W&L's schedule (4th or 5th time since 2015). I hate having lost Centre and Sewanee, rivalries that lasted more than 50 seasons, with Sewanee getting 66 of 67 straight years (not counting the 2019 gap). I hate that we haven't played in New York outside of a playoff game in 25+ years. Or that we've never come down to some of the drivable SAA peer type institutions in the deep south now that Sewanee is off the schedule. Rhodes (1976), B-SC (never), Millsaps (never), and Berry (never).

It's just so uninspiring to see this schedule and as conferences continue to consolidate I just don't see it getting any better.

#8
I suspect the startup of Roanoke football is driving this. Hard to promise home and home series when you won't have room to schedule them going forward. Also, that third OOC is hard to get. I don't expect this will last more than this season as Roanoke appears to be on schedule to play conference ball in 2025.
#9
Men's soccer / Re: US Open Cup and DIII Soccer
March 05, 2024, 09:35:38 AM
Quote from: Another Mom on March 04, 2024, 03:06:33 PMMy son played on a USL2 team for 2 summers, so I'm certainly aware of the league -- they are even in my county and I STILL hadn't heard of them!

I feel like a lot of these teams come and go from this level every year. No idea of their history in the league, maybe they've been around for a while. But I used to follow a few similar teams in NJ by where I grew up and they've all evolved to other leagues or folded or moved or renamed or who knows what. Minor league soccer in the U.S. is so unstable, especially the way MLS keeps pulling the rug out from the lower tiers and changing the system all the time.
#10
Men's soccer / Re: US Open Cup and DIII Soccer
March 04, 2024, 02:18:04 PM
Quote from: Another Mom on March 04, 2024, 01:46:40 PMWhat (who) are the Hudson Valley Hammers??? I guess I will go Google, but I live in the Hudson Valley and I've never heard of them.

USL2 team, the old PDL if you are more familiar with that name. I believe they like the term "pre-professional." Mostly MLS and USL lower tier sponsored teams, absolutely amateur, and non USASA sanctioned. It's a late spring/summer league.

#11
Quote from: Ralph Turner on February 27, 2024, 12:00:32 PMI am glad that Ron opened up a board on which we can discuss this.

I have plenty of questions about how and why it should/not apply to D-3.
How many D-3 colleges will close if athletics is not an enticement to attend?

One already sees "Tik-Tok" shorts encouraging guys to go to trade school instead of college, because they will make more money. You also read of CEO's who preferentially pay/hire non-white or female candidates.

Can we imagine what D-3 will look like in 5 years?

It's not just Tik-Tok. It's easy to denigrate that way, but there is an increasing amount of research coming out that going to college may not be the simple path to a better future that we have pushed for 50+ years. Most of that research is dependent on how much it costs to go to college, and whether you have to take significant student loans, but the body of work is definitely starting to define a point where higher education is less lucrative in the long run than trade schools or apprenticeships.

Now I'm not saying that the research doesn't show that you will, typically, make more money in the long-term the more education you get. That relationship still holds. On average a h.s. dropout makes less than a h.s. grad, a h.s. grad makes less than a community college grad, a bachelor's makes more than a 2yr degree, a master's makes more than a bachelors. On average this is still true. But the cost to attain each level of higher education, paid up front instead of invested or borrowed and paid back over a decade or more, makes those relationships much less linear than it used to be.

$75-100K borrowed from 18-22 and paid back over 10 or 20 years is a massive opportunity cost versus earning 30-60K over that same time period as you go from apprentice to journeyman. And earning 85K-100K or more as a master electrician when someone else has incurred 150K-200K in debt to get an undergrad and a masters over 6 years is going to be real hard to overcome if you decide to be a teacher or end up middle management somewhere.
#12
Oh well... Maybe 45 years will be the Generals magic number. Good season though.
#13
What I know about basketball fits in a teacup, but it sure is turning out to be an exceptional year for W&L's mens and women's teams.

Be nice for the men to make the tourney... It's been 44 years. But the ODAC is so ridiculously strong in basketball I'm just glad they are typically a threat on any given night to topple ranked opponents. Much different from the dark ages when I was there.

As for the women... They should be in regardless but I hope they pick up another well deserved ODAC title. Spending the better part of the season in the top 15 has been very impressive.
#14
Great data. That's pretty bleak.
#15
General Division III issues / Re: Future of Division III
December 20, 2023, 10:53:27 AM
Yes. I noticed the same thing. W&L appears with 3 stressors, I think, I haven't looked at this article since I posted it. Of course, it is unknown which 3, but with 2.5B+ in assets as of 6/30/23 on the audited financials, and almost $1.98B endowment (78% of assets), I suspect the "stressors" are of the University's own making. Namely an increase in financial aid and a slight decrease in the number of students. Not sure what the third one would be, maybe operating loss in the short-term, but I think the analysis definitely applies to schools without a nest egg much better than to those with the ability to easily cover these "stress factors", especially over the short-term issue of the covid years.

Now, that does not mean that even W&L's endowment, and schools like it, will be able to cover the demographic issues indefinitely. But I suspect schools with $300MM or more in endowments are ok in the short-term and, I suspect, once you push over that $500MM, given active alumni support, you are probably ok in the longer term.

If you are looking at a school with $100MM and 3 or more of these stress factors, I'd be much more concerned. And under $50MM my kid is simply not going. Pick another college. It costs too much to gamble over a 4 year period that way. Even on a full-ride, the risk of disruption is massive and, in my opinion, very hard to call it worthwhile. The logistics of what do you do if the school goes under, even after graduation, and you need a transcript or a rec or something is just a massive pain.

Checking W&L's financials will help show why I think schools without massive endowments are in trouble. W&L's endowment high point was $2.09B reported June 2020, which included a massive 36% gain that year. So the value of the investments has drifted down over the following 2 years, despite steady increases in donations, and that may be one of the stress points.

I should point out that of W&L's 2BB or so, only about 400MM is unrestricted. So they can't do whatever they want with the vast majority of the endowment funds. The University is essentially an investment corporation, as ONLY $72MM in revenue comes from tuition and fees (that includes the law school, so 72/1850 undergrads does NOT give you the average cost of undergrad attendance).

What is interesting to note is that the University spends $90MM on instructional expense, so the revenue from tuition does not even cover the cost of instruction, let alone student services and plant. Total costs of almost $200MM dwarf the tuition revenue, so without being an investment corporation, W&L would run almost $150% in the red every year, though it wouldn't be so bad if they weren't handing out almost $60MM in student aid. Then it would only be about 50% in the red annually. But that should tell you why I'm skeptical of schools with smaller endowments.

Is W&L overpaying for instruction and services? Maybe versus a school with a smaller endowment. I'm sure W&L is not the cheapest run school, nor should it be with the financial backing available. However, it is important to note that without significant endowment assistance, W&L would have to seriously cut costs or student aid just to get even close to breaking even.

On the other hand, it's hard not going to comment on the fact that W&L's operating budget received $63MM from the internal endowment and $19MM from external trusts component of the endowment. 81MM from 2B... 4%. The school costs, on average, 27K per year for 1850 students. I mean, dropping that down to, say, 10K, would cost another 31.5M, or roughly less than 2% per year of the endowment. So spending 6% of the endowment annually would drop the cost of the school, on average, to one of the cheapest in the country. On the other hand, only $400MM of the endowment is unrestricted, so if that $31.5MM had to come from the unrestricted portion, that's almost 8% per year. A relatively large percentage, that a couple years of flat returns, like we've seen, would cut pretty drastically into the available funds.

So is that 6% ruinous? Hard to say. It would be very difficult to pull from the unrestricted account. And, to fund that $31.5MM on the same level as the current endowment contribution would require another $787MM in endowment devoted to tuition and fee reduction or unrestricted.

Figuring out the average return on endowment is over a long-term is a bit tricky. Certainly in the years since the high point hit, it would have made the endowment look very bad. But the 36% return in 2020 would mask a lot of basically flat to 1-2% negative returns over the last 2 or 3 years.

However, to put it in perspective, in the year 2000, when I graduated, NACUBA said W&L had a $400MM endowment. So that's a 425% increase over 23 years, which works out to a Compound Annual Growth Rate of 7.47%. Providing 4% per year to operating expenses all of a sudden doesn't seem so bad. Inflation over the last 20 years has averaged about 2.61% according to the Federal Reserve.

So despite paying 4% per year (using this year for all years over the 23 year period and assuming the 20 year inflation average is essentially the same as the 23 year), the endowment has grown around 4.75% per year post inflation. What does that work out to? Roughly $700MM over the period added to the endowment in post inflation dollars. If that had been cut to 2.75%, providing the extra 2% of the endowment needed to drop tuition significantly, it would still have been a $350MM increase post inflation.

So no, not ruinous, but definitely expensive, cutting the post inflation gains by half or $350MM. Plus, using averages is not strictly correct. Years where the base drops in the beginning have a much greater impact than the 36% gain toward the end thanks to the time value of money. So I suspect the effect would actually be a larger penalty, but I'm not going any deeper.

So if you've gotten this far, you are probably wondering what is the point? There are several.

1) Endowments are massively important. If you are looking at colleges to invest in for your kids' education, it's definitely a factor you need to take into account, especially with a private school. Probably the most important factor in the school's possible survival over the suspected demographic cliff we are about to hit.

2) Well-managed schools spend only a pittance of their endowment every year, but that is due to several good reasons. a) inflation is a bear b) unrestricted funds are not generally a large part of the endowment c) investment returns are not steady year over year

3) If you want to know how much trouble a school is in with possible declining enrollment, check to see how much of their operating budget tuition covers. If the ratio of tuition and fees to expenses is anywhere close to 1:1, declining enrollment could be a massive problem.

4) Is higher-education busted in this country? To some degree, yes. W&L basically has posted a roughly $700MM profit net of expenses and inflation over the last 23 years. Some of that is donations, some of that is investment profit. But a "non-profit" is absolutely profiting, it's just not distributing those profits and is holding them, "in trust" for future generations. However, over the same period, tuition and fees have steadily increased as well, so as the school has profited, the "customers" have paid more. I suspect this is true at most colleges with large endowments. They will say they are saving for a rainy day, and to some degree they are and that rainy day is just about on us, but the net result is a "non-profit" has essentially profited while continuously charging more to those it is supposed to serve.

Call me skeptical of our current model of higher education and it's "non-profit" status. Also call me skeptical of schools that have not done this successfully, as their tuition vs expenses pay model is going to be severely tested in the next 10-15 years.

What would I suggest? Here's where it gets a bit technical.

In order to keep "non-profit" status, I think the endowment should pay out roughly equal to the endowment gain vs a ratio like 2x inflation on a 5 year average 5 year trailing basis but collared at 4x inflation and limited to endowments of $500MM or above, adjusted every year for inflation. So, for 2020, schools should have budgeted to pay out any endowment gain they had, on average, over the period 2010-2015, that was more than 2x inflation but capped at 4x inflation. So if inflation was 2.5%, and the school's investment average was 7%, they would budged to pay 2% of the endowment to the operating budget. If they had an excellent period, with a 20% gain vs a 2.5% inflation rate, they would budget to pay out at least 10%, the remaining 10% could be reinvested.

If the school has a less than 2x inflation return, or a negative return average over the 5 years, it would not be required to draw down the endowment except that it still needs to pay bills and would likely do so regardless. Sub $500MM endowments would be exempt, or possibly have a graduated ratio (3x inflation or more as the lower limit), but the goal would be to ensure these schools can build to a healthy endowment. In fact, a straight endowment figure might not be a great idea, but rather endowment per student might be more effective.

This rolling time period/delayed rolling average, would allow schools to budget properly and also use investment returns while still allowing endowments to grow, even against the inflation rate. But it would limit the growth rate in most average years and, hopefully, benefit the consumers by putting more money to use.

Anyone who got this far... I'm impressed. You must really be interested in this topic. I'm a numbers guy, so I enjoyed playing with it, but I can't imagine reading it...