Critical to the success of an organization's information- and data-based decision making is ensuring that the information developed and used is of...

Critical to the success of an organization's information- and data-based decision making is ensuring that the information developed and used is of high quality. Quality, in this case, generally means that information is timely, relevant, accurate, and complete, or, as shown in Exhibit 6.21, on "TRAC." In this case study, we will examine the elements of TRAC and then see how an intercollegiate athletic program, specifically that of the University of Alabama at Birmingham, could manage financial information to stay on "TRAC" in its efforts to make a data-based decision. Alabama has been attempting to determine the fate of its football program in terms of the second half of the budgetary equation for intercollegiate athletic organizations: managing expenses to balance budgets or attain profitability. Information that is on "TRAC" provides a solid foundation for an organization's decision-making and problem-solving processes. Shortcomings in any of the four areas result in decisions built on inadequate foundations, and the results are not likely to be positive. Let's now consider the case of data used in the University of Alabama's decision regarding the fate of its football program. The University of Alabama at Birmingham (UAB) is a public school with approximately 19,000 undergraduates and a member of the NCAA's Division I Conference USA. In December 2104, Ray Watts, president of UAB, announced that as a result of the school's campus-wide strategic planning process, the school would drop football, bowling, and rifle that academic year "to more effectively [sic] invest in the success of priority programs that are most likely to bring national prominence relative to the necessary investment" (Greer, 2014, p. 1). A school statement cited "soar- ing operating costs, which place extreme pressure and a growing financial burden," with costs that "are continuously spiraling upwards driven by cost-of-attendance payments to players, meals, equipment, facilities, coaches, travel and more." The UAB Athletic Department made the call to "right-size its investments to support and establish long-term plans for building and properly maintain- ing championship athletic programs," and "relied on current and projected financial data, and analysis" to make the decision. "The fiscal realities we face—both from an operating and a capital investment standpoint—are starker than ever and demand that we take decisive action for the greater good of the Athletic Department and UAB," Watts said. "As we look at the evolving landscape of NCAA football, we see expenses only continuing to increase. When considering a model that best protects the financial future and prominence of the Athletic Department, football is simply not sustainable" (Greer, 2014, p. 1). exhibit 6.21 Timely Relevant Accurate Complete Providing the most up-to-date information available. If the information is not available at the time when it is needed for decision making or problem-solving, it is of little use to intercollegiate athletic administrators. Giving information that relates to and enhances understanding of key issues. This means not only keeping information systems clear of information that does not relate to or is not used in the organization's decision making but also ensuring that decision-makers in the organization have access to the information needed for the particular decisions in which they are involved. Ensuring that the information is a reliable and valid representation of what is happening. In some situations, the information used is the result of individual or group judgments about a situation, which are naturally subject to bias and interpretation. It is the intercollegiate athletic administrator's responsibility to develop better data on the situation, either in the form of more reliable facts and figures or by seeking the opinions of a wider group of people, preferably including "experts" with extensive experience with the situation under consideration. Providing information that is sufficiently comprehensive to represent all the important aspects of the situation. Incomplete information results in decision making that fails to take into account one or more important factors. This, in turn, jeopardizes the success or effectiveness of the decision or solution. The UAB statement presented the following financial data: that institutional support accounted for $20 million of the roughly $30 million annual Athletic Department operating budget, and that "from an operating budget standpoint alone, the difference between maintaining and eliminating football is more than $27 million over the next five years; this is in addition to the existing $100 million institutional subsidy." The investment did not include additional necessary capital improvements for facilities, estimated at $22 million for football facilities alone, including a field house, an indoor practice facility, and a turf field. In eliminating football, the statement argued, UAB would be better positioned to invest in programs where the institution could be competitive at the conference and national levels. "We are not looking to reduce the athletic budget, but instead to reallocate our resources to remain- ing athletic programs," Watts said. "This strategic plan will give us our best chance to win championships and national prominence. Many of our programs have been on the cusp, and funds redirect- ed from football can propel them to the next level. . . . I want the UAB family to know that this decision was not made lightly; that it has and will continue to be truly agonizing," Watts said. "I know many will be disappointed. . . . This is not easy, but it is the right decision for UAB and our future" (Greer, 2014, p. 1). However, almost immediately some experts expressed doubt about the data on which the decision to drop football was based. Andy Schwartz, an antitrust economist who has studied intercollegiate athletics, remarked, "unless they've done the careful work to understand the differences between accounting and economics, they're going to get the wrong answer." Schwartz later argued that UAB's study made basic errors that caused it to overestimate the future annual cost of the football program by millions of dollars, and concluded that UAB football was either "break-even" or "slightly profitable" even before considering merchandise sales and other revenue sources (Kolowich, 2015, p. A13). There is also the fact that in the Southeast, intercollegiate football is a "cultural polestar," and in the words of former University of Georgia president Michael Adams, there is a sense in the region, "and maybe especially in Alabama, that if you don't have a football program, you're not a real university" (Gardner, 2015, p. A18). To underscore this point, UAB students, alumni, and many local residents were outraged by the decision to drop the program, which had gone 6-6 in 2014, its best season in a decade, with an average home game attendance of 21,000 ("UAB to reinstate," 2015). The school responded to the outcry with the formation of an independent commission to review the athletic department's financial data and forecasts and to suggest ways to address future financial concerns. The resultant study lowered the projected expenses but did not alter the conclusions of the first re- port, and it further stated that to cover future operating deficits would require $17.2 million over the next five years. In response, UAB athletic boosters, said Watts, "rose to the occasion" with a "broad base of support never before seen" to gain commitments to cover the expenses to reinstate the three dropped sports. Be- fore going public with the reinstatement announcement, Watts met with concerned stakeholders to gather input, but he reiter- ated that no additional university funds would be forthcoming to cover projected losses. This process was a direct departure from the initial study, which had been kept under wraps, said Watts, because it would have been "disruptive" to carry out the process in public. As a result, UAB reversed its decision to drop the pro- grams, with football slated to return for the 2017 season. How- ever, former Georgia president Adams warns that the fiscal issues will not recede in the face of promises of donations. Costs are only going to rise, and donors are "going to have to come up with a fairly significant amount of money every year" for UAB to continue the commitment to FBS football. Stakeholder trust in Watts will also need to be rebuilt. A crisis communications expert noted that in the future, stakeholders who weren't included in the pro- cess need to be involved so "nobody can say they were blindsided" (Gardner, 2015, p. A18).