IHSA tournament profits tumble as employee salaries rise

Even as pack-the-house players like Derrick Rose, Jabari Parker and Marcus Jordan led their teams to state titles in recent years, the Illinois High School Association has seen revenues and profits from its marquee state boys basketball tournament plummet.

Between 2006 and last year, profits from the tournament fell by 29 percent, government records filed by the IHSA show. Revenues — mostly from ticket sales — decreased by 17 percent between 2009 and last year.

IHSA spending on salaries and employee benefits, meanwhile, is up 21 percent in just one year’s time, according to the private, not-for-profit group’s most recent filing with the Internal Revenue Service.

The mix of declining boys basketball tournament revenues and escalating personnel costs has some coaches and school administrators befuddled.

“We have had the greatest high school players in the country over the past five years,” says Tyrone Slaughter, boys basketball coach at Whitney Young High School, Class 4A state champions this year and in 2009. “And they are making less money? That doesn’t make sense.”

Slaughter sees it as a sign that the association, which faces a state legislative hearing Tuesday, is “stuck in the old way of doing things.”

Whitney Young coach Tyrone Slaughter | Patrick Gleason~For Sun-Times Media

The IHSA oversees sanctioned high school sports and academic contests involving more than 800 member schools statewide. It’s come under fire in recent months for its handling of high-profile decisions involving athletes’ and teams’ eligibility.

Behind the scenes, a larger, if less public, debate has been building over the nearly $11 million the association takes in and spends each year.

Some school administrators are questioning whether they should get a bigger slice of the pie from ticket revenues, sponsorship deals and broadcast rights to IHSA events. And they’re finding support from state lawmakers, who point out that, even though the IHSA isn’t funded by taxes, more than 80 percent of its members are taxpayer-funded public schools.

Examining the IHSA’s finances over the past 10 years, the Chicago Sun-Times found:

◆ Personnel costs are on the rise. Of the nearly $11 million the IHSA spent in the 2012-13 school year, nearly $3.1 million went for “salaries, other compensation [and] employee benefits,” according to its most recent IRS filing — a 21 percent increase over the $2.5 million-plus the organization spent the year before. IHSA Executive Director Marty Hickman had no explanation for this, other than to say that “salaries and benefits would have increased at a much more moderate rate” and he would need to discuss the matter with the association’s accounting firm.

◆ It’s facing skyrocketing expenses for pensions, paying hundreds of thousands of dollars a year into its $8.7 million pension fund — for which it isn’t required to identify pensioners or the amounts they get. Last school year, the IHSA paid $425,000 into the plan, which paid out $590,911 to retirees. The rise in pension expenses — projected at more than $7 million over the next 10 years — prompted it to switch employees to a 401(k) plan as of July 1, 2008.

◆ The boys basketball tournament — the IHSA’s signature event — made $1.1 million last year, $463,799 less than it did in 2006, when it turned its biggest profit. That 29 percent decrease came as Illinois teams, in particular Rose’s and Parker’s South Side alma mater, Simeon, were attracting national attention.

Boys basketball tournament revenues, the amount the IHSA took in from the event, totaled a little more than $2 million last year. That’s 17 percent less than when revenues hit a high of $2.45 million in 2009.

Reacting to the Sun-Times’ findings, Simeon boys basketball coach Robert Smith says the IHSA “could do something better to make more revenue to help all of the schools.”

‘A pretty good deal’

Headquartered in downstate Bloomington, the IHSA has 25 full-time employees and is governed by an 10-member board of school principals. Of the 35 tournaments and contests it sanctions, 20 — including boys basketball, girls basketball, football and cheerleading — make money. Fifteen — including boys and girls tennis, Scholastic bowl and chess — don’t.

IHSA events brought in more than $5.7 million last school year, most of that from ticket sales. The IHSA paid $2.7 million out of that to the hundreds of high schools that hosted events. It kept $1.9 million, with the rest going to pay referees and other officials.

Hickman, the IHSA’s executive director, says he thinks most member schools feel they’re getting “a pretty good deal” from his group.

IHSA Executive Director Marty Hickman | Michelle LaVigne~Sun-Times Media

“We don’t have dues, we don’t have entry fees, and we share some revenue,” Hickman says. “When you look at it from the point of view of what you get and the quality interscholastic program that is going on, I believe many of our members will say they’re satisfied with that.”

But a state lawmaker says that most of the money the IHSA pays schools to host events gets offset by the cost of staffing them, even after concession and souvenir proceeds, which schools keep for themselves.

“I think we need to dive a little deeper on exactly how the cut is made — and how much high schools are actually profiting from this — and if they’re getting a good return on their investment for hosting these events,” says state Rep. Linda Chapa LaVia, D-Aurora, who pushed for the legislative hearing on IHSA operations that’s set for Tuesday in Springfield.

Chapa LaVia’s House Resolution to have lawmakers question IHSA officials passed 55-51 last month. Supporters included the Illinois Press Association, whose members include the Sun-Times, and the Illinois Broadcasters Association.

The IPA and IHSA battled in court in 2008 over newspapers’ rights to photograph and sell pictures of the state football finals, with the two sides reaching a settlement that enabled the press to keep doing both.

The Sun-Times’ parent company, Wrapports LLC, has an ownership stake in High School Cube, which broadcasts a variety of high school games online but not certain playoff contests the IHSA controls.

Since it’s not a government body, the IHSA isn’t subject to the Illinois Freedom of Information Act, which would require it to make public individual royalty and sponsorship agreements. Such deals netted the organization $647,633 last year.

Hickman says the organization files the same financial information that the IRS and state attorney general require of all not-for-profits.

Basketball move possible

The boys basketball tournament has been the organization’s biggest event. But the IHSA has drawn criticism for staging it in Peoria, a long drive for fans from the Chicago area, and for changing the format in 2008 from two classes — A and AA — to four, diluting the competition but giving more schools the chance to win a state title.

The IHSA’s contract with the Peoria Civic Center ends after next season. Some Chicago-area school administrators say the organization needs to consider moving the tournament closer to Chicago.

“I wouldn’t say they are mismanaging it,” Mike Zunica, athletic director at St. Rita High School, says of the tournament. But he adds, “Why wouldn’t the IHSA want to move the basketball tournament closer to the bigger base of potential fans? I think that would be something I would look at if I was looking to improve attendance.”

Smith, the Simeon coach, is amazed that state tournament revenues and profits declined each of the four consecutive years that his school, led by Parker, who has declared for the NBA draft after one year at Duke, won Class 4A, the division for the biggest schools.

“That’s wild,” he says. “We were in demand all over the country. I think a lot of people just don’t want to make the drive.”

He’s critical of the job the IHSA has done in publicizing the event, citing his role with the Chicago Elite Classic, a yearly, national-level tournament run by Smith and Whitney Young coach Slaughter that’s held at the University of Illinois at Chicago.

“They don’t even have a press conference or anything,” Smith says of the IHSA. “It’s crazy. Promotion is everything. The Chicago Elite Classic wouldn’t work at all if we didn’t promote it.

“People understand the state tournament is coming, but a lot of times they don’t even know who is in it. You have to tell them exactly what is happening and when.” Hickman says the IHSA has made strides using social media to promotes events, but says, “Certainly, there may be more we can do with regard to promoting” the boys basketball tournament.

Regarding a move from Peoria, which has hosted the tournament since 1996, “We’re open to other places, but those places have to express some interest in it as well,” Hickman says.

He says the IHSA solicits bids from venues and communities willing to host the event and that there hasn’t been interest from Chicago and the suburbs. It’s been a decade, though, since the association last sought proposals.