BYU football quarterback sneak: BYU passers return to Provo to raise money for endowment

Published: Thursday, Sept. 2 2010 2:07 a.m. MDT

BYU quarterback Jim McMahon

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PROVO — For the adoring BYU fan, this is the ultimate family reunion.

Don't worry about name tags — former BYU greats Steve Young, Jim McMahon, Steve Sarkisian, Robbie Bosco, Ty Detmer, Marc Wilson, Virgil Carter and Gifford Nielsen will be easy to spot.

No pads or passing plays this time; instead, on Friday and Saturday, the All-American quarterbacks will be throwing their support behind the football program that propelled them into the NFL or successful sports careers.

The goal is to raise a million dollars to endow four BYU football scholarships.

Don't know what an endowed athletic scholarship is? Well, you're not alone.

"When I had heard about other universities doing those kinds of things before, I really hadn't paid much attention to it," said former Y. quarterback Wilson.

Schools create endowed scholarships for athletes, students and even funds for professors' salaries by investing large donations, then relying on the interest year after year without touching the principal investment. BYU has endowed athletic scholarships for nearly 15 years, but the emphasis really began in 2007, said Duff Tittle, BYU's associate athletic director of communications.

It's a trend that's becoming increasingly common across the country as college athletics programs enter a new arms-race era. To stay competitive, universities are having to spend like never before.

The Cougars are joining a growing group of universities that are rushing to keep up with the Stanfords and the Dukes — schools with hundreds of endowed athletic scholarships and millions of regenerating endowment dollars.

Those huge reservoirs allow colleges greater financial freedom to bring the best athletes, build the newest facilities and boost their fan base, which they hope will, in turn, generate more money for the university overall.

And in an economy where every dollar counts, filling those accounts with self-perpetuating funds isn't just nice — it's becoming necessary.

So, let's say you're a die-hard football fan who has an extra $250,000 kicking around your bank account.

Rather than just blow it on football memorabilia, you want to gift it to your alma mater. Together with school officials, you decide you want to create a scholarship to honor your father, who played tight end for the Cougars.

Universities then invest that money in stocks, bonds, real estate, international bonds, etc. — most often in higher-risk but higher-return funds due to the long-term nature of the account, explained Steven Thorley, finance department chair in the Marriott School of Management at BYU and endowments expert.

A common annual return is 8 percent, with a usual withdrawal amount of 5 percent. Thus, the 3 percent growth each year covers inflation, leaving the money in the fund with the same scholarship-funding power year after year.

It's a great system — until the stock market plunges. Then, what used to be a robust 8 or 10 percent return atrophies to a measly 1 or 2 percent, or even worse, to losses.

"University endowments (nationwide), like all other large sums of investment money ... they've all taken hits," Thorley said, "and in some cases, they were severe."

Some universities across the country are holding scholarships, stalling building projects, underfunding classes or programs, or instituting hiring freezes. BYU has been on a hiring freeze since Dec. 19, 2008.

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