Michigan athletics is big business.

Brian Merlos
Brian Merlos
Brian Merlos

The University of Michigan Athletic Department has a budget of $74.5 million and projected revenue of $87.4 million this fiscal year. Last summer, Adidas and the University inked an 8-year agreement worth $7.5 million for the company to supply apparel to Michigan’s 25 athletic teams. The new basketball coach makes $1.3 million a year with bonuses for reaching the NCAA Tournament and an extra $150,000 for winning it. The new football coach makes $2.5 million a year – more than three times the yearly salary of the University’s president.

Athletic directors, the people who oversee all that money, traditionally have a strong connection to collegiate sports.

Fielding Yost, who served as athletic director from 1921 to 1941, was a longtime Wolverine football coach whose 1901 team outscored opponents 550-0 and won the first Rose Bowl. Fritz Crisler (1947 to 1968) coached the football team for 10 seasons, winning 71 games and losing only 16. Don Canham (1968 to 1988) coached the Michigan track and field team after competing on it as a student. Everyone knows Bo Schembechler (1988 to 1990), one of the most successful college football coaches in the sports history. Jack Weidenbach (1990 to 1994) was senior associate director of athletics before taking the department’s top job. Joe Roberson (1994 to 1997) was once signed by the Brooklyn Dodgers. Even Tom Goss (1997 to 2000), an experienced businessman, played defensive tackle for the Wolverines in the 1960s.

Bill Martin is different.

Rather than playing on the football team here, he went to Wittenberg University in Springfield, Ohio, and then earned a graduate degree in economics from the University of Stockholm in 1963. Only after that did he come to Ann Arbor to get an MBA in 1965. His sport of choice is sailing, and he has served as president of the United States Sailing Foundation and the U.S. Sailing Association. He has never been a legendary football coach. He has been president of the U.S. Olympic Committee and has taught classes at the University of Michigan Ross School of Business School.

Above all, Martin is a businessman. A very successful businessman.

In 1968, he started First Martin Corporation, an Ann Arbor-based commercial real estate firm, which now has ownership interests in 40 area properties totaling about 1.4 million square feet, according to Robert Gates, an FMC vice president.

Take it from longtime competitor John Swisher III, co-founder and chairman of Swisher Commercial, who said Martin’s company has set the pace for local commercial real estate companies.

“I can’t think of anyone at the same level,” he said.

Martin is a partner in or owns a number of other smaller commercial real estate companies, including C3 Capital Partners, 2401 LLC and Traverwood II LLC. He is also the founder and chairman of the Bank of Ann Arbor.

That’s his résumé, but who is Bill Martin?

And what does the answer to that question mean for the University of Michigan?

Perhaps as a result of thousands of business deals, Martin has developed what is reputed to be one of the most charming personalities on campus.

During a recent two-hour interview in Weidenbach Hall, he doled out life advice to a writer for The Michigan Daily, mused about the power of Robert’s Rules of Order and talked about the importance of taking economics classes.

He speaks quietly but firmly and clearly. When he gets agitated, he exudes an almost grandfatherly sense of disappointment. He’s also a bit of a name-dropper. He read a quotation from W.B. Yeats (“Too long a sacrifice can make a stone of the heart”) that a big Athletic Department donor sent to him during the search for a football coach this fall. He mentioned an Easter e-mail he received from Pierre Woods, the New England Patriots linebacker. Then there are the New Year’s gifts from billionaire alum Sam Zell.

Both real estate moguls, Zell and Martin got to know each other as competitors. Each year, Zell sends out small statues – each about a foot tall – that play songs the Chicago businessman wrote himself. Martin insisted on showing them off. For example, one is a replica of the torch from the Statue of Liberty with a rolling ticker that displays the entire Declaration of Independence and a recording of Zell’s new lyrics to “This Land is Your Land.”

Because Martin spends so much time working as athletic director (he says he’s in the office from 8 a.m. to 7 p.m. on weekdays), he has scaled back his involvement with his business holdings, letting his sons do most of the work.

“I haven’t been active at all,” he said.

As one of the largest leaseholders in the area, it’s of little surprise that the University is one of Martin’s largest tenants.

The University leases 158,255 square feet of office and laboratory space directly from Martin or from one of the many companies in which he has an ownership stake. The University’s Museum of Art Off/Site gallery, the Center for the Education of Women, the Department of Psychiatry’s Addiction Research Center and radiation oncology research space for the Medical School are among the uses for all those square feet.

For that space, the University pays at least $220,000 a month in rent directly to Martin or to one of his companies (that total consists of the current monthly rates for seven properties and the initial monthly rates for five properties).

As one of the University’s most powerful figures and a businessman profiting from the school, he sits in a precarious position. There is always the threat of a conflict of interest.

University President Mary Sue Coleman has adamantly stated that Martin has always been upfront about his business with the University.

“He’s been scrupulous about his business dealings and making sure everything was disclosed,” Coleman said. “I am very confident that we disclose everything and absolutely believe that he has done this enormously well.”

In a way, Coleman is staking her reputation on Martin’s forwardness. So is the University Board of Regents, which has approved the leases with full knowledge of Martin’s potential conflict of interest.

Regent Martin Taylor (D-Grosse Pointe Farms) said there could be a conflict of interest in a similar situation, but that in this case there isn’t because all the leases are approved publicly at the regents’ monthly meeting, and the rents are at market rate.

“That’s why we have disclosure,” Taylor said.

As if to prove the point, he noted that the wealthy Martin, who takes home about $370,000 a year from the University and likely much more from his businesses, doesn’t need the University’s business.

“He could have retired five times over,” Taylor said.

Business competitors as well as faculty members who have worked with him on the Advisory Board for Intercollegiate Athletics say Martin is ethical and honest.

Jim Curtis, owner of Curtis Commercial, an Ann Arbor-based real-estate company that directly competes with FMC, praised his professionalism: “I’ve always said this: The only company that I would recommend outside of my own would be Bill Martin’s.”

It was his business acumen – combined with his U.S. Olympic Committee experience, his sailing organization leadership and his locker near then-President Lee Bollinger’s in the Intramural Sports Building – that got him the job of athletic director in the first place.

“(When Goss announced his resignation) Bill came to mind – a very successful businessman, very public-minded, very devoted to Michigan,” said Bollinger, now president of Columbia University, in an interview earlier this month.

Bollinger called him a “non-traditional candidate for the position” and likened him to Michael Bloomberg, the billionaire mayor of New York. Bloomberg skipped the traditional political pipeline and went right to the top. “Not your average politician, great businessman,” Bollinger said. Like Bloomberg, who accepts only a dollar a year as compensation from the city, Martin was paid an annual salary of one dollar in his early years as athletic director.

Initially, his appointment was temporary, and Martin didn’t want to be a candidate for the full position. But during the search for a permanent director, several coaches and Athletic Department staff members signed a petition encouraging Martin to stay on and took it to Martin. He says the petition prompted him to reconsider his candidacy.

There was also another reason: He had begun reforming the department’s finances, and he wanted to see it through.

“I know what it’s going to take to fix this place,” he said.

Part of the reason Martin was brought in was to clean up the department’s financial state. The last departmental budget under Goss was revised in September 1999 to reflect a projected deficit of $2.8 million. Martin cut costs and increased revenue. Among other tactics, he signed a new radio contract, added premium seating in Crisler Arena, installed the balcony in Yost Ice Arena and slashed staff through attrition.

The chorus of his supporters sounds like this: “When he came into the department it was in a deficit. It was losing money. Within a very short time Bill had turned that around and stabilized the finances.” (Coleman)

“He does deserve credit for bringing the Athletic Department into the black and beyond.” (University Regent Olivia Maynard (D-Goodrich) )

“The economic situation has gone from dire to very sound.” (Charles Smith, chair of the Senate Advisory Committee on University Affairs)

They’re right. The department’s budget for the 2008 fiscal year projects a surplus of $12.9 million.

The advantages of having a seasoned businessman as athletic director are obvious. But does anything get forgotten in the wake of making business decisions? Critics of the renovation of Michigan Stadium – and there are many – say so.

The $226 million renovation has drawn criticism because it includes the addition of 83 luxury boxes, which many faculty members, students, alumni and others say is a rejection of the stadium’s bleacher seating-inspired egalitarian values.

To Martin – who has updated much of the department’s aging infrastructure, built an academic center and aims to redo the basketball stadium next – the addition of skyboxes is good business. He says they’re necessary to fix the Big House’s press box and its other outdated elements. “I didn’t wake up and say ‘Oh, let’s add some fancy skyboxes to Michigan Stadium,’ ” he said.

School of Education Prof. Percy Bates, another member of the athletics advisory board who speaks positively of Martin, put it this way: “In terms of a business mindset, it was: I need to do this, and I need a way to pay for this.”

Would former athletic directors have made the same decision?

“Because they didn’t have such a business background, some of them might have looked at it differently,” said Bates, who has worked with every athletic director since Weidenbach.

Roberson, the former athletic director, has spoken out against the skyboxes. Asked to name a time he made a decision that was right for the program but not wise in pure business terms, he offered this example: “The business decision would be putting advertising in Michigan Stadium, adding four to five million (dollars) a year, which would make our job of being able to do all the other things we need to do a lot easier,” he said. “But that’s not who we – we Michigan – are.”

One area that doesn’t seem to get short shrift in favor of the bottom line is upholding academic standards. Bates – a member of the subcommittee of the athletics advisory board charged with making sure athletes meet GPA requirements and someone who has the reputation among his peers as a strict enforcer of eligibility requirements – said Martin is ethical when it comes to academics. It’s not an uncommon view.

“He doesn’t claim to be an academic himself, and he doesn’t intervene,” said Smith, the SACUA chair. “But he begins just about every board meeting by turning to me and saying, ‘I consider the faculty the most important part of this meeting.’ “

When he was hired, Martin developed a four-part plan for the department: 1. Remember we’re an academic institution first; 2. I’m going to focus on ethical behavior; 3. Continue the tremendous legacy of winning; 4. We’re going to pay our own bills.

“His character is what makes him successful in both areas – as athletic director and as a businessman,” said Psychiatry Prof. Stanley Berent, who knows Martin through the athletics advisory board.

But can the businessman pick coaches?

John Beilein, the new basketball coach, and Rich Rodriguez, the new football coach, have taken over programs that have disappointed in recent years. Detractors of Martin note that he’s produced relatively few national champions and none in the big, revenue-producing sports like basketball, hockey (though this year’s team has reached the Frozen Four) and especially football. It’s no challenge to find Michigan fans disgruntled with Beilein – whose first team missed the NIT, let alone the NCAA Tournament – and Rodriguez.

The selection of Rodriguez is an interesting case. In the Daily’s recent sit-down with him, Martin grew defensive when asked about the coaching search. He failed to snag his first choice, national champion LSU’s head coach Les Miles, who decided at the last minute not to come to Ann Arbor. Miles was a fan favorite, and the sports media exploded with criticism of the athletic director’s handling of the search. The Detroit Free Press ran an article about Nebraska’s new athletic director, Tom Osborne, using a professional firm to find a coach. The article questioned why Martin – who lacks Osborne’s football coaching experience – didn’t use a firm. He now says he did hire one, but he refused to talk about it at the time because he didn’t want to discuss it with the media. Rumors swirled about rejection from coaches at lesser powers like Iowa and Rutgers. For a few weeks, it was at best a circus. Many alumni and people on campus still fault Martin for not getting Miles, and some attribute the problem to Martin’s relative inexperience with athletics.

Martin may be remembered for the way he balanced the department’s finances. He may be remembered for renovating the Big House, fixing Crisler Arena (if he does) and building the Stephen M. Ross Academic Center. He may also be remembered for some unforeseen scandal, the kind that tend to pop up every so often in the Michigan Athletic Department. But the irony is that the businessman, for better or worse, will likely be widely judged by the success or failure of two coaches.

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