Secret services: The hidden sports finances of Army, Navy and Air Force

The Naval Academy Athletic Association NAAA employs Navy coaches, owns its football stadium and gets about 1% of its $42 million in revenues from government support.

U.S. Secretary of Defense James Mattis earns an annual salary of $207,800, according to public records. He oversees a department whose massive budget recently listed $8.2 billion for the Missile Defense Agency and $403 million for tactical Tomahawk cruise missiles.

This national security information is not confidential. It is available by law because these positions and programs are paid for and accountable to U.S. taxpayers.

By contrast, the Division I sports programs at U.S. military service academies are much more secretive about salaries and finances:

► Army athletics has refused to reveal the contract terms of football coach Jeff Monken, including his pay or even the length of his new deal announced in September.

► Air Force athletics declined a request for the contracts of its football and basketball coaches, saying such information wasn’t subject to public records laws.

► Likewise, Navy athletics has rejected requests for detailed information about its revenue and expenses, including how much it spends on administrative pay and team travel. Navy athletics said its policy is “to not release confidential data of this matter.”

No other athletics department has been allowed to be as secretive about its business affairs as Navy's has the last several years, according a USA TODAY Sports analysis of public disclosure requirements in major-college sports.

More:Army, Air Force, Navy all now outsourcing athletics

Database: See how much college football coaches make 

More recently, changes at Air Force and Army show they are following Navy’s path to privacy in sports business — boosted by acts of Congress that authorized their athletic business operations to be private non-profit organizations.

But it was not the intent of lawmakers to give them the ability to hide information. It was to help them become more financially competitive and boost their sports programs as recruiting tools for the academies. 

“None of it was intended to shield information from the public,” said John McHugh, a former U.S. Army Secretary and former congressman from New York who co-sponsored some of the legislation.

All three U.S. service academy sports programs are part of treasured federal institutions that are funded by taxpayer dollars. Yet unlike other public universities directly funded by taxpayer support, Navy, Air Force and Army say they don't have to disclose coaches’ employment contracts and other financial records that even private schools must provide.

The bigger question is why. A USA TODAY Sports inquiry found the answer lies in loopholes and outsourcing that is largely a result of the academies getting pulled into the vortex of the big-spending world of major-college sports.

Government transparency experts say it’s wrong.

“It’s absurd in a way,” said Alex Howard, deputy director of the Sunlight Foundation, which advocates for better public access to government institutions. “It’s an absurd thing that they wouldn’t be forthcoming about how much they make, what their contract is, how long it is, at a service academy. It really is a gobsmacking default toward being closed for an institution that should be open.”

Outsourcing athletics

Army, Navy and Air Force always have been different from the major-college programs they compete against in the sports business world. That’s because they are part of federal military institutions that don’t award athletic scholarships and are governed by restrictive federal government rules about contracting and fundraising.

Such rules generally are designed to protect against government waste, abuse and fraud. But those rules also handicap these teams competitively when their civilian competitors don’t have the same restrictions and can pay top dollar for coaches, including 39 schools this year that are paying football coaches at least $3 million.

So Army and Air Force recently did what some companies do for financial reasons: They outsourced operations, following the lead of Navy, which had operated in similar fashion for decades.

Since 2009, each got federal legislation that ratified or authorized its athletics business operations to be separate, private entities. By doing business this way, they can get around federal government restrictions in order to earn and spend more like normal athletics departments, reducing their need for academy financial support.

“The reason that each of the academies did it really lies in the fact that the cost of athletics is going up at a much faster rate than the government could support,” Air Force athletics director Jim Knowlton told USA TODAY Sports.

It gave them more autonomy. At the same time, these athletics programs have used this autonomy to decline requests for public records despite their continued reliance on the academies and the government. Not only are these athletics organizations still under government and academy oversight, but the students at these service academies are government employees, including athletes.

Coach Jeff Monken signed a new deal with Army in September, but Army athletics has declined to reveal the terms of his contract.

Private programs?

Officials with Navy, Air Force and Army athletics gave the same reason for not disclosing the same financial information that other public institutions are required to give upon request — because they’re not obligated to do so, at least not anymore.

They say they are private non-profits that don’t employ government workers and aren’t public institutions that are subject to public records laws.

“There’s not a requirement that information be disclosed,” Navy athletics director Chet Gladchuk told USA TODAY Sports. “We try to cooperate with anyone that calls us, more so than just wholesale throwing information out on the street.”

Navy voluntarily has provided the base football salary of football coach Ken Niumatalolo ($2 million) but for many years has denied requests for information such as coaches’ contracts and detailed budget information. Gladchuk said federal legislation in 2013 essentially ratified how Navy athletics long had operated under the Naval Academy Athletic Association, which was founded in 1891.

Other schools are required to provide more records to the public in the interest of transparency and accountability, including private schools. USA TODAY Sports analyzed the three general public disclosure requirements in major-college sports and how most or all are now avoided by Navy, Air Force and Army:

1. Public records laws. Public schools that get taxpayer support are required to make certain disclosures in exchange for that support – as a way for taxpayers to see how their money is spent. At the University of Mississippi, for example, a public request for the phone records of football coach Hugh Freeze revealed a call placed to a number associated with an escort service. Freeze then resigned in disgrace in July. Until recently, Army and Air Force at least divulged football coach contracts. Now they don’t. “State and federal open record laws do not apply to private organizations,” Army athletics director Boo Corrigan said in an e-mail to USA TODAY Sports about the new public records policy of Army athletics.

2. Internal Revenue Service filings. Even private schools such as Texas Christian are required to file a public Form 990 in exchange for their tax-exempt status. These forms allow donors to see revenue and expenses, including what they pay top employees. For example, TCU’s IRS form showed football coach Gary Patterson earned more than any other TCU employee in 2015, at $5.1 million. Air Force, Army and Navy athletics previously filed these forms as tax-exempt non-profits, but Air Force and Navy now say they no longer have to because they are governmental affiliates. Army athletics transitioned to a private organization this year.  Asked if it would seek a similar exemption, Army athletics spokesman Matt Faulkner provided a statement: "We are in the first year of the (non-profit), so we are (filing) all required forms without exception."

3. Equity in Athletics Disclosure Act filings with the U.S. Department of Education. Virtually all Division I athletics departments are required to file this financial information for transparency in gender equity. But Army, Navy and Air Force do not because the academies do not participate in Title IV federal student aid programs. Even private religious schools such as Brigham Young must reveal an array of aggregate expenses here, including its expenses in football ($16.6 million in 2015) and men’s basketball ($6.1 million).

Air Force has a 4-5 record this season, and won 10 games in two of the previous three seasons.

'High degree of government involvement’

If they’re not compelled to divulge such information, the service academy athletics departments are allowed to take the position that they and their government overseers alone should be trusted with their business affairs without independent public scrutiny. The Air Force Academy Athletic Corporation started in 2013 and no longer discloses contracts.

“I can assure you there’s a high degree of government involvement in the AFAAC’s activities,” said Miles Mathieu, the chief financial officer of the AFAAC. “If a vendor knows we’re not going to make a contract public knowledge, they may be more inclined to provide advantages within that contract that they wouldn’t provide with another public institution.”

The Army athletics department’s position on public records also changed this year after it transitioned into a 501-c-3 non-profit called the Army West Point Athletic Association. The non-profit was authorized by Congress in the 2016 National Defense Authorization Act.

In response to a request for coaches' compensation documents in September, Army athletics told USA TODAY Sports that “as of now, we will not be releasing any of the information you requested.”

Critics say this kind of secrecy violates the spirit of the law, even if these separate organizations are not fully funded by taxpayers.

“It’s a bad idea,” said Kathleen Clark, a law professor and expert on government ethics and national security law at Washington University in St. Louis. “Congress knew to be concerned about this sort of thing, and I think it’s inconsistent with (the law).”

'Appearance problem’

The law stipulates that the secretaries of the Army, Navy and Air Force shall ensure that the contributions they receive from these non-profit athletics entities don’t “compromise the integrity or appearance of integrity of any program” of the Department of the Navy, Air Force or Army. Clark argues their lack of disclosures contradicts this.

“Congress gave them this (legislation) with the proviso that it not compromise the appearance of integrity,” Clark said. “And it does compromise it. It creates, at the very least, an appearance problem because we cannot verify what the finances are. God only knows. That’s not to say there’s any abuse going on, but how would anyone know?”

Much like the service academies, some athletics departments at public schools also are organized as separate non-profit organizations, including at Kansas and Central Florida. These athletics departments still turn over coaches’ contracts and financial records as a matter of law or policy. They also are required to file the IRS forms and other financial data.

“We value transparency and accountability, and there are clauses in the coaches’ contracts that they are subject to disclosure,” Central Florida spokesman Chad Binette said.  “The policy was established by the UCF board of trustees.”

Navy’s Gladchuk pointed out that the NAAA employs Navy coaches, owns its own football stadium and gets only about 1% of its $42 million in revenue from government support. He gave this data voluntarily — information that couldn’t be independently verified because the records aren’t required to be public. 

Navy athletics is much less publicly subsidized than at Air Force or Army by virtue of being operated as a separate entity much longer. Air Force athletics got $31 million of its $50 million from state or other government support for 2015-16, according to a document that Air Force initially refused to disclose this year but recently provided after being informed of this story by USA TODAY Sports.

Air Force’s athletics corporation doesn’t run all Air Force sports and isn’t directly subsidized by government money, said Nancy Hixson, the CEO of the AFAAC. The AFAAC still receives significant revenue from the Air Force Academy through an agreement with the Defense Department. These outside entities also are entangled with their public institutions in many other ways, according to the legislation. It says all stock of Air Force’s athletics non-profit “shall be owned by the United States and held in the name of and voted by the Secretary of the Air Force.”

For Navy, it says the NAAA might use public Navy property at no cost. In Army’s case, it says the Secretary of the Army may provide housing for athletics personnel at the Army Garrison at West Point as well as other support services.

The intent of the legislation was not to “afford the service academies a reason to not disclose budgetary issues, etc.” said McHugh, the former congressman. “That was not contemplated as part of the bill. … In fact, if that were an issue, Congress might want to take a look at tightening the requirements for reporting under that.”