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Chattanooga Times Free Press (Tennessee)

When Bernard Childress took over as executive director of the Tennessee Secondary School Athletic Association five years ago the first thing he had to do was hark back to his days as a prep basketball coach.

In sports terms, it was late in the game and Childress's team was so far behind that a monumental rally was needed.

The TSSAA had been financially drained after defending itself against one of its member schools -- Brentwood Academy -- in a lawsuit that circulated through the judicial system for 10 years, twice reaching the U.S. Supreme Court.

The football powerhouse never denied the recruiting violations it was accused of in 1997, but said that the penalty imposed by the TSSAA -- suspension from post-season play for two years and a $3,000 fine -- was too severe. After losing its appeal to the TSSAA, the school changed its argument, saying that its constitutional rights had been violated, and filed suit.

The suit was resolved a decade later in favor of the TSSAA, but the damage had been done.

Defending the case for so many years cost the TSSAA nearly $3 million, draining its finances and leaving it at the brink of collapse.

"We really were on the verge of shutting our doors," said Childress.

Had the state's athletic governing body ceased to exist, the potential chaos would have been far-reaching. The TSSAA oversees all state high school sports matters, from assigning officials to conducting state tournaments, enforcing regulations and coordinating a catastrophic insurance policy to protect schools if athletes are seriously injured.

But under Childress' leadership, the TSSAA has engineered a financial turnaround that has left the organization in the best financial shape in its 89-year history and solidified the foundation on which all high school sports in Tennessee are built.

And the benefits have flowed back to schools.

The TSSAA's finances have improved to the point that the organization is able to give back to some of its member schools. Last fall, the 16 schools that participated in state football playoffs and title games shared nearly $1 million in receipts.

But in 2009, there were more skeptics than believers, Childress recalls.

"When I took over we had zero reserve and really didn't have much in the way of an operating budget," he said.

"The auditor walked out of our building after that first meeting and told his assistant that in two years the building would be vacant and we would be out of business."

Lawsuit's origins

By the 1990s Brentwood Academy had become the state's premier football program, including back-to-back championships in 1995 and 1996 to give the Eagles nine titles. In July 1997, only a few months after the TSSAA split private schools into a separate division, the state's governing body found Brentwood Academy guilty of six violations, including three recruiting violations by its football program.

Former Brentwood athletic director and football coach Carlton Flatt had given three tickets to a middle school coach, who then brought two prospective student athletes to a playoff game. Flatt also had contacted, by letter, 12 incoming freshmen detailing football practice and signing the letter "Your Coach."

The TSSAA deemed the tickets a recruiting gift and said the letter was another violation because it had been sent out before those students had enrolled at Brentwood Academy. The school was banned from the postseason for two years, placed on four years' probation and fined $3,000.

School administrators never denied the six violations, but instead contended the punishment was too harsh. After losing its appeal to the TSSAA, the school sued in 1997.

"It was a frivolous lawsuit," Childress said. "BA never said Carlton Flatt didn't recruit those kids. When their argument first began, when they appealed their penalty to us, there was never a mention of freedom of speech. They made it into a freedom of speech argument later on and that's why it circulated through the court system so long and reached the Supreme Court twice.

"It became more about the attorneys than the issues that started it. It was smart lawyering on their part, but it cost the organization."

The case dragged through the courts for a decade and included 12 appeals. But in June 2007, the U.S. Supreme Court ruled 9-0 in favor of the TSSAA.

Building a comeback

Prior to the lawsuit, the TSSAA had a net worth of $1.6 million, including its reserve funds. Defending the case for so many years cost the TSSAA nearly $3 million, which left the association's net worth at $511,000, including the property and building in Hermitage that houses the association's headquarters.

"The financial concept for the association was we always wanted to have enough in reserve fund to have half a year's operating money," said Ronnie Carter, the TSSAA's executive director for 24 years before retiring in 2009. "We could operate for two years if we had a total financial wipeout, but the BA lawsuit obviously dipped into that and it was going to take some work to get back on solid ground."

Childress and his staff came up with an aggressive financial plan designed to cut in-house costs by 20 percent a year for five years, while also ensuring that membership dues, which range from $150 to $300 annually depending on the size of the school, would not be raised.

After reviewing the TSSAA's financial report in 2009, Childress went line item by line item looking for cuts the organization could make in-house. His plan included 30-plus changes, including leaving his old job as assistant executive director vacant for nearly two years. Instead of hiring someone to fill that spot, the TSSAA's 22 full-time staff members shared the extra workload.

The association began using more volunteers at postseason tournaments to cut costs and asked coaches to take their certification tests online rather than hosting clinics across the state. It saved $60,000 annually by posting the membership newsletter online rather than mailing it to the 402 member schools and by changing the way it prints game tickets.

"From day one we had to look at creative ways to cut our operating expenses," Childress said. "The challenge was how to do more with less money. When I started talking about the in-house cuts and the five-year plan, our auditor looked at me and told me I was unrealistic."

But Childress thought it could be done.

"I'm not sure how many people realized just how much trouble the association was in," said Sequatchie County Principal Tommy Layne, who sits on the TSSAA Board of Control and is also a member of its finance committee.

"That lawsuit ... had really taken a toll. But Bernard sat in that early meeting and said if we're going to make cuts they're going to be in the building first. He was determined not to take anything away from the schools or the kids who play sports. He didn't want anybody outside to see a difference in how the state playoffs were operated."

A dramatic turnaround

Five years later, the turnaround is complete.

The TSSAA's most recent audit, completed last week, shows a net worth of $3.4 million, including a profit of around $300,000 from last year. That total includes a reserve fund of $1.75 million.

Meanwhile, the TSSAA has pushed forward in other ways, as well.

There are now a total of 200 playoff spots in football, 28 more than before the classifications expanded, and the TSSAA gets 50 percent of the gate from each game as well as a financial guarantee of $250,000 from the city of Cookeville for the rights to host the state championships.

Every school whose football team qualifies for the playoffs also gets a share of the postseason profit, and once all expenses are paid for football state championship games, the TSSAA splits the profit with the 16 schools that play in the title games. Last fall, those schools shared $95,000 and there was another $800,000 divided out to the schools that participated in the playoffs.

"Giving money back to the schools is something new that comes from the financial turnaround by the association," Layne said. "I've checked with other states and there aren't many who do anything like that.

"As someone who has been around long enough to know where we were before and after the BA lawsuit and where we are now, it's been a pretty dramatic turnaround."

Contact Stephen Hargis at shargis@timesfreepress.com or 423-757-6293.

July 27, 2014
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