In an empty square on an immaculate campus off Jubilee Road in Parktown a large and expensive plasma screen television

sits outdoors in a purpose-made Perspex box, hardly ever used.

Certainly when I studied at Wits Business School (WBS) in 2008 the incongruously placed screen was the butt-end of many a cynical snigger as we ate our free lunches and donned our free WBS merchandise:  “look at it, these guys have so much cash they buy a plasma and put it in an outdoor garden – What’s if for, I have never seen that thing on?”

By 2010 the television has finally started to flicker with barely legible notices – defeated by the glare of the sun off the screen, but it begs the question: where does WBS get the money for such lavish spending?

Between 2004 and 2008 WBS has shown 100% growth in its academic revenue stream, according to its financial manager Tabrez Jooman.
WBS’s net profit margin approaches  10% of revenue compared to Wit’s 4% for 2008, and this despite a substantially lower percentage of income  generated through government subsidy, endowments and research grants (about 15% of revenue compared to Wits’ 50%).*  
Described as “very successful” by Wits head office financial manager Daniel Gozo, WBS is one of (if not the) most financially efficient schools under the Wits umbrella in terms of its income/expenditure ratio.

By the end of 2008 WBS was pulling in R44million from its main academic activities, which includes their full-time courses such as their best-in-the-country * MBA and the PDM (postgraduate diploma in management) stream. This is a 100% increase in their 2004 figure of R22million while Wits main has shown only a 50% increase in their comparable revenue for the same period.
Their ‘third-stream’ activities, which include their lucrative short-course programmes offered to businesses and professionals, drew in a figure of about R100million in 2008, according to Jooman.

While WBS’s gross profit for their academic activities sits at 38% showing a net profit of about 25% compared to figures of about 25% and 14% respectively for the third stream, according to Mark Peters who was head of executive education at WBS during 2004-2008, it is the WBS success and emphasis in their third-stream activities that has become the goal of many Wits schools.

Although revenue generated in the third stream is not complemented by government subsidy, which tends to make up about 50% of the academic revenue streams, it is money generated as ‘discretionary revenue’ which means that the head of school has full autonomy when deciding how to spend it whereas money generated through primary academics is subject to a budget template imposed by Wits main said Peters.
According to Peters WBS offers 52 short courses while 86% of them are paid for by businesses allowing WBS to charge up to R171000 for their most expensive one-month course. Lecturers are said to earn up to R10000 a day for work done in the third stream while infrastructure investment is significant – so quality is high. 

Success here has freed up substantial resources for WBS to invest internally and to spend on luxuries and high wages.
Jooman says WBS’s success has allowed them to generate an improvement in their contribution to Wits as a whole from R4million in 2004 to R16million in 2008, an increase of 400% over the four year period.

The contribution figure is calculated as a percentage of turnover, increases in the figure thus reflect a proportional increase in the school’s revenue.
Described as “dramatically over-complicated,” by Peters the contribution requirement is a significant and burdensome cost which dramatically affects the school’s profitability and, according to Jooman, is an impediment to their operational autonomy affecting the school’s competitiveness with institutions such as Gibbs and UCT’s business school.

WBS ability to overcome contribution requirements as well as imposed overheads and budget templates to produce such a healthy surplus is an achievement that to Peters comes down to “understanding the rules of the game … which are complex”.

* Figures for WBS are approximations provided by Mark Peters and Tabrez Jooman; figures for Wits main extracted from their annual reports 2004-2008.
**According to the Financial Mail 2000-2005, survey no longer conducted.