Statesman.com - Texas athletics finished 2013-14 school year $2.8 million short
Texas athletic director Steve Patterson has insisted for months that the athletic department does not have as much money as everyone thinks.
He’s right. The Longhorns are now operating in the red.
The UT athletic department lost money during the 2013-14 academic year, according to an audited financial statement obtained by the American-Statesman through an open records request.
The actual shortfall was negligible by Texas’ standards — about $2.8 million. Still, it’s the first time the department has lost money since the 1999-2000 academic year.
The department had approximately $161 million in revenue and $163.8 million in expenses, according to a document produced by the Austin accounting firm of Maxwell Locke & Ritter. Those numbers are still tops in the nation.
The athletic department had a $9.7 million surplus during the 2012-13 school year, records show. But an 11.8 percent drop in overall ticket sales due to fewer concerts at the Erwin Center along with the cost of changing football coaches apparently eroded Texas’ financial cushion.
Patterson told the American-Statesman last April that he expected the department to finish in the black. The school had more than $40 million in reserves, school officials said at the time. So any one-year hiccup can be glossed over. Patterson has incentives to mind the store; he receives a $100,000 bonus if the department is solvent.
“I think we’re still healthy,” Patterson said in an interview Saturday. “I’m encouraged with the ticket sales in both (men’s and women’s) basketball programs and volleyball. I think all things considered, we sold well. The reality is that we’re going to have increased costs when we get through the next month with changes in legislation, changes in food service.”
The drop in ticket revenue was the most eye-opening, a precipitous fall to about $53.6 million from $60.8 million. “Most of that is just fewer concerts, and that becomes just a wash,” Patterson said. “You take it in at the arena and you turn around and give it right back to the band.”
Specifically examining Texas athletics, football ticket sales remained the same, approximately $34 million from one year to the next. But men’s and women’s basketball and baseball ticket sales all declined.
The department also incurred a one-time charge of $4.375 million to buy out Charlie Strong’s contract at Louisville. That money came straight from reserves and not the operating budget, Patterson said, dropping the overall reserve total to about $35 million currently.
Former coach Mack Brown received a $2.75 million severance package, but the payout is structured over four years. Brown also received a $500,000 one-year payment to become a special assistant to the president, an arrangement Patterson said will continue in 2015.
Overall, donations remained the same, at about $37 million, a stagnant level that worries some within the Longhorn Foundation. The school took in $2.2 million more than in the previous year — a total of $23.9 million — from NCAA and Big 12 distributions. That figure should go up over time with new TV contracts.
It’s also believed that the Texas athletic department is one of the few in the nation that transfers money back to the university. The Longhorns sent $9.7 million into the academic coffers. It’s the third time in four years that the athletic department has transferred more than $9 million back to academics instead of keeping the money for itself.
But the cost of doing business is going up. Scholarship costs increased, the amount paid out in contractual game guarantees went up, and so did items such as team travel and the cost of uniforms.
A new expense is coming for the 2015-16 school year, if certain legislation passes at next week’s NCAA national convention. The NCAA is widely expected to pass rules that allow schools to pay athletes for the full cost of tuition and use of their name, image and likeness. Patterson has said he’s budgeting $6 million for that expenditure.
Assuming the legislation passes, all Texas athletes could get as much as $5,000 annually for tuition. All UT athletes would get an additional $5,000 — up to a maximum of $20,000, based on four years of eligibility — placed in a trust to receive upon leaving school. That money would be a payment for use of an athlete’s name, image and likeness.
Department officials are already talking about a financial literacy program, believing a day will come when the quarterback, pole vaulter or rower gets a $20,000 check upon graduation.
The school has more than 500 athletes competing in 20 varsity sports. It’s unclear how that revenue would be generated.
At a school like Texas, the math alone dictates that football must be successful. The Longhorns have a 100,000-seat stadium and did not fill it once during the just-completed 6-7 season.
The Longhorn Foundation recently sent out a questionnaire to donors asking whether they’d be willing to pay for tailgating space around Royal-Memorial Stadium. Initial reaction was not pleasant.
Now factor in that the school needs to build a new tennis facility and a new basketball arena and someday enclose the south end zone of Royal-Memorial Stadium. “Construction costs aren’t going down anytime soon,” Patterson has said.
Patterson has not indicated whether football ticket prices will go up for the 2015 season. The department has hired two dozen new staffers to create an outbound sales force in hopes of moving the ticket inventory UT already has.
Texas’ situation brings up sobering questions that school officials have elsewhere. If the Longhorns are struggling to make ends meet, how will others make it?
BREAKING DOWN THE TEXAS ATHLETIC BUDGET
Category;2012-13;2013-14
Total revenue;$165,691,486;$161,035,182
Total expenses;$156,008,651;$163,850,593
Surplus (deficiency);$9,682,835;($2,815,411)
Ticket revenue;2012-13;2013-14
Football;$34,416,141;$34,089,405
Men’s basketball;$3,731,676;$3,107,303
Women’s basketball;$325,416;$267,243
Baseball;$1,052,846;$987,150
Total;$60,860,735;$53,655,399
Other notable revenue;2012-13;2013-14
Donations;$37,386,271;$37,633,030
NCAA/Big 12 payouts;$21,740,373;$23,914,930
Licensing royalties;$33,421,518;$31,955,783
Sports camps;$4,157,893;$4,526,777
Other notable expenses;2012-13;2013-14
Scholarships;$9,956,345;$10,842,276
Coaching salaries/benefits;$24,415,065;$25,375,094
Support staff salaries/benefits;$30,823,731;$35,714,697
Recruiting;$1,405,178;$1,463,992
Medical expense/insurance;$1,865,346;$2,014,676
Transfers to academics;$9,201,066;$9,721,719
Sources: Reports by the University of Texas to the NCAA and audited by the Austin accounting firm Maxwell Locke & Ritter.
HOW WE DID IT
The American-Statesman obtained the 2013-14 financial statement of the University of Texas athletic department through an open records request.
Originally Posted by Therealsouthsider
