Interesting Financial Data - Auburn, UAB, uat

[AUChizad]

http://www.al.com/sports/index.ssf/2010/08/ncaa_financial_survey_alabama.html

NCAA financial survey: Alabama in black, Auburn in red
Published: Wednesday, August 25, 2010, 7:44 AM
Jon Solomon -- The Birmingham News

Alabama turned another profit. Auburn moved into the red. And UAB dug a deeper hole.

That was the verdict from a new NCAA report that shows fewer schools are making a profit on college sports during a down economy and increased spending. The result: Athletics departments rely more than ever on institutional subsidies.

The NCAA reports only 14 athletics departments from the Football Bowl Subdivision (formerly Division I-A) made more money than they spent in 2008-09, down from 25 in each of the previous two years. The average institutional subsidy for athletics in the FBS rose from $8 million in 2007-08 to $10.2 million in 2008-09, the most currently available year of data.

The NCAA did not identify which schools are self-sustaining. NCAA surveys obtained by The Birmingham News show that Alabama again reported a profit, Auburn was among those no longer in the black, and UAB's deficit increased.

Based on the way the NCAA annually tracks finances, Alabama's athletics department reported a $4.3 million profit once $5.1 million in direct institutional support was subtracted.

Auburn's NCAA survey showed a $3.7 million deficit in 2008-09 after $5.2 million in student fees was removed. However, Auburn Athletics Director Jay Jacobs said the department did not run a deficit in 2008-09, nor did it have a $14.3 million surplus as reported in NCAA data for 2007-08.

"For the last six years we've been able to put money in reserve," Jacobs said. "Here's the thing: Those people who put together the report used the same parameters for everybody. I'm just saying you've got to be careful what you add to the revenues and expense side because it may not all be apples to apples."

UAB's athletics department reported a $13.1 million deficit in 2008-09, when factoring in subsidies that accounted for 57 percent of the department's total revenue. The amount of subsidies for UAB athletics increased 26 percent between 2005-06 and 2008-09.

The continuing trend of subsidizing college athletics reinforces charges that the current rate of spending is not sustainable.

"I am cynical in that I just don't think it's possible," said Dan Fulks, a Transylvania University accounting professor who did the NCAA research. "Cedric Dempsey, as he was leaving (as NCAA president in 2002), said the biggest mistake the NCAA made was when it announced its goal to be self-sustaining. If we believe it's worth having athletics, it's worth paying for."

Auburn's deficit

Auburn's self-reported data shows several factors why the NCAA considers 2008-09 to have been a deficit. For starters, Auburn spent an additional $6.2 million on severance payments than the previous year, largely for the football staff after its 5-7 record.

An additional $5.3 million was spent in '08-09 on direct facilities, maintenance and rental. Auburn also spent $1.3 million more on employee salaries and benefits and $413,000 more on scholarships.

Meanwhile, booster contributions -- the department's largest revenue source -- declined from $34.9 million to $32.1 million due to $2.8 million less in football donations. Fulks said the NCAA study tracks only cash received from contributions, not pledges paid over several years.

Jacobs said Colonial Bank's financial struggles have not reduced the level of giving by prominent Auburn booster Bobby Lowder, who retired in 2009 as the bank's CEO.

"I can't say there's any one particular donor that has been particularly impacted more or less than anyone else," Jacobs said. "I think everybody has been hit to some degree. Our most loyal folks continue to support us at the highest level they can."

Jacobs said the NCAA might consider Auburn as having a deficit in part because schools sometimes count student fees differently. Instead of charging students to attend sporting events, Auburn makes most games free and receives student fees, Jacobs said.

"We think it's a subsidy," Fulks said of student fees. "It's a tuition increase and designated for athletics. Not all students go to every game yet they're paying a fee."

For UAB, its subsidies in 2008-09 came from direct institutional support ($9.7 million), student fees ($3.3 million), direct state or other government support ($98,000) and indirect facilities and administrative support ($22,897).

UAB's football program reported a $1 million deficit in 2008-09, without factoring in subsidies from student fees or state/ government support, which were not allocated to any particular team. The football deficit was $856,000 in 2007-08.

Impact of recession

The NCAA study shows that the growth of average revenue generated directly by FBS athletics departments slowed to nearly 6 percent from 2008 to 2009, down from 17 percent growth from 2007 to 2008. Meanwhile, the growth of total athletics expenses ballooned to 11 percent from 2008 to 2009, nearly double from the previous year.

"I think we're beginning to see the effects of the recession," Fulks said. "Unfortunately, I don't think we're seeing the total effects of the recession yet."

However, Fulks said he is encouraged that the growth rate on athletic spending has remained around 5 percent of total institutional spending. The NCAA found no gap between the growth of institutional spending versus the growth of athletics spending.

In June, the Knight Commission reported that athletics spending per athlete at FBS conferences in 2008 outpaced academic spending per student by four to 11 times.

"We just don't agree with that," Fulks said. "Our numbers come directly from the institutions from my survey."

The gap between the "haves" and "have-nots" continues to grow considerably. The highest athletic revenue produced by one school was $138.5 million, yet the average FBS school produced $32.3 million. Similarly, the most money spent by one school was $127.7 million, compared to the average of $45.9 million.

That disparity nearly caused major conference realignment this summer, when Texas and other Big 12 schools almost created a 16-member Pac-10. Other leagues likely would have reacted.

"The only thing that surprised me is that Texas stayed," Fulks said. "I don't think it's over. The disparity between the top 10 percent and the bottom 10 percent is dramatic."

The study doesn't factor in what value athletics places on campus-wide giving or enrollment. NCAA interim President Jim Isch said on the association's website that institutions continue to determine the value sports adds to their overall operation.

"It appears more institutions are having to face these difficult decisions about where to invest their money," Isch said. "The top end -- while it is not as populated as it was a year ago -- still does not have to rely on institutional subsidies. But those that do are falling further behind."

[Snaggletiger]

This absolutely blows me away.  Let's start with $32 milllion in donations.  Then let's add the dividends from Bowl revenues, which by the way, has been in the $10 million plus range the last few years.  Now think about averaging 85,000 people in the stands at an average tix price of...ooohhh...let's go conservative at $20.00 a pop.  That's about $1.7 mil per game at how many games?  Don't forget the lucrative TV package in place which divides untold millions among the teams.  Wait, concessions in the stadium each game....licensed apparel sales around the Southeast...deals with UnderArmor and on and on and on...

A deficit???  I know the football program basically funds numerous other sports but holy shit..a deficit?  Someone needs to fire the financial adviser.   

[JR4AU]

This absolutely blows me away.  Let's start with $32 milllion in donations.  Then let's add the dividends from Bowl revenues, which by the way, has been in the $10 million plus range the last few years.  Now think about averaging 85,000 people in the stands at an average tix price of...ooohhh...let's go conservative at $20.00 a pop.  That's about $1.7 mil per game at how many games?  Don't forget the lucrative TV package in place which divides untold millions among the teams.  Wait, concessions in the stadium each game....licensed apparel sales around the Southeast...deals with UnderArmor and on and on and on...

A deficit???  I know the football program basically funds numerous other sports but holy shit..a deficit?  Someone needs to fire the financial adviser.   

Auburn normally operates in the black.  Football obviously carries the other sport's load...baseball might run in the black, not sure.  Donations down due to the end of Tub's era and the way it went...the initial "shock" of the Chizik hire...and recession.  Basketball hurts Auburn badly...and I didn't read where the new areana's construction might have factored in to all this too.  Considering only 14 of 120 programs operates in the black...it's not as bad as it sounds...though we should be one of those 14.   

[Snaggletiger]

I've heard estimates thrown out there on talk shows and other places that some major programs generate as much as $75 million plus each year.  I know the football program is the proverbial goose/egg...but what the hell are you spending it on?

[notthatcool]

Auburn's NCAA survey showed a $3.7 million deficit in 2008-09 after $5.2 million in student fees was removed. However, Auburn Athletics Director Jay Jacobs said the department did not run a deficit in 2008-09, nor did it have a $14.3 million surplus as reported in NCAA data for 2007-08.

"For the last six years we've been able to put money in reserve," Jacobs said. "Here's the thing: Those people who put together the report used the same parameters for everybody. I'm just saying you've got to be careful what you add to the revenues and expense side because it may not all be apples to apples."

[JR4AU]

I've heard estimates thrown out there on talk shows and other places that some major programs generate as much as $75 million plus each year.  I know the football program is the proverbial goose/egg...but what the hell are you spending it on?

Traditionally, women's sports are the drag finanically.  Bammer has two women's sports that carry their own weight...gymnastics, and Softball.  Tenn has women's basketball which probably rivals most men's Bball teams in revenue.   OTOH, Auburn has men's Bball, which should at least carry it's own weight...and it doesn't, and we have equistrian which I guess is expensive to maintain, and not even a sport at but like 2 or 3 other SEC schools.