Interesting discussion. I think there are a lot of flaws with Max Connor’s (and his staff’s) analysis. Settle in, this is a long post. Here is the article that links to the podcast:
https://statehornet.com/2019/12/athletics-department-budget-deficit/
Key points stated in the podcast:
· Based on FY18 numbers, article references USA Today as the data source
· $2.6M deficit is based on report from University Budgeting Advisory Committee (UBAC)
· Consulting firm issued a report to Athletics in October containing recommendations to streamline
revenues and decrease the deficit. That report has yet to be made public.
· Compares Sac State to Big Sky conference and Sac State has the highest deficit.
· 83% of athletic budget comes from allocated funds (not generated by athletics)
· Most Big Sky athletic departments don’t run large deficits
· Concessions at all CSUs are not run by athletics so that revenue does not go towards athletics
revenues
· Ticket sales are low
· Touches on the failure to build the events center when the 2004 referendum passed due to the
recession
· Student engagement should be increased
· Ticket sales in FY18 were ~$330k, 30% increase over FY17.
· 3 other schools in the BSC have lower ticket sales.
· Montukies at roughly $5M and $3M in ticket sales
Here is the actual verbiage from the UBAC FY20
Recommendations Document dated 5/3/19:
Athletics has an on-going deficit, and their revenue and budget are not sustainable based upon their expenses. In order to eliminate the deficit in the foreseeable future, a plan of action needs to be developed and implemented. Current projections for the deficit are at a minimum of $2.6M by June 30th .
· Every year Athletics incurs a deficit, the University’s Central Reserves is reduced to fund that deficit. This leaves less funding for additional courses, emergency or urgent situations, campus contribution requirements by the Chancellor’s Office for infrastructure or capital project funding, and other campus needs.
· Once a plan and timeline is implemented, there needs to be some sort of accountability and reporting measures to ensure progress is made towards eliminating this deficit.
· Since a consultant is currently reviewing the Athletics’ situation and will be providing a recommendation, UBAC is requesting an update around October 31, 2019 from Athletics so the committee members are not surprised with the following year’s Annual Budget Call submission.
· It is also important to keep in mind that Athletics does help to further many of the university’s imperatives such as increasing academic success (overall student-athlete GPA of 3.1 for the third consecutive year), increased NCAA graduation success rate (currently 76% with an average unit load of 14.95), and community engagement through their many events and community partnerships with local high schools.
Here is the FY20 President
Budget Decision dated 9/17/19. Athletics received a baseline allocation increase to $4.9M for FY20, up from $3.7M in FY19
My comments:
· Interesting podcast. Kept it straight forward but missing more in-depth research and analysis.
· They completely whiffed on the big picture perspective of this issue. Based on the UBAC website, the projected University budget for FY20 is $356.9M. The $2.6M athletics deficit is 0.73% of the University budget, but approximately 10% of the athletics budget (based on the $25.8M FY18 number from the Federal EADA reports). I’m not belittling $2.6M, but in the grand scheme of things the deficit is not even a drop in the bucket for the University. That said, it does need to be reduced if not completely eliminated.
· A $6M reserve will be carried over into FY20 from FY19 for use in “One-Time Requests”. The bulk of which is going to Academic Affairs. If the athletics deficit was a significant issue, there would have been an allocation made to cover the potential deficit for FY20.
· Student engagement is completely irrelevant wrt the deficit. Athletics gets their money from the students via the student fee whether or not they attend athletic events. While increased student turnout would be great for game day atmosphere and the growth of future fans/donors after graduation, it essentially has zero impact on athletic revenue generation.
· BSC comparisons are not apples to apples. Most of the BSC athletic departments sponsor the minimum level of D1 programs (14: 6 male, 8 female) while Sac State sponsors 21 sports (9 male, 12 female) so a broad comparison of the athletic budgets is not valid. A more accurate and relevant comparison would be on a sport by sport basis using the EADA numbers. This correlation can then determine the “actual” expenditures as a percentage of the total athletics budget at Sac State in relation to other BSC athletic departments.
· I like how the authors point out the lack of an events center on-campus. The events center would serve the campus well, and not just for athletics. Sac State is losing out on revenue generating opportunities (athletic and non-athletic events) and having that facility is a large piece of the puzzle to closing/minimizing the athletics deficit. An events center would also make some programs (notably MBB and WBB) more competitive thereby generating a significant increase in interest and revenue via donations and ticket sales.
· In addition to athletics not benefiting from concession revenues at athletic events, they also do not directly benefit from apparel revenue aside from whatever is sold on the Hornetfanshop. Almost all of the apparel in the bookstore uses the athletics logo(s) and those sales go directly into the University coffers (after Follet takes their cut, of course). So this is another revenue stream that is not taken into account in the $2.6M number being thrown around.
· University Central Reserves are tapped as $18M was used towards the Tchschen Science Building. This means there isn’t a slug of money to throw at a new events center in the near future to get that project moving if private funds aren’t raised.
· Sac State campus-wide student fees in the CSU are 11th highest for the 2019-20 academic year and 5th highest among D1 CSUs (posted below). This means that increasing the athletic fee (or incurring a fee to cover the events center) is a viable option on the table for admin to consider.
Cal Poly: $4,201
San Jose: $2,110
San Diego: $1,768
Bakersfield: $1,677
Sacramento: $1,626
Northridge: $1,235
Fullerton: $1,182
Long Beach: $1,092
Fresno: $847
The bottom line is the $2.6M deficit can be addressed in various ways, and barring an economic collapse I don’t see this being a major cause for concern that will result in any athletic programs getting cut.
