Weighing Cactus Cafe's Losses

The Texas Union has justified closing the Cactus Cafe on financial grounds, claiming that the famous venue has been losing money for years. But when the Friends of the Cactus Cafe had its own CPA look over the numbers, they found inconsistencies in both the numbers and the Union's response.

According to an internal audit conducted in August 2009, the cafe has earned $4.5 million in the last decade, with roughly two-thirds from concert admissions and the rest from bar sales. However, in that time it lost $212,640, or 4.7% of its total budget. Part of that loss is what is commonly nicknamed the "Tower Tax" – an administrative charge levied on all university entities – that increased from $5,578 (or 1.6% of revenue) to $15,552 (2.8%) from the 1999-2000 academic year to 2008-09.

While the cafe's losses may sound significant, the Texas Union as a whole is subsidized by student fees intended to broaden programming beyond what is profitable on any given night. By comparison, Texas Performing Arts (which books shows in six campus venues, including Bass Concert Hall) only covers 63% of its operating costs from revenue, and depends on donations and sponsorships for the rest. Yet at no point in the last decade has the Union acted to cut those losses. And until it had to find the cash to pay for a 2% merit pay raise pool ordered by UT President Bill Powers last fall, there was no suggestion of closing the Cactus, nor any mandate to management that they had to start breaking even. Friends of the Cactus Cafe member and CPA Chris Yost called the Union's analysis "purely a budgeting exercise. This is not about the Cactus Cafe losing money. It's 'How are we going to fund this merit pay pool?'"

Yost noted that the administration has repeatedly underestimated revenue and overestimated expenses like advertising, and added that in 2008-09, the cafe's income rose to a record high of $548,535 while losses dropped to a five-year low. However, the Texas Union has already calculated its 2010-11 budget without the Cactus Cafe, and while it is considering future options for the space, it has repeatedly depicted the venue as a money pit (see "Off the Record".) Warning that the numbers bear more analysis before any actions are taken, Yost asked, "Is their income estimate too conservative, and are they attributing expenses that are too high?"