Football by the (Negative) Numbers
Welcome to the real athletics budget
"It's all about dollars, hours, and acres," explained UT Chief Financial Officer Kevin Hegarty. "The stadium is really only open for a few hours a week, but the operational costs are continual."
For the last few years, UT's athletics program as a whole has earned a slight surplus. In 2008-09, the program cost $107.3 million and received $110.7 million in revenue, donations, and sponsorships. In recent years, only two sports programs – football and men's basketball – have turned a profit on paper, while a third – baseball – has remained static, nominally breaking even. Historically, the program has run at a loss, and future projections show that the university will soon start subsidizing its operational costs. Early proposals to discontinue only the 17 loss-making sports were quickly discounted when it became clear that the finances were just too interwoven to separate. Women's basketball coach Gail Goestenkors said, "I'd love to say that the [Moncrief-Neuhaus Athletics Center] was renovated for all of us, but everyone knows that the big build happened because the football team wanted it."
The critical moment came with the realization that the UT athletics program was running an untenable balance sheet. Between 2005 and 2010, the debt load increased from $66 million to $222.4 million, and a shaky bond market means that the annual $14.7 million in debt service payments will be difficult to maintain. After the Longhorns failed to win the 2009 BCS National Championship at the Rose Bowl, any argument for increasing ticket prices to cover the deficit collapsed. Athletics Director DeLoss Dodds, echoing the rationale offered by University Unions Director Andy Smith for the recent closure of the Cactus Cafe, said, "Raising prices when there is not a general reason to do that, like an increase in your raw product, is not something that drives in additional business."
It finally comes down to T-shirts. The athletics program leases all merchandising rights from UT: In the last five years, it has earned $32 million from merchandise sales. In return, athletics contributes roughly $2 million a year to the university coffers under the academic initiative program, a little over half of which comes from merchandise sales. Hegarty said, "We realized that athletics was keeping the lion's share [of merchandise profits], then calling our contracted portion a gift. That's like telling your landlord 'Merry Christmas' when you hand him your December rent check. ... Well, we got tired of standing under that sprig of mistletoe."
"Looking back, some items were incorrectly filed as 'academic initiative,'" said UT President Bill Powers. "For example, the $700,000 to remove trees for the stadium expansion should not have been accounted as 'benefiting students.'" Considering the relatively paltry $66,000 in biennial losses given as the reason for closing the Cactus Cafe and ending the informal classes program, the administration was no longer able to justify subsidizing the athletics program at the expense of academic funding.
Those same accounting concerns extend to the education the university provides to student athletes. In 2008-09, UT spent an average of $210,000 per student athlete – roughly eight times the amount for a nonsporting student. Tina Kien, director of learning services for the athletics program, called the return on investment "disappointing. ... We spent $8.2 million in scholarships in fiscal year 2008 and only achieved a 40 percent graduation rate." The situation, she acknowledged, is likely even bleaker than it seems. The latest statistics released by the NCAA only report up to the incoming freshman class of 2002, whose members should have graduated a four-year course in 2006. "Come back in 2013," she added, "and I'll tell you what we did for this year's graduating class."
So what happens to the facilities? One cost-saving proposal is to turn them into parking. With the recent proposed loss of another 400 public parking spots in West Campus, in addition to spaces lost during the stadium expansion and the upcoming construction of the new College of Communication building, parking is at a premium in the campus area. Pat Clubb, vice president of university operations, explained, "Even if we just convert the area into simple surface parking, that's $110 a year for each car. While conversion into a structured facility would be complex, the $602 per year per permit would cover those costs and feed more money into the academic budget."
While some memorabilia will be retained in a new museum (the Texas Exes have offered space in their building for the 20-foot illuminated Longhorn, currently located in the Howard L. Terry-Bobby Moses Jr. Longhorn Locker Room), the plan is to dismantle and sell off as much equipment as possible to offset the massive outstanding construction debt. However, the university will have to find alternate employment for all permanent staff. Groundskeepers will be transferred to the Facilities Services Department, while commercial food services conglomerate Aramark has said it will work with fast-food concessions around campus to find vacancies. As for the coaching staff, Powers said, "We've tried to find a good fit for their talent-spotting skills." So, as of September, coach Mack Brown may be America's highest-paid undergraduate admissions supervisor.
*Oops! The following correction ran in the April 9, 2010 issue: Due to editorial confusion, we mistakenly reported last week that the University of Texas was ending its football program (and all athletics programs), that the city of Austin would henceforth subsidize UT football, that several UT football players were transferring to other universities, and that Darrell K. Royal-Texas Memorial Stadium would be repurposed for academic functions and additional parking. We have since learned that we were mistaken. We apologize for any inconvenience and promise to never, ever, ever, make similar mistakes again – at least until April 1, 2011.