His Precious

If this isn’t the most distilled essence of the core value of every fiber of Greg McGarity’s being, I don’t know what is.

Last year, Georgia and every other SEC school received $32.7 million as part of its annual payout. It was $31.2 million the prior year. Back in 2009, it was only $11 million per school. This year’s payout won’t be announced until next month, but it’s again expected to be a record amount.

So what’s the need to continue to charge the student fee at all?

“If I’ve got a $3 million hole there, I’ve either got to cut $3 million out of my budget (or do something else). So it’s a huge part of our revenue source,” McGarity said.

But UGA also projects that – even after increasing spending on football and the indoor athletic facility – it will have more than $63 million in its reserve fund at the end of this fiscal year. Couldn’t the student fee be waived and the $3 million be made up for by dipping into the reserve fund?

“That’d be like you or me going into our 401k,” McGarity said. “We don’t want to do that.”[Emphasis added.]

All these years, and it turns out the Georgia Way is just like funding somebody’s retirement.  I keed, I keed (I hope), but it’s worth pointing this out as a retort:

The student fees result in the second-largest known subsidy of any SEC school, according to USA Today. Auburn, which receives a $4.3 million subsidy, is the only one with more. (Vanderbilt’s numbers, as a private school, are not known.) Six SEC schools don’t receive a subsidy at all.

Allow Mr. Rainy Day to respond.

Student attendance has actually been a frustration for many at Georgia. They often don’t sell out their 16,000 allotment. When Scates was on the board he helped organize a Young Alumni program, allowing recently graduated students to buy up some of those unsold student tickets.

So what about finding $3 million somewhere else and letting in students for free for football games?

“That’s 16,000 seats right there,” McGarity said. “You can’t be all things to all people. Our financial model has to work.”

That’s right. You don’t mess with the reserve fund, peeps. Besides, you’ve got to train these kids early to recognize their true utility to Georgia athletics.  Teach a student to pay a mandatory athletic fee, and you make a wallet for life.  Or something.

I know I’m repeating myself here, but who in the world at Georgia thinks it’s a good idea for McGarity to explain himself in public?

64 Comments

Filed under Georgia Football

64 responses to “His Precious

  1. Hogbody Spradlin

    How in the Sam Hill can he claim any definition of an operating deficit with those revenue increases?

  2. Runlindsey

    Two weeks ago I had a UGA rep in my office pitching the McGill Society for a 25k donation. That would give me bonus points when it came time to make my donation to the Hartman Fund which would then allow me to buy tickets. I asked him about the reserve fund. He told me there was a new CFO in town that was comprehending of the issue and dedicated to spending it down. I think I’ll send him the link to this story.

  3. heyberto

    There’s really no good way to spin that, so I’m not sure what he could say that would be any better. I’m not defending him.. but this isn’t just McGarity either.. he’s got a group of enablers backing him up. He’s clearly all in himself, and well paid, so it’s not inappropriate that he be the human shield for the Athletic board, but the Georgia Way is bigger than Greg.

    A bit of side note – Does anyone else wonder that the possible unbundling of cable packages could impact the financial windfall? That people like the UGA Athletic Board think this won’t last forever so they better stock up while they can?

    • With regard to your side note, I might give that some measure of credence if there were any steps being taken by B-M to control the expense side of the ledger. But every time I see Kirby in his helicopter, I’m reminded otherwise.

      • RandallPinkFloyd

        Gotta spend like Bama to be like Bama, right?

      • DankJankins

        I’m down with spending a little more so Kirby can fly around in a red or black helicopter instead of that yeller one..🙂

      • hailtogeorgia

        It’s just like most other people, Senator. You can preach budgeting and saving all the time, but until the time comes when those things are actually necessary…

        Maybe the thought is that it’s a moment in time and they’re taking the ‘If not now, when?’ approach? Honestly, who knows?

  4. JCDAWG83

    Pride goeth before a fall. These are the golden days for college football, especially SEC football. SEC ADs think the money and demand will never slow down and they can do whatever they want. Unfortunately for them, as the old saying goes, “this too shall pass”.

  5. Gaskilldawg

    I wrote a letter to The J. Reid Parker Director of Athletics about three years ago in response to a request to increase booster contributions to build something (can’t remember what, maybe the baseball stadium.)

    I pointed out that using the reserve fund is nothing like a working person dipping into a 401(k) since a retirement fund enables a person to continue to be able to spend for years after his or her income from work ends.

    If UGA Athletics does not “retire” then continue to have financial needs. If UGA stopped having intercollegiate sports programs there would not be an additional 20 years worth of intercollegiate sports expenses to fund.

    The “we don’t dip into our 401(k)” analogy is stupid.

    • Gaskilldawg

      By the way, he sent me a handwritten note simply saying that “We agree to disagree.” No analysis of why UGAAA has a “retirement” to fund.

      • Reipar

        The reason he disagrees is unlike most ADs he is planning on the gravy train ending. When it does the reserve fund will be our retirement as earnings decrease.

        • Maybe the ADs should be planning to reduce their bloated operating budgets and the facility Taj Mahal projects in anticipation of the gravy train ending.

          • Reipar

            So your solution is we get all ADs to spend the Georgia way when we cannot even have a universal drug plan?

            I love how our guy is McFruggal and everyone else spends like a drunken sailor.

            We are trying to spend like Bama but be prepared for when the tv money dries up. How is this not the best of both worlds when you consider our competitors are not going to adopt the Georgia way?

        • Gaskilldawg

          Even if “the gravy train” ends UGA will still be selling tickets, radio broadcast rights, and licensed merchandise. It has the ability to adjust expenditures to revenues (i.e; reduce the number of employees and as employment contracts come for renewal adjust salaries.)

          If UGA gets out of the intercollegiate sports business UGA will not need a massive reserve fund since it will not need 4 million dollar per year coaches to coach P.E.

          If I retire I am not making money but I will still need to be fed. If UGA gets out of the sports business there will no longer be an AA to feed.

          • Reipar

            You are advocating we get out of sports? No seriously. Is that what you are saying the solution is? We just “get out of the sports business”???

    • I don’t for the life of me understand why the contribution minimums are going up again. Probably because they can rather than because they should or need to.

      Contributions for the right to buy tickets … Another reason for Kessler to burn the thing down. These organizations may look like 501c3 organizations, but they act like for-profit entities now. If they want to move to a PSL model as a result, at least, that’s transparent. Yes, I understand I would lose my 80% tax deduction, but I really don’t care now.

      • DawgPhan

        the tax deduction isnt really even that valuable unless you are donating serious coin each year.

        • DP, if you’re donating serious coin, I would imagine the value of that donation goes down because your deductions either get phased out or throw you into the alternative minimum tax because of the income thresholds.

          • DawgPhan

            maybe, I am not an expert on taxes. I know the deduction for me is pretty worthless, in that I dont donate because of the deduction. I would have to imagine that there is some sweet spot where some people get a benefit, but for me with 4 tickets and regular amounts of income, it doesnt really change my taxes.

            • It’s probably worth $250-$500 per year if you’re making the minimum contribution level based on your seating location and marginal tax bracket.

      • Tim in Sav

        well……don’t make a contribution and don’t but tickets….quit bitchin about it.

        • That was an intelligent, well thought out comment … I’m only making the comment that these are for profit operations now cloaked behind a mask of the IRS tax-exempt status.

        • Gaskilldawg

          Tim, ee is one of the few guys who never has made one personal criticism of any poster, even when he disagrees. Don’t pick on the nicest guy on the board; call me names if you feel the need to be a jerk.

    • Tommy

      Also, you don’t trigger penalties and taxes by dipping into the reserve fund. It’s a savings account, which you can use to invest in gameday experience enhancements that actually enhance the gameday experience like, oh, making it easier for your loudest fan segment, the students, to attend games.

      There are a lot of reasons (63 million, roughly) why I don’t donate to UGA athletics — they’re not curing cancer, housing the homeless, etc. — but chief among those reasons is that they don’t need my money.

      If this is about tickets, you can go on Stubhub and buy tickets to all the non-bodybag games come out way ahead of even the lowest-level Hartman Fund donor.

  6. Bright Idea

    The BOR recently capped how much of a school’s athletic budget can be funded by students. The cap won’t affect UGA or Tech because they rake in so much otherwise. Ga. State and the smaller schools are gonna’ get hit hard by the cap. The BOR has an eye on this so I suspect McGarity knows he’s in the clear with the $106.00. I wonder what motivated Emerson to bring this up.

    • HVL Dawg

      Emerson probably has heard one of Malcolm Gladwell’s recent podcasts. Gladwell recently did 3 commentaries on the financial strategies of successful universities. He did a big take down of Stanford’s 23 billion dollar endowment. It is causing a stir.

  7. The problem is they charge the fee, and then students have to buy tickets on top of it and pay full price for UNC and UF.

    • Reipar

      $8 is hardly buying a ticket. Plus they receive free tickets to every other single sporting event. Of course students have to pay full price for away games. They also have to pay full price for the hotel, gas, and food for the road trip.

      That said I think they should make it where you can opt out of the fee and then anything you want to go to you just pay market rate. They should also cut the ticket allotment down to 10,000 and give the remaining 6,000 to the young alumni program at 50% price.

      • Many students don’t go to another sporting event outside a football or basketball game. Those “free” tickets are pretty much worthless to the typical student … and those sports don’t sell out even with free access. My point about the neutral site games is that the AA made a decision to take a home game away for … you guessed it, money, and then turn around and charge a student full price for a ticket. I understand the full price for true away games or bowl games.

        Is the foregone $400k in student ticket revenue for the season going to be missed when you’re receiving $35m from the conference’s media rights?

        I agree with you about the ability to opt out of the fee, but I would say if you opt for the fee, you pay the fee for both semesters (i.e., you can’t opt in for fall and opt out for spring). The problem is that there are 35,000 students paying the fee and only 16,000 who get the ability to purchase tickets.

        • Chi-town Dawg

          And those students can only attend half of the home games. Unlike when we were in school and you could attend all of the home games, it’s now a 3 game package.

        • Reipar

          Pretty sure if you go to one basketball game and one baseball game your free face value tickets just paid for your student fee.

          I think they should also unbundle the bus fees, library fees, lab fees. Basically anything you decide not to use.

          • Normaltown Mike

            “if you go to one basketball game and one baseball game”

            Sounds like some type of cruel and unusual punishment at UGA.

  8. PTC DAWG

    How are other Power 5 Schools handling this issue? Is UGA on an island with this?

    • DawgPhan

      I believe that USA Today publishes the data each year. UGA is not alone in charging the student fee, but a lot of the peers of UGA do not charge the fee. Like Bama and tOSU.

  9. 86BONE

    “Dank” and “JC”…very good comments!

  10. Normaltown Mike

    Article doesn’t mention it, but what is our debt load at present?

    I recall it being over 100 million a few years ago. The IPF is paid for but we are paying off several other projects and will be for many years.

  11. Lrgk9

    There is no PR nightmare McGarity.

    Approaching 70% women and nerds at UGA undergrad these days.

  12. DawgPhan

    Just seems like a weird time to ask donors for money. Money is basically free right now and has been for a while. You could finance the improvements @ a very low rate and invest the money to pay for it and likely come out ahead.

    The when rates go up, you can hit up donors for cash.

    • Normaltown Mike

      I think they’d find themselves in striped pajamas if they operated as you suggest.

      • DawgPhan

        What would be illegal about this?

        • Normaltown Mike

          I’m not positive how the AA is incorporated so maybe they could, but a non-profit can’t collect money and make proprietary investments for operations. They can hold a donor’s money in an endowment, but there are fiduciary responsibilities that preclude hedging with OPM.

    • dubyadee

      “You could finance the improvements @ a very low rate” YES

      “and invest the money to pay for it and likely come out ahead.” NO, AT LEAST NOT SAFELY.

      • DawgPhan

        But certainly the money in the reserve fund is currently earning some interest, right? That it is invested somewhere…to follow the 401k analogy.

        I think of this as getting the 0% credit card to make a major purchase when I have the cash on hand to just buy it outright.

        • Normaltown Mike

          IDK, but I doubt they are invested in the open market as we would define it. They are a quasi if not de facto state controlled entity and there are strict rules (as there should be) with what such an org an do with funds on hand.

      • W Cobb Dawg

        ““and invest the money to pay for it and likely come out ahead.” NO, AT LEAST NOT SAFELY.”

        Not sure what the A.A. would do, but if I had loads of cash laying around and wanted a safe investment, I’d buy raw land. Heck, they don’t even have to pay property taxes. Then again, I agree with others there’s no relation to a 401k situation. If not using the money they should drop or at least reduce student fees. At least it would help the pretence they’re serving the students.

  13. Russ

    As a parent with a child approaching college age, this really pisses me off. College costs are at an all-time high and all McDumbass can think of is the reserve fund.

  14. JTP

    This is an outfit that told me that they weren’t willing to start taking Hartman Fund gifts paid with American Express because the fees were too high.

    Ears is gonna have that diamond in his shorts… just you wait!

  15. TMC DAWG

    The more McGarity speaks, the more I dislike him,

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