Today’s excuse for a big reserve fund

Greg McGarity is projecting that Georgia will receive a smaller distribution from the SEC in the next fiscal year than it just received.

Boy, I didn’t expect cord cutting to have an effect that quickly.  Look out, ticket prices.

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UPDATE:  Seth Emerson reports they’ve spent a lot of time at today’s Athletic Board meeting discussing the reserve fund.  Here’s the series:

UGA treasurer now addressing the reserve funds, and the amount that is in the UGA Foundation that I’ve discussed earlier: It’s now $34.8 million, and the school says they haven’t been able to spend it. (That $34.8 million, in addition to the other known reserves, brings it to about $75-$80 million.)

They’re proposing to give the A.D. the ability to spend 4 percent of the money in the UGA Foundation. So they can use $1.3 million of it.

But they’re also still setting a limit on how much of it has to stay in there. So around $30 million cannot be spent and must stay in the foundation.

Or, to define the parameters more specifically,

The takeaway right now is they’re explaining the reserve fund and justifying it, but also handcuffing themselves by saying that they can never:

  • Have the reserve fund go below $30 million.
  • Spend more than 4 percent of the existing money set aside in the UGA Foundation, which is currently $34 million.

And when Seth says “they”, he’s not just talking about McGarity and Morehead.

Ryan Nesbit, the school treasurer, now leading a slide show presentation that emphasizes the benefit of keeping a good operating reserve. Includes “sound financial planning and fiscal management,” and “capacity for other unforeseen needs.”

I know, I know.  But, here’s what they try as an explanation.

Another board member complimented UGA’s fiduciary policy, and then Jere Morehead spoke up to make another point.

“We’re depending on our donors to pay for that project, or else our position changes dramatically,” Morehead said. “We need that project to be funded by our donor base so then we can move on to other projects.”

Nesbit said it would be “ill-advised” to go beyond the $10 million set aside for the west end zone project.

Another board member asked what “unforeseen” events would be that would necessitate keeping the funds. Morehead pointed to the SEC revenue, and whether it will be that much 10 years from now.

So, they’re not worried about the players getting paid now as much as they are us not watching ESPN on cable.  Ho-kay.

There’s no dissent from the board on the fiduciary policy. Just some questions and points of clarification. But board members are complimenting the athletic department for its policy.

As long as they’re on the same page, then.

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19 Comments

Filed under Georgia Football, It's Just Bidness

19 responses to “Today’s excuse for a big reserve fund

  1. Paul

    It’s working!

    Like

  2. dawgxian

    Senator, i’ve read twice now that we have about $60 million in the bank but also close to $100 million. Could this be explained by the athletic department wanting to eliminate debt? I’m really interested in your thoughts

    Like

  3. John

    I appreciate their desire to be cautious, given the expectation that over the next few (3-5) years revenue from the conference and TV is going to drop off, but don’t really understand this level of “caution.” Maybe they are just that scared of decreases in revenue or are anticipating the drop will be sharper and sooner.

    But there has got to be a middle ground between this and going full Auburn.

    Like

    • Sherlock

      There is a middle ground between this and going full Auburn. It is called financial irresponsibility. It is the equivalent of living paycheck to paycheck. I understand that most Americans live that way, but it doesn’t make it correct.

      Like

    • DawgWalker07

      I would appreciate their desire to be cautious given the projected future of TV revenue if they had actually been spending when TV revenue started increasing and no one thought a bubble was going to burst. To me this sounds like an ends justifies the means sort of thing, and we’re left with a program that’s hesitant to spend and instead relies heavily on donors to pony up to finance projects that should have already been (at least) started across multiple sports. How this university has fallen behind in so many different sports when it comes to facilities I will never, ever understand, but the fact that we’re penny pinching and calling it “financial responsibility” and still not addressing a lot of needs without asking the public to pay (more) for it is ridiculous.

      Like

  4. The Georgia Way

    All hail the $80 million dollar reserve fund!

    Like

  5. Russ

    No boat rocking here, Cap’n! Can I have my HD tickets now?

    Like

  6. You know what’s not going to help? A scheduling philosophy that doesn’t put butts in seats:

    Appy State, Samford, Austin Peay, Middle Tennessee State, UMass, Arkansas State, Notre Dame, Murray State, Virginia*, and East Tennessee State are all of our known OOC games through ’20 (besides COFH). That’s not helping.

    Also not a big assist is the odd years when we’re at Auburn and at Tech. Maybe Noon Game McGarity could try to do something about that?

    Like

    • Noon Game McGarity, head bean counter and reserve fund black belt

      No.

      Like

      • The Georgia Way

        As Mr. McGarity so eloquently stated above, our agreement to take all the noon home game slots, along with the lower-tier bowl games were major factors in The Georgia Way gaining the #1 reimbursement from the SEC in 2016 and we will do so again in 2017!

        What was not mentioned were the additional benefits of the lower costs associated with these games, While opposing programs may win for a few hours on a Saturday afternoon, you can easily see how The Georgia Way wins in the long run!

        And this is another Bulldog Point of Pride!

        #COMMITTOTHEG

        Like

  7. 79DawgatWork

    Like any good lawyer, Dean Shipley knows to only ask questions when he already knows what the answer will be – in this case, it offers ADGM the opportunity to flatter himself and the Board so they can all pat themselves on the backs…

    Like

    • The Georgia Way

      We are very proud of all of our faculty members on the Board.

      However as academic progress representative, we selected Dean Shipley to provide a positive academic progress update prior to the vote to place much-needed protection on the athletic funds currently going to the university’s ‘academic’ endeavors.

      He did an outstanding job.

      Like

  8. JCDAWG83

    I guess the logic of the huge reserve fund is lost on me. If the day comes that revenue dries up drastically, that means demand for the product has gone away. If that is the case, what good will the reserve fund be outside of funding expenses and salaries for a few months? If there is no demand for tickets and no donations being made, there will be no need to fund salaries and facilities.

    I’m not an advocate of zero sum budgeting but the obsession with the reserve fund balance seems like wasted effort to me.

    Like

    • southernlawyer11

      ^^Exactly. It’s not like it’s an endowment on the academic / research side…..you know, the main point of the University. You would think that the notion of perpetuating big money collegiate athletics, as a legitimate end in itself, in the face of systemic collapse is antithetical to the University’s core mission. (personally, I’m being tongue in cheek. But it also doesn’t jive with the Adams’eque Georgia Way, unless you believe they’re all a bunch of hypocrites)

      Like

    • Bulldog Joe

      Because this money is ‘reserve’ in name-only.

      This much cash just doesn’t sit in a bank collecting interest.

      Previous board members have inquired as to where this large flow of funds are ‘invested’.

      This inquiries are never answered.

      Given recent scrutiny in the media, the university found it necessary to put restrictions on the Athletic Board’s ability to reclaim it for athletic use.

      Those benefiting from this cash cow aren’t going to kill it without a fight.

      Like

  9. JasonC

    Sorry for the potty language, but seriously, F— these guys. It’s a shame that good “student athletes” like Chubb and others are saddled with a bunch of limp d–k losers.
    It’s taken a while but I’m to the point where I don’t care. If they win, yay! If they don’t, I can’t let it steal my joy. Too many other things to invest my focus on.

    Like