The athletic director who cried wolf.

Shot.

Wisconsin’s athletic department is projecting revenue losses between $60 million and $70 million if the Badgers play a conference-only, 10-game season and losses of more than $100 million if the upcoming football season is canceled because of the coronavirus pandemic…

Alvarez said the Badgers have projected a $140 million operating budget for the 2020-21 academic year.

Chaser ($$).

In the Power 5, a football program that loses money either is terrifically mismanaged or it is simply spending all the money so it doesn’t turn a profit. If they did turn profits — and most Power 5 departments could with any sort of reasonable fiscal restraint — then people might wonder why players don’t get a bigger cut.

The federal government might wonder why the athletic departments don’t have to pay taxes. Schools don’t need to renovate their locker rooms every five years. They don’t need to drastically renovate their football facilities every 10 years. They didn’t need to increase coaching salaries by a factor of 10 over the past 30 years. They also don’t need to subsidize other sports that can’t pay for themselves. (With the exception of the sports that give the school the scholarship numbers to comply with Title IX; that’s simply a cost of doing business.) They pay for all that stuff now because if they don’t spend all the money, the football players or Uncle Sam will come looking for their cuts.

New math:

In 2018-19, Wisconsin’s football program accounted for about 58% of the department’s $157.7 million in revenue, according to the university’s most recent financial report to the NCAA. The Badgers generated $24 million in ticket sales and $8.3 million from contributions related to football, as well as $45.6 million from media rights, $9.4 million from bowl revenue and $5.3 million from program sales, parking and concessions.

If the season isn’t played, the Badgers would save money on some expenses, including team travel ($1.3 million in 2018-19), opponent guarantees ($3.1 million), game expenses ($1 million) and bowl expenses ($2.1 million). Much of their $40.4 million in expenses, like athlete student aid, coaching salaries and facility debt service, are fixed costs.

I sure would like to hear how Alvarez calculated those loss figures.

13 Comments

Filed under Big Ten Football, It's Just Bidness

13 responses to “The athletic director who cried wolf.

  1. Ran A

    A report came out a week ago and stated only one program could be standing with some similince of what they look like today, if football was not played.

    Georgia

    That’s what happens when you have more than $100MM reserve fund. We all get frustrated with the pace that Georgia does some things (much more aggressive since Kirby showed up); but I think we all can agree that Georgia could be in a better position than just about any program in the country going into 2021, because of that fund.

    Going into 2018, UF had $80MM in debt and $80MM in liabilities. (Only thing I could find quickly).

    Weird year – who knows how it will all shake out.

    Like

    • According to the ESPN article:

      Wisconsin officials told the Wisconsin State Journal that the athletic department would have to go into its reserve funds to make up the difference. According to the report, the reserve fund had $190 million at the end of the 2018-19 fiscal year.

      I think there’s a lot of fuzzy math going on with athletic department revenues.

      Like

      • Not for profit accounting is fuzzy. That fund balance on the balance is virtually the same thing as retained earnings on a corporate balance sheet. There isn’t some offshore account with money just stacked in it.

        You need to look at their cash flow statement and some of the balance sheet ratios to get a real feel for the financial health of these entities. Look at how much of the current assets are truly liquid compared to the reserve fund to get an idea of how much is available now.

        Like

  2. 79Dawg

    A modest reserve fund is appropriate. But as I have said here on many occasions, an enormous reserve fund to protect against an extinction level event is … worthless. “In the land of the blind, the one-eyed man is king”; and in a land where no one can spend money on major college athletics, all the money in the world won’t do you any good… And make no doubt about it, the 2020 CFB season is rapidly hurtling towards extinction!

    Liked by 2 people

  3. ATL Dawg

    Oh no! Their shitty business model is at stake!

    Like

    • It’s only shitty if you aren’t part of it.
      Huuuuge customer base, limited competition, low and fixed labor costs (with the exception of management), and tax protection?
      Hell yeah, gimme some of that….

      Liked by 1 person

  4. FlyingPeakDawg

    I said it before, only a moron could lose money running a P5 athletic department….oh wait.

    With every expectation of reduced stadium attendance and usage plus historically low borrowing rates, why wouldn’t you have crews working on improving Sanford Stadium right now? Why not envision and begin preparing for how venues may need to operate in the future (e.g. better entry/exit, seating, security, etc.)? Investment, jobs, community support, positive message to donor/season ticket holders, etc. Nope…bury the money under UGA’s tomb for a “rainy day” still to come I guess. Wish I was on the UGAAD investment board earning those fees.

    Liked by 1 person

    • Gurkha Dawg

      It looks like it’s raining pretty good right now.

      Like

    • None of that helps recruiting. That’s the reason it isn’t being done.

      We’ll get our carrot & stick refund email and be told, “Hey, at least you don’t have to miss half a quarter to run to the bathroom.”

      Like

  5. Gurkha Dawg

    The final income statement was published a few years ago for the movie “Harry Potter”. It showed a loss of $700 million. That is ridiculous of course. Hollywood accounting. They say no Hollywood movie has ever showed a “profit”. I think Power 5 CFB uses the same accounting standards.

    Like

  6. Michigan state quarantine for 14 days. Exactly what we’ve been talking about. So how did they now prepare fully. gonna happen every month every week.

    Like