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ColonelSteve
01-28-2013, 09:10 PM
Good god almighty

Now, after staggering to losing football seasons in four of the last five years and seeing attendance drop to levels last seen in the 1970s, the Vols find themselves mired in more than $200 million of debt, the most in the SEC, with reserves of just $1.95 million, the least in the conference.

The athletic department spends a startling $21 million a year on debt payments, $13.5 million of which comes from the school’s stressed $99.5 million athletic budget and the rest from donations.

“We’ve got to get football healthy,” athletic director Dave Hart said. “That’s our economic engine. When that program is successful, everybody wins.”

http://tracking.si.com/2013/01/28/tennessee-athletic-department-is-200-million-in-debt/?eref=twitter_feed

Catonahottinroof
01-28-2013, 10:25 PM
That's even worse than what drove Maryland to the BiG. UK was on its way to that without the football coaching change.

CitizenBBN
01-28-2013, 10:43 PM
Sure they spend a fortune on debt service, but don't worry. the economists have explained to me why having huge deficits and massive debt service isn't a problem. lol.

Would be curious to see their books. I'm sure they're available publicly, just don't have time to do that work but would be curious to see where the expenses have been. Even a huge revenue drop wouldn't seem to be enough to do that to them unless they kept spending like there wasn't a problem.

ColonelSteve
01-28-2013, 10:45 PM
Sure they spend a fortune on debt service, but don't worry. the economists have explained to me why having huge deficits and massive debt service isn't a problem. lol.

Would be curious to see their books. I'm sure they're available publicly, just don't have time to do that work but would be curious to see where the expenses have been. Even a huge revenue drop wouldn't seem to be enough to do that to them unless they kept spending like there wasn't a problem.

You gotta think theyre still paying Fat Phil, Bruce Pearl, Pat Summit and others, they just renovated Neyland and built a new FB facility

ColonelSteve
01-28-2013, 10:46 PM
Another link

http://www.sportsbusinessdaily.com/Journal/Issues/2013/01/28/Colleges/Tennessee.aspx

MickintheHam
01-29-2013, 04:19 AM
Outstanding articles, steve. It is easy to see why MB deep sixed the actual attendance numbers from the last home game.

Catonahottinroof
01-29-2013, 07:05 AM
Maryland made the jump to the BiG over a $50 million deficit for a bigger and steady revenue payments. $200 million is a staggering number....

Bakert
01-29-2013, 08:43 AM
Sure they spend a fortune on debt service, but don't worry. the economists have explained to me why having huge deficits and massive debt service isn't a problem. lol.

Would be curious to see their books. I'm sure they're available publicly, just don't have time to do that work but would be curious to see where the expenses have been. Even a huge revenue drop wouldn't seem to be enough to do that to them unless they kept spending like there wasn't a problem.

In the 1980s they were not called economists but rather Republicans. :-)

There is some information there that is useful, and perhaps it tells a bit of a cautionary tale. For example, there is this "Much of the department’s debt came from a series of expansions to Neyland, followed by a series of improvements in the last seven years that actually reduced capacity and created more premium spaces. Built in three phases between 2006 and 2010, those changes cost more than $130 million. The athletic department continues to investigate ways to upgrade Neyland, whether it’s more premium spaces or more chair-back seats, measures aimed at improving the fan experience and driving more revenue, while reducing capacity."

I know that some are alluding to the losses being due to attendance and making a comparison to UK's recent attendance issue, but the table at the bottom of the article indicates a loss of only $1.6 million from 2007-2012 in terms of ticket revenue - not a huge amount when compared to a $200 million overall shortfall.

The SEC shares bowl revenues, right? But still, I would guess not going to the type of bowls UT was going to has to also have a large impact.

ColonelSteve
01-29-2013, 08:59 PM
In addition, outstanding debt and debt service for athletic departments can fluctuate greatly from year to year. Just a year ago, Alabama and LSU carried more debt on their books than Tennessee. According to Alabama’s 2010-11 NCAA financial disclosure, it had outstanding debt of $207 million. LSU came in right behind at $202 million. Tennessee was third in the conference at $188 million. For the 2010-11 fiscal year, Tennessee was fifth when it came to annual debt service payments, behind Alabama, LSU, Georgia and Auburn.

The schools change positions in such rankings based on a few factors, with one being short-term financing that is later converted to long-term financing. This is the reason Tennessee saw its debt service payments jump from $7.7 million in 2010-11 to $13.5 million in 2011-12. According to the University of Florida’s University Athletic Association audited financials for the 2010-11 fiscal year, current debt payments of $6 million will balloon to $31 million in 2018.

Other factors when looking at the fiscal health of an athletic department:

• How much a department must return to the university. Tennessee has returned $29 million the past five years under agreements from a previous administration, for example.

• Tax expenses. Tennessee is in a unique position in relation to its SEC peers because it pays 9.25 percent in sales tax on tickets sold, and an additional 5 percent on tickets for football, and men’s and women’s basketball.

But no matter how it’s measured, amassed or counted, debt is money owed, and it has to be paid back.

Tennessee athletic director Dave Hart has asked Chancellor Jimmy Cheek for help.

“I asked him, would he consider when we’re done renegotiating the SEC [television] contract, could all the money stay in athletics, and he said, ‘Yes,’” said Hart. “Secondly, because we were in a football staff transition, I said, ‘Will you return some of that athletics money [currently committed under previous agreements to the university] so we can stabilize?’ and he agreed.”

Last year’s athletics budget shortage was covered by athletic reserves but depleted the fund to just $1.95 million.

“That was the biggest surprise to me, that our reserve had reached that level,” said Hart, who was hired 16 months ago. “In this conference, that’s unusual.”

The chancellor has agreed that funds of $7 million per year previously committed to the university will be suspended for three years, in an effort to rebuild the reserve fund.

Asked if any sports will have to be contracted in order to make ends meet, Hart said, “Absolutely not.”

http://espn.go.com/blog/playbook/dollars/post/_/id/2837/vols-financially-strapped-but-not-alone