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UI Athletics Department finishes in the red for first time in years

[ 0 ] January 17, 2013 |

In releasing its annual budget report Thursday, the University of Iowa Athletics Department’s six-year streak of ending in the black came to an end.

Athletics officials are quick to explain, though, that the nearly $7 million deficit in fiscal year 2012, which ended June 30, is due largely to construction projects the department paid for that year, including the renovation project on Carver-Hawkeye Arena and the new football practice facility.

Associate Athletics Director Rick Klatt said arbitrary budget deadlines can make for misleading numbers. For example, the department received contributions for those construction projects in the past two years that aren’t accounted for in this budget.

“It’s kind of a timing thing when it comes to capital projects,” he said.

All National Collegiate Athletic Association schools are required in January to submit an annual overview of their expenses and revenues.

UI’s Athletics Department brought in nearly $98 million in revenue in FY12 and had nearly $105 million in expenses. The resulting deficit is a departure from previous years. The department saw a surplus of $5.3 million in FY11 and $14.3 million in FY10.

The department spent about $33 million on facilities in FY12, an increase of about $11 million from the previous year. Klatt said that’s because of a $7.6 million payment that the department made on a new football practice facility, $5 million for arena renovations and another $1.5 million to repair a drainage issue and replace turf at Kinnick Stadium.

Much of the department’s expenses — more than $30 million — go toward salaries and benefits for its roughly 70 head and assistant coaches and 220 staff members and administrators. That includes perks such as car stipends, country club memberships and entertainment, clothing and housing allowances.

Klatt said the department is particularly proud of the more than $10 million it gave back to the university in the form of athletic student aid in FY12.

“That’s a check we write back to the institution for all of the scholarships we award,” he said, “and unlike some of our peers in the league or across the country, when we bring in in-state students to the University of Iowa, we pay the in-state rate, and when we bring in out-of-state students to the University of Iowa, we pay the out-of-state tuition.”

Investing in great people and giving them the tools to be successful is what in turn makes the department successful, Athletics Director Gary Barta said in a statement.

“Our commitment to student-athlete scholarships and offering our student-athletes the very best facilities in which to train and compete are at the heart of what we’re trying to do,” he said.

The department’s largest source of revenue, about $26 million, comes from participating in bowl games and tournaments. It took in another $26 million in contributions from individuals, corporations and associations, many of whom are alumni and fans.

Ticket sales account for about $25 million in revenue, a category that’s been increasing over the years, from $23 million in FY11 and $22 million in FY10. The FY12 sales are unusually high, though, because they include the $780,000 in ticket revenue generated from the U.S. Olympic Wrestling Trials last April in Iowa City, Klatt said.

Stacey Brook, a sports economist who lectures in UI’s Tippie College of Business, said the UI Athletics Department has been profitable for the past six years, so to see a loss is “abnormal.”

He said he agrees with Klatt’s assessment, however, that budgets often are impacted by deadlines. For example, if expenses occur Dec. 31 and a report is due Jan. 1, “Then it’s going to look like we’re going to have more of a loss than we do,” he said.

Looking over the Athletic Department’s FY12 report, he said, “Whether that happened here or not is beyond my ability to ascertain.”

In his review of the finances of 226 public athletic departments, Brook found that fewer than than 10 percent were profitable once public subsidy was removed. UI was one of 22 schools that were in the black, having generated about $4.7 million in profit last year once the small amount of subsidy it received was subtracted, he said.

Most NCAA athletics departments are not required to be self-sustaining, meaning they don’t need to be able to operate without external subsidies from the university or the state or federal governments, Brook said. UI’s Athletics Department, however, is expected to generate its own operating revenue to sustain itself, Klatt said.

Brook said he thinks UI’s Athletics Department fares well financially compared to its peers because it is accustomed to not relying on outside funding.

“In order to be able to pay for things, then we have to actually generate the revenue,” he said.

Barta echoed that sentiment in a statement.

“Our fans can be proud of the fact that the UI is one of a handful of institutions that has an athletics program that is self-sustaining,” he said. “We don’t use State General Fund dollars, University funds, or student fees to operate our athletics programs.”

Reach Tara Bannow at tbannow@press-citizen.com or 887-5418.

Category: Hawkeye news

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