CONTINUING WITH A LOOK AT NC STATE FINANCES
Part 4 focused on a number of good things concerning financing athletics at NC State:
– $180M of facility improvements since 1999
– Outstanding attendance for both football and basketball, even though the product on the field/court leaves a lot to be desired.
But one area where the Wolfpack Club hopes to improve is in its athletic endowment. From Bobby Purcell in Jan 2008:
…We have about $46 million committed to the endowment and about $21 million in money contributed. We would need about $140 million in the endowment to earn the $7 million per year we spend on scholarships. As far as I know, there are only two schools in the country who are fully endowed on their athletics scholarships, Stanford and North Carolina. We would like to join that club as well…
While the redesign of the official sports websites has played heck with documenting the numbers, the new Wolfpack Club website gives us some more information on the athletic endowment. This page has broken down the full scholarships for each sport, the endowment giving for each sport, and the current total athletic endowment of $29.9M.
On a broader scale, a 2009 report, shows that the top five athletic endowments in the nation belong to ACC schools (not something that I would have expected). If you go back to part 3, you can find line items or totals that look funny with the numbers reported from GT, Duke, and BCâ€¦all three schools with endowments in the top five nationally. Maybe weâ€™ve figured out where some of those undesignated revenues came from.
On this list, 6th through 10th place range from $46M to $56Mâ€¦which is not horribly beyond Stateâ€™s total commitment amount from the same year (of course we donâ€™t know how much those schools have in pledges). The bottom line is that the Wolfpack Club may not have the athletic endowment where it needs to be, but may not be horribly behind other similar schools.
One source of annual revenue that we havenâ€™t discussed yet is the money received from student fees.
From Aug 2009:
â€¦Student fees at NC State remain the lowest in the UNC System and 6th out of the 9 ACC schools reporting athletic fees. Within the ACC member institutions athletic fees generate between $1 and $10.4 million annually. NC State fees produce approximately $4.1 millionâ€¦.
In 2008, the student fees at State were about $100/student less than those at UNC. If Yow decides to aggressively pursue revenue increases, then I expect her to close this gap over the next several years.
Student fees represent almost 9% of State’s total revenue reported at EIA; but we don’t know where this money is hidden or even if it was reported there. I brought this whole subject up for more than just another example of the games that are played with the numbers at EIA (though it serves that purpose very well). The more important reason was to understand how much the fees were, how State’s fees compare within the UNC system and the ACC, and as background for our future discussions on the Knight Commission’s latest report.
IS THE WELL RUNNING DRY?
Consider the following:
1) Tickets for the upcoming football season may not sell out for the first time since 1999.
2) Attendance during the 09-10 basketball season (13,184) was the lowest since moving into the RBC Center. This was the second straight year of declining basketball attendance with 13,456 for the 08-09 season being the previous low mark.
3) The Wolfpack Club’s list of ongoing capital campaigns includes the Isenhour Tennis Center, Doak Field, and Dail Basketball Center; even though all three opened in 2005. In a 2008 interview, Bobby Purcell mentioned needed improvements for both the tennis center and the baseball field. Why is it taking so long to complete fund-raising for these projects?
4) In Dec 2006, the Wolfpack started a fund-raising effort named â€œBridge the Gapâ€ to sell 3600 engraved bricks to be placed in the Dail Plaza on the north side of C-F. Evidently, this fund raising effort has not been completed.
5) The Wolfpack Clubâ€™s website listed over 3300 LTR seats still available in the RBC Center. Selling the LTR rights to these seats would bring $7.8M to the Wolfpack Club. (However, nearly 2900 of those seats – $5.8M â€“ are located in the 300 Sections at the top of the RBC Center.)
6) The old Wolfpack Club site containing a list of available LTR seats for C-F totaled over 1300 seats. The website didnâ€™t list the cost for each section; but the value of these seats would exceed $2.6M. The website also says that there are limited club seats and suite availability as well.
7) The new Wolfpack Club site also has a listing of available LTR seats at C-F. The interesting thing about the new list is that it has almost 900 more seats than the list from 2006. Apparently a good number of people have decided to walk away from the money that they have already invested into their seats.
It is not hard to come up with excuses and/or explanations for each point raised above and we all recognize that winning would fix a lot of problems. But winning â€œtomorrowâ€ doesnâ€™t help with fundraising â€œtodayâ€. In one of the interviews that has disappeared from gopack.com, Bobby Purcell gave a few examples of things that were left on the “To-Do” list with debt reduction and improvements to the baseball stadium and tennis center at the top of the list. Longer term, an indoor practice facility and improvements to the east concourse at C-F were things that they would like to pursue.
In addition to facility upgrades and new capital campaigns, fund raising efforts will also have to address a substantial increase in scholarship costs starting this month. First there are larger than normal tuition increases due to cuts in spending by the NC Legislature (discussed here and here). In addition to the tuition hikes, the athletic departments will also have to pay out-of-state tuition for out-of-state athletes after an exemption that had been in place for five years has been eliminated. Removing the exemption will require that the Wolfpack Club come up with an extra $1.9M, the Ram’s Club about $2.4M and ECU about $1M.
If there really are fund raising issues, then resolving these issues fall squarely on Debbie Yow, Bobby Purcell, and their staffs. It will be interesting to see what (if any) changes are made in the athletic department and Wolfpack Club to stabilize or increase revenue and donations.
Completing a â€œperfect trifectaâ€, we can now add â€œconflicting dataâ€ with our other two problems, â€missing dataâ€ and â€œold dataâ€.
The Indy Star used the Freedom of Information Act in a brave attempt to get the complete story surrounding the financing of college athletics. They compiled the results from the questionnaires into a database that you can do some simple queries on. I didnâ€™t include any of their numbers in our discussions because:
– The numbers are only from one year (2005) and are not being updated.
– The numbers donâ€™t agree with those found at EIA
– In some cases, the numbers simply donâ€™t make any sense. (Like the school with the largest athletic endowment, UNC, reporting no revenue from endowments.)
– Private schools didnâ€™t have to respond to an FOI request and it doesnâ€™t look like those from the ACC did.
So I just didnâ€™t spend much time in their database. However, I really do like the basic outline that they used to organize the data. If you could get the schools (public and private) to fully disclose the information in the appropriate classification (including their booster organizations), then accurate comparisons and conclusions could be made. Maybe weâ€™ll get there somedayâ€¦but that day isnâ€™t today.
There is one item from the Indy Star numbers that I wanted to mention. For State, the revenue from parking, programs, and concessions is listed as $290k for football. Football attendance in 2005 was 370,476; which (if accurate) would mean that State got less than $1 per ticket for parking and concessions. If this parking/concessions number is anywhere close to accurate, then this would represent ignorance, incompetence, and mismanagement on a grand scale.
It seems to me that parking passes alone should have easily exceeded $290k, so I really donâ€™t think that this revenue number is accurate. However, this discussion makes me really curious about concessions revenue both at C-F (which should be HUGE) and at the RBC Center. Itâ€™s one thing to pay exorbitant prices for concessions when you think that the money is going to State. Itâ€™s completely different if the concessions have been signed over to vendors for pennies on the dollar.
There are simply too many holes in the financial picture to start drawing all of the conclusions that I would like. However, these numbers contain more than enough information to generate a number of conclusions and questions:
– Why is State spending so much less on their athletic teams than the other schools in the ACC?
– What is being neglected that is being covered at other schools?
– State is #5 in the conference for FB ticket sales, #3 for menâ€™s BB tickets, but consistently in the bottom three in the ACC in total revenue. How is this possible?
– [Question for Yow] What sorts of things (both short-term and long-term) are you looking at to increase athletic department revenue?
3) Even before meeting with the Wolfpack Club, Debbie Yow has said that she was going to look at ways to increase revenue. How aggressively she pursues increased revenue MIGHT be an indication of whether or not the financial picture at State is as dire as the numbers from EIA suggests.
4) Final Thoughts
Even though we donâ€™t have all of the information that we would like to see, it is just human nature to draw conclusions based on what we do know. So Iâ€™m going to share my overall conclusion, but wonâ€™t argue (I promise) even if yours is different.
Basically, I think that Lee Fowler took the easy way out when managing the athletic department in pretty much every area. On the financial side, it is often easier to cut expenses than to increase revenue and thatâ€™s what I think that Fowler did. His efforts at improving facilities were needed and welcome. But I would really like to know what he gave up in the athletic department budget to help fund those improvements.
If questioned about this, I suspect that Fowlerâ€™s answer would have been that everything that could be done to generate revenue was already being done and that every available dollar was being funneled into facility improvements that were long overdue. The simple fact that the largest university in NC also has the smallest student fees successfully dispels any excuse about being unable to increase revenue. I donâ€™t know what else he would offer in his defense; but based on the last decade, I wouldnâ€™t expect anything too deep.