Losing is Expensive

[Stallion]

There is an article in the Daily Campus today that claims that the SMU Athletic Department lost 56 MILLION Dollars over the last 4 years. Every time I try to open the article all day long at both work and at home-the story is blocked and eliminated from my computer screen before I can read it. Perhaps Alex Lifeson's Mob Moss theory at work?

[expony18]

someone posted the article on here the other day

[Stallion]

hmm here's a synopsis from Orlando-also with a blocked link.

http://blogs.orlandosentinel.com/sports ... rs-ob.html

[FroggieFever]

TCU operates at a loss, as well.

[BrianTinBigD]

I would like to see the cash flow statement

[Pony Soup]

This one?
_____________________________________________________

Over the past four years, the SMU athletic department has lost $56.7 million.

The department is projected to lose $16.8 million in 2008 and $16.3 million in 2009.

If those projections hold up, the SMU athletic department will have lost almost $90 million over six years, figures far larger than previously published estimates.

The number come from figures in university budget documents obtained by The Daily Campus.

Athletic Director Steve Orsini said meeting a budget and reining in the deficit are goals of his since he arrived in spring 2006.

"It's important, but is it realistic?," he said. "Only a handful of athletic departments do not have a deficit."

A recently published NCAA report confirms Orsini's statement. It analyzed the revenues and expenses of all NCAA Football Bowl subdivision (formerly known as Division I) schools in 2004, 2005 and 2006. Only 16 of the 119 schools reported profits.

But SMU's losses are much larger than the median number for the other 102 schools. According to the NCAA report, the median loss for these schools was $6 million in 2004, $6.8 million in 2005 and $9.4 million in 2006.

By comparison, SMU lost $12 million, $13.72 million and $12.96 million in the same period.

In 2007, Orsini's first full year at SMU, the deficit was $17.95 million.

Previously reported numbers had SMU's deficit between $3 and $5 million each year, but those numbers underreport the financial drain of scholarship funds, which are included in the bottom line of athletic departments.

Christine Casey, SMU's vice president for business and finance, agreed that self-sufficient athletic departments are hard to find.

"They're on campuses for various reasons," she said. "It's a part of the experience and an important function on campus."

"That being said, there's always a limit to what you're willing to do as far as supporting an activity and that's a question that's made internally every year."

All budgets at SMU, including the one submitted by the athletic department, begin going through preliminary drafts in the fall and are due to Casey's office by April. They are submitted for approval to the Board of Trustees at its May meeting.

Orsini said he takes seriously something President Gerald Turner said to him when he was hired - that he was to get the department in better fiscal shape.

"It doesn't happen overnight," Orsini said.

Orsini's first budget as athletic director was in 2007 and had losses of $5 million more than the previous year, which was the final one for former athletic director Jim Copeland.

Three big items ballooned the deficit in 2007 - a $400,000 per year deal for basketball coach Matt Doherty, a $600,000 buyout for fired basketball coach Jimmy Tubbs and a contract extension upping Phil Bennett's salary to $500,000 per year.

The 2008 and 2009 budgets are projected to have reductions in the deficit, but are still larger than losses in the Copeland era.

"What I noticed when I got here early on is SMU was falling behind in generating revenue," Orsini said.

To that end he has worked to take advantage of what he calls missed opportunities for sponsorships. That means more advertisements at games, which fans probably noticed this past season, and increased partnerships with businesses for the department.

Orsini also has overhauled most of the leadership within various parts of the department so the people in charge have "more of a business focus."

One item that will not cause additional hits to the budget is the salary of new football coach June Jones. More than $10 million was raised by Orsini for Jones' annual salary of nearly $2 million and the assistants that came with him. The group that raised the funds is called the Circle of Champions and is solely underwriting those costs.

Orsini said the Circle of Champions model worked so well he wants to apply it to other areas of the department. He said it creates a sense of involvement in athletics that keeps people connected.

But ticket sales remain the biggest source of immediate income for the department. That's where the product on the field will help with off-the-field money issues.

"Once they start winning people will support you more," Orsini said.

[southerncomfort]

Almost every school operates at a deficit albeit not as large as ours...we'll work on it. Later.

[BrianTinBigD]

The losses include the cost of scholarship funds. The athletic department gets hit the cost of each athlete from an accounting perspective. It is not like Steve O has to walk a suitcase full of cash across campus to pay the tuition costs of every player. This is just a bs cross charging issue and the original 3 to 5 million number is in fact closer to the amount of actual money the athletic department loses. Since SMU has higher than average tuition the loss is higher than average. This is some quality reporting in the Daily Campus.

[Pony Soup]

This is some quality reporting in the Daily Campus.

Would you expect anything better?

[LakeHighlandsPony]

Don't tell me Equestrian and Rowing lost Money???!! No!!

[03Mustang]

Techincally, wouldn't the academic part of the university be a big money loser as well? Maybe we could get rid of some of the Spanish Dept. to cut the defecit.

[Alaric]

The losses include the cost of scholarship funds. The athletic department gets hit the cost of each athlete from an accounting perspective. It is not like Steve O has to walk a suitcase full of cash across campus to pay the tuition costs of every player. This is just a bs cross charging issue and the original 3 to 5 million number is in fact closer to the amount of actual money the athletic department loses. Since SMU has higher than average tuition the loss is higher than average. This is some quality reporting in the Daily Campus.

Yea, let's see a cash flow statement. The anti-athletic group in the faculty like our favorite Spanish professor tend to focus on the P&L which includes monies that are applied to scholarships. The only way that's truly relevant is if you were at peak enrollment and you suffered an opportunity cost from not allowing the next student in because you gave a scholarship (true costs like meals, rent, etc notwithstanding but those probably on top of the scholarship "costs" anyway). It's like looking at a REIT w/o looking at "funds from operations" or an oil and gas company without considering depletion...not meaningless but only the beginning of the story.

[PonySnob]

Are the funds raised by the Mustang Club used to pay for athletic scholarships or just the general expenses of the athletic department?

[d_pony]

the tuition is waived for scholarship athletes (this was done by President Pye)
the funds the Mustang Club raises goes into the general athletic budget for athletic department expenses

[Alaric]

the tuition is waived for scholarship athletes (this was done by President Pye)
the funds the Mustang Club raises goes into the general athletic budget for athletic department expenses

I think the athletic dept budget is "charged" the cost of each scholarship for the budget or at least it was at one time. Anyway to get access to the financials if your name isn't Gerald J. Ford? BTW, he's building a rather large cottage