Where is the money going?
Over the weekend, a group of Pac-12 athletes put together a list of action items for the NCAA to address before the beginning of the 20-21 football season. In a piece for The Undefeated, Bomani Jones put together a timeline of how the group of athletes arrived at this moment. In that article, one of the group’s organizers, a Cal football player named Jack Curhan, asks a question many of us are thinking about right now as sports organizations claim massive losses in year-over-year revenue.
Where is the money going?
In an attempt at financial transparency, Kansas AD Jeff Long sent out an e-mail to supporters last week. Any time a sports organization opens its books—to whatever degree—I’m there. (So you’re telling me that… an NFL team might not need the money after all? My mind is blown!) Long wrote to address the shifting nature of the Jayhawks’ football schedule; Kansas’ first scheduled football opponent, New Hampshire, decided to postpone their season, leaving KU scrambling to fill the date.
For those only passingly interested in the gridlock of college football scheduling, this would be a game that KU pays New Hampshire to schedule. This is common across football, and in fact there’s a small scandal brewing in New Mexico over this, as the state’s governor has requested that college football in the state should be postponed, which made the admins at UNM and NSMU hot. Matt Brown’s great Extra Points newsletter drills down even further on the saga, but here’s the gist:
By postponing these games, or rescheduling them, they’re effectively voiding the cash coming in, cash that goes toward the department’s expenses. For someone like NMSU, whose budget is about $18M for the entire year, losing this $3M windfall for two football games is a devastating blow to their books. Although debt is common in the AD game, something like this only stands to widen the gap between the NMSUs of the world and you know, Texas (whose annual budget is $179M).
Back to Kansas. With regards to the pandemic-affected 20-21 campaign, Long provided the following budget breakdown:
Reader, I’m not trying to get all Pro Publica on you, but I thought that these numbers deserved a closer look. Owing to its status as a nonprofit wholly owned by Kansas University, the Lawrence Journal-World has reliably pulled the AD’s records over the years. Since around 2006, the department’s expenses have grown more rapidly than its revenues—the LJW estimates that between 2006 and 2017, expenses rose 92% while revenues rose 68%. Last year’s operations cost $110M and the AD’s revenues were $114M, which is a rosier financial portrait than the previous few years. This year’s budget was set at $108M.
When an athlete department is bringing in money, and the end goal isn’t a big ol’ pile of profit, where does that money go? To salaries. At Kansas, the Les Miles regime has required more cash; in the past few years, there’s been a substantial increase in expenses related to football staffing. Also, there’s been a pretty big bump in admin salaries; some (but probably not all) of that has to do with payouts owed to former AD Sheahon Zenger and former football HC David Beaty. As one might expect because recession, donations are down year-over-year:
As you can see, about 15% of the operating budget is generated by donors. I am not in the Williams Fund, but I get their e-mails and can sense they’re feeling the pressure to fundraise. (In 2019, ticket sales generated $19M in income.) In Long’s letter, he claims that, best case scenario, this year’s total revenue figure will be down 20%, meaning (best case) somewhere in the $90M range. Cuts and salary reductions have shaved off about $10M from the annual budget, which means that they’re set to come in at a little less than $100M for the year.
This is all coming to a head. If and when players get their cut of the proceeds, ADs like Kansas will have to fundamentally alter how the AD works and who gets paid. Without a tactical approach, they will fall even further behind their in-conference peers.
In the Pac-12 players’ letter—a group of Big 10 players also wrote a similar letter yesterday—they’re asking for 50% of conference revenue to be distributed to the athletes. (I would guess that this is a starting point they will negotiate toward, but let’s pretend its a hard 50%). In Cal’s case, that’s about $15M. For Kansas, that would be almost $19M—KU’s Big 12 revenue payout from 2019 was $37.7M. Though the Jayhawks have apparently shaved $10M from their books, an additional $18M payout to athletes would require drastic restructuring of department expenses, to say the very least. Salary reductions totaling $1M is not going to cut it.
It’s going to take innovative solutions to get through this bind. There’s reason to think the Jayhawks will find a way. But all of this could be turned on its head if fall sports are cancelled or postponed. And we’ll know much more about that, soon.