University of Tennessee Athletics Department Overview

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1 University of Tennessee Athletics Department Overview 1

2 Background Member of NCAA Division 1A and Southeastern Conference Support 20 varsity intercollegiate sports Provide scholarships to over 500 male and female student-athletes The University of Tennessee athletic department is a member of NCAA Division 1A and the SEC. A requirement for participating at the Division 1A level is having at least 16 sports. At Tennessee, we have 20 intercollegiate sports and provide scholarships divided up among over 500 male and female student-athletes who participate on these teams. 2

3 Intercollegiate Teams Men (9 teams) Baseball Basketball Cross Country Football Golf Indoor Track and Field Outdoor Track and Field Swimming and Diving Tennis Women (11 teams) Basketball Cross Country Golf Indoor Track and Field Outdoor Track and Field Rowing Soccer Softball Swimming and Diving Tennis Volleyball We offer these sports to be competitive on the league level. We field the sports that other schools in our league are participating in, with the exception of rowing. Currently Alabama is the only other SEC school offering rowing. 3

4 Academic and Athletics Accomplishments Placed 3 rd in Excellence in Athletics Cup rankings in (behind Duke and Stanford). Finished 8 th in the Sports Academy Directors Cup standing for athletic performance. Graduated 87 current and former student-athletes in Had 243 student-athletes achieve a GPA of 3.0 or higher last semester. Advanced 19 of 20 teams to post-season competition in We had another great year last year - both academically and athletically. This past year we placed third overall behind Duke and Stanford - in the Excellence in Athletics Cup Rankings released by the Laboratory for the Study of Intercollegiate Athletics at Texas A&M University. The purpose of this award is to recognize institutions that are excellent in both academics and athletics, and we re proud to say we ranked the highest of public institutions. We also combined for an eighth-place finish in the Sports Academy Directors Cup standings. It marked our best showing in the 12-year history of the competition, which recognizes the best overall collegiate athletics programs in the country. We had 87 student-athletes graduate in , continuing our commitment to excellence in the classroom. 243, or 53 percent, of our student-athletes made a 3.0 or higher this past fall We have also had a lot of success through our Renewing Academic Commitment, or RAC, program. Ten former student-athletes who returned to the university to finish their degrees through the RAC program graduated in The RAC program works with former student-athletes by assisting them with advice on remaining degree requirements, course scheduling, tutoring, employment and internships opportunities offered through the CHAMPS/Life Skills Program, as well as use of the Thornton Center for their everyday needs. 4

5 Organizational Structure Standard University department Separate athletic departments for men and women with separate athletic directors Reporting relationship to University President Dr. John Petersen Fiscal oversight by both State of Tennessee and University policies and procedures Annual audits by the Division of State Audit Regular assessments of internal controls by University Audit and Consulting We are proud to be part of the University family. We have separate athletic departments for men and women with separate athletic directors, and we report directly to UT President Dr. John Petersen. We have fiscal oversight by both the State of Tennessee and University policies and procedures with annual audits by the State of Tennessee - Division of State Audit. We have regular assessments of internal controls by University Audit and Consulting. 5

6 Goals Athletics seeks to: Graduate all student-athletes; Compete for and win SEC and NCAA titles; and Produce young men and women to be ambassadors for our University and our state. Athletics must be fiscally responsible: Self-supporting No state funding required Our goals year in and year out are to graduate all of our student-athletes, compete for and win SEC and NCAA titles, and produce young men and women to be ambassadors for our University and our state. And we must accomplish these key goals in a fiscally responsible manner that is selfsupporting and requires no state funding. In fact, the University of Tennessee Athletic Department is one of less than 10 departments in the country that receives no funds from state subsidies or taxes. The only non-athletic department generated revenue is a $1 million contribution to women's athletics department coming from student fees. 6

7 Business Model Operate without any state tax dollars Leverage football and basketball programs to generate ticket revenues, private gifts and marketing sponsorships Utilize revenues generated by football and basketball success to fund other sports programs and supporting infrastructure A key goal for UT athletics is to operate in a fiscally-responsible manner without the use of state tax dollars. We re very proud of the fact that we are one of probably less than 10 programs in the country that can say that. The only funds we receive from the university is $1 million for women s athletics from student fees. Our funding is primarily driven by football, men s basketball and women s basketball through ticket revenue, private gifts and marketing sponsorships. These sports allow us to fund the other14 sports programs. League revenues are a pass thru in football and basketball revenues. 7

8 Athletics Operating Revenues Football Men's Basketball Women's Basketball Development Marketing Other Sports Licensing Other Revenue Program Fees $33,826,438 $ 6,128,862 $ 4,064,295 $15,654,757 $ 2,682,626 $ 1,454,371 $ 1,850,000 $ 2,601,403 $ 1,000,000 49% 9% 6% 23% 4% 2% 2% 4% 1% Total $69,262, % For last year, we had over $69 million in athletic operating revenues $1.18 million of the women s development revenue is under women s basketball revenue because it is donations tied directly to basketball season tickets. The Other Revenue category is mostly money from camps. 8

9 Athletics Operating Revenues Development 23% Marketing 4% Other Sports Licensing 2% 2% Other Revenue 4% Program Fees 1% Football 49% Women's Basketball 6% Men's Basketball 9% Football Men's Basketball Women's Basketball Development Marketing Other Sports Licensing Other Revenue Program Fees 9

10 Athletics Operating Expenses Football Men's Basketball Women's Basketball Development Marketing Other Sports Event Management Administration Facilities University $ 15,656,441 $ 4,986,912 $ 4,038,064 $ 1,441,247 $ 784,157 $ 15,391,358 $ 3,129,063 $ 8,604,119 $ 12,536,281 $ 2,745,243 23% 7% 6% 2% 1% 22% 5% 12% 18% 4% Total $ 69,312, % Athletics reduced operating expenditures (other than salaries and scholarships) in fiscal year 2005 by $1.145 million versus fiscal year Between fiscal years 2003 and 2005, overall athletics operating expenditures have decreased a total of $3 million. Although UTAD has made significant strides in controlling its operating budget and raising fund, the athletics department still faces challenges to control costs that are beyond its control: Rising tuition costs have a proportionate effect on the athletics department budget. Last year UTAD s scholarship bill was $6.48 million, up seven percent from $6.06 million in Compounding the problem is the fact that UTAD pays out-of-state tuition for 85% of their student-athletes. Salary costs for the department rose by $3.5 million due to the statemandated three percent raise and two percent state bonus for all employees, increased salaries for men s and women s coaching staffs and changes in men s basketball and women s swimming staffs. The athletics department provides funding for three areas without have any oversight of the units. Last year the department spent $1.8 million to operate the Thornton Athletics Student Center, and approximately $1.2 million to cover the budget shortfall for Thompson-Boling Arena. The athletic department also spent $245,242 to cover the operating deficit for Gibbs Residence Hall in addition to its normal housing fees for student-athletes. 10

11 Athletics Operating Expenses Administration 12% Facilities 18% University 4% Event Management 5% Other Sports 22% Marketing 1% Women's Basketball 6% Development 2% Men's Basketball 7% Football 23% Football Men's Basketball Women's Basketball Development Marketing Other Sports Event Management Administration Facilities University 11

12 2005 Financial Performance Operating Revenues $ 69,262,754 Operating Expenses ($ 67,958,839) Athletics Generated Profit $ 1,303,915 Athletics Support to University ($ 2,745,243) New Loan from University ($ 1,391,197) Net Asset Change $ (50,131) Last year, athletics had operating revenues of more than $69 million with operating expenses of almost $68 million creating an athletics generated profit of $1.3 million. Athletics provided more than $2.7 million in cash support to the university and had to take out a loan of almost $1.4 million to buyout men s basketball coach Buzz Peterson from his contract. When it was all said and done, athletics had a net loss of $50,000 for

13 2006 Operating Budget Beginning Budget Year-end Projections Operating Revenues $ 65,697,328 $66,210,000 Operating Expenses $ 62,987,328 $63,375,000 Athletics Generated Profit $ 2,710,000 $ 2,835,000 Athletics Support to University $ 2,710,000 $ 2,710,000 Net Asset Change $ - $ 125,000 For fiscal year 2006, we are projecting a profit of $125,

14 Capital Expenditures Capital projects are funded through bonds, private gifts and/or project specific revenue. Existing debt load is $53.6 million as of 6/30/06. Annual debt payments are $6.5 million for athletics facilities and $1.125 for university parking garages. UTAD funds capital projects through bonds, private gifts and project specific revenue, i.e. funds generated through the football sideline ticket policy change are being used to fund renovations at Neyland Stadium. As of June 30, 2006, UTAD s debt load will be $53.6 million. UTAD currently pays annual debt payments of $6.5 million for athletics facilities and an additional $1.125 million for university parking garages. 14

15 Athletics Impact on the Local Economy An August 2004 survey conducted by the Center for Business and Economic Research at UT found that UTAD had an economic impact of $104 million on the local economy. UTAD generated nearly $12 million in sales and amusement tax revenue from concession and tickets sales. UTAD paid $1.13 million in local amusement taxes and $2.11 million in state taxes. Another key goal of athletics is to be a good citizen to the university, the city of Knoxville and the state of Tennessee. Not only does UT Athletics provide a national platform to showcase our great university and state, we also provide a great economic impact. A survey conducted by the Center for Business and Economic Research at the University of Tennessee in August 2004 based on data from the school year found that the University of Tennessee Athletic Department contributes nearly $104 million to the total income in the Knoxville MSA. More than $62.8 million is attributable to the expenditures made in the community by the department with an additional $41 million evolving from expenditures made by visitors and fans. In fiscal year 2004, the athletic department generated nearly $12 million in sales and amusement tax revenue from concession and tickets sales and from the expenditure and visitor/fan effects. The athletic department paid $1.13 million in local amusement taxes and $2.11 million in state taxes. The additional $11.97 million was a result of visitor and fan expenditures of $2.12 million in local sales taxes and $6.61 million in state sales tax. 15

16 Athletics Impact on the University Academic scholarships for non student-athletes $ 1,375,000 Self-funding of academic scholarships for student-athletes $ 6,480,000 Economic impact to University through private gifts to $ 4,000,000 Alumni association for athletic tickets and parking Athletics benefits to University employees and students $ 5,500,000 through free or reduced rate tickets Self-funding of all facilities and utilities $ 9,100,000 Annual debt service on University parking garages $ 1,125,000 Travel and scholarship expenses for Pride of Southland $ 835,000 Miscellaneous University program support $ 10,000 Total $28,425,000 The athletics department is committed to giving back to the University and the community through a variety of ways. Last year, the athletics program contributed more than $28 million to the university in some fashion. We gave $1.375 million for academic scholarships awarded to non-student athletes We paid $6.48 million for academic scholarships for our student-athletes We provided 16,000 season football tickets to the alumni association for academic fundraising purposes which generated more than $4 million for the university. Last summer we surveyed other schools in the SEC and across the country and found that: Alabama made no contributions to the university and provided no tickets for university donors. They also charged their students $40 per football season ticket. Georgia only provided $75,000 to the university for scholarship gifts and provided no tickets for university donors. They charged their students $42 per football season ticket and also received $2.8 million from student fees. Florida provided 170 tickets for university fundraising purposes, received $2 million from student fees and charged students $46 per football season ticket. Virginia made no contributions to the university, provided no tickets for university donors and received approximately $7 million in student fees. We provided more than 13,300 student football tickets per game at no cost and another 6,000 halfprice football season tickets for faculty and staff members. The conservative value of these tickets would be $5.5 million. We paid $9.1 million for our facilities and utilities We provided $1.125 million in annual debt service on five University parking garages We paid $835,000 for travel and scholarship expenses for the Pride of the Southland Marching Band. And we provided $10,000 for other programs on campus like the Partners in Sports program. 16

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