A little more a year after the opening of Matthew Knight Arena, the athletic department is finding that its athletic and outside events are not pulling in as much revenue as originally projected, making debt repayment a lot trickier.
In a new set of financial projections sketched out this January, the athletic department forecasts that men’s basketball will be 14.4 percent short of what they estimated to earn in 2012 — from a projected $3.3 million to $2.8 million. Women’s basketball was estimated to be 30 percent short of what the athletic department expected.
The overall projected shortfall for the entire arena sits at 16.7 percent for the 2012 academic year, and a 35 percent actual shortfall for 2011. Therefore, the new projections lowered most of the expected revenue categories up until 2038.
One implication of these shortfalls is further delay in getting a financial contribution from athletics back to the academic side, a battle the Intercollegiate Athletics Committee has been fighting since 2004 when the athletic department promised to make a contribution when their budget stabilized.
Eight years and almost $63 million later, the department has yet to make progress on a contribution to academics and has rejected several models brought forth by the IAC.
The IAC has come up with a few different models to get athletics to help subsidize academics, all of which have been struck down. The latest was an extra $1 surcharge on sporting event tickets, which was denied on the grounds that it would hurt ticket sales.
Even so, the same surcharge concept is currently being used to generate revenue to help repay the $200 million in state bonds that were used to build Matthew Knight Arena.
According to Executive Assistant Athletic Director Dave Williford@@http://directory.uoregon.edu/telecom/directory.jsp?p=findpeople%2Ffind_results&m=staff&d=person&b=name&s=Dave+Williford@@, every ticket over $8 has an extra dollar tacked on that goes into Oregon’s General Athletic Fund@@http://bluebook.state.or.us/state/govtfinance/govtfinance01.htm@@ to act as a “safety net” for future deficits in the repayment of the bonds taken out on Knight Arena.
Nathan Tublitz,@@http://directory.uoregon.edu/telecom/directory.jsp?p=findpeople%2Ffind_results&m=staff&d=person&b=name&s=Nathan+Tublitz@@ IAC chair and biology professor, said that he didn’t even know the surcharge existed.
“The IAC was not made aware of this extra surcharge,” Tublitz said. “Their financial projections were off-base, so now they are forced to find money elsewhere. I think it shows how poorly this project was designed from a fiscal standpoint.”@@no kidding@@
Other members of the IAC said that their vexation stems from the fact that their model was denied only to be used for a “bond payment surcharge” and to fund “facilities enhancements” @@facilities enhancement (casanova?) and bond payment surcharge@@instead of academics.
“It really shows they are unwilling to prioritize giving back to academics,” Student IAC member Maneesh Arora@@http://directory.uoregon.edu/telecom/directory.jsp?p=findpeople%2Ffind_results&m=student&d=person&b=name&s=Maneesh+Arora@@ said. “It makes it even more frustrating that the reason for denying it conflicts with their current actions.”
Despite the shortfalls and a meager net income of only $5,391,606 in 2011, the athletic department is confident that they will be able to follow the payment model@@whose?@@ with help from football revenue and the well-stocked Legacy Lund of $130 million donated by Phil Knight and other donors.@@http://www.goducks.com/ViewArticle.dbml?DB_OEM_ID=500&ATCLID=1157459@@
“Based on the numbers in our projections that we updated, we have all the confidence in the world we will meet our goals,” Williford said. “The model speaks for itself and we stick to that.”@@no surprise him saying this — don’t want to give the other impression, perhaps?@@
The repayment plan — made between the Oregon University System, the athletic department and the state — stipulates that the athletic department will pay $16.3 million per year, which includes land and underground parking debt. Athletics officials are adamant that the deficits are trivial in the grand scheme of things, and any shortage will be recovered through increased income in future years combined with cutting expenses.@@uh huh@@
However, many throughout the campus community were skeptical of the athletic department’s projections from December 2010 and believe this deficit is a result of a lack of accountability to the University as a whole — an issue the Intercollegiate Athletics Committee of University Senate has been working to solve for many years.
“The ASUO had always predicted that the athletic department was too optimistic with their budget projections for Knight arena,” ASUO Sen. and IAC member Molly Bacon@@http://directory.uoregon.edu/telecom/directory.jsp?p=findpeople%2Ffind_results&m=student&d=person&b=name&s=Molly+Bacon@@ said. “The lack of accountability and oversight in our athletic department has allowed it to get away with such shoddy projections — something no other unit or organization on our campus would have been able to do.”
Tublitz said that future deficits could lead to a depletion of the Legacy Fund entirely, but current projections maintain that the fund won’t be drawn below $50 million.@@?@@ Whether the athletic department’s math is accurate is a hard call for those charged with keeping track of the athletic department’s financial dealings.
“Their projections have not been validated by the revenue that has come in,” Tublitz said. “If the economy does not pick up and people don’t buy basketball tickets, then their current projections will not come true, and they will have to dig deeper into the Legacy Fund.”@@and potentially beyond@@