Thursday, January 31, 2013

Rocky Top Stone Broke

The University of Tennessee Athletic Department is $200M in the hole, according to Sports Business Journal.


I'll let that sink in for a minute.

That's almost one hundred million cups of airport coffee. That's enough to buy out A-Rod's contract and still have enough for a MLS franchise. That's eight hundred million chicken nuggets off Wendy's Dollar Value Menu.

That's how deep this amateur athletic program is in the hole. It's part of the ultra-lucrative SEC. It gets gobs of cash every year from conference television deals and bowl payouts and NCAA basketball tournament money and licensed apparel. It gets immense amounts of national television exposure to promote its brand. It is located 3 hours from the nearest professional football team and 4 hours from the nearest professional basketball franchise. Ticket prices that have gone up 20% in the last five years.

And it is $200M in the hole.

The reasons for this are varied. The football team has been equal parts lousy and unappealing for years now. The byproduct of lousy football is fired coaches, and with fired coaches come millions of dollars in coaching contract buyouts. It's expensive to keep up with the Sabans in the SEC, where the average athlete gets underwritten to the tune of $164K a year. They just poured a ton of money into improving Neyland Stadium, not that anybody's apparently going to games there. They've got a brand new $50M athletic center. They used to pay some money back to the university's general fund every year (they've stopped doing that). They get hit with a special local tax on athletic event tickets.

But still. Two hundred million. Barely two million in cash reserves. Annual debt service of $21M. Something like $18M owed to fired coaches. A "stressed" annual athletic department budget of $99.5M.

The next time someone talks about "revenue sports" in college athletics, think about Tennessee. Think about $200M. And maybe, think again.
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