What Do The Financial Numbers Mean for UM/MSU Athletics?

By JIM O’DAY

Last week, the Montana University System released information pertaining to the financial pictures of the athletic programs across the state – and particularly those at the University of Montana and Montana State University. The figures were from the fiscal year ending June 30, 2012, and will be reviewed by the Montana Board of Regents on Tuesday, Jan. 8, 2013, starting at 11:05 a.m. in Helena.

Typically, these numbers cause considerable confusion not only by those reading the reports, but by news outlets who are trying to report on them.  The most recent news reports are no different.  I’m sure the numbers in these reports are also very confusing to the members of the regents as well – and they are ultimately responsible for the fiscal status of both institutions.

First of all, the numbers are not really a fair “apples-to-apples” comparison – and it appears no two schools are really alike in their reporting philosophies as you scour NCAA audit reports.  For example, the latest report said UM football program posted a $3.3 million profit during the fiscal year ending last June.  Likewise, the report stated that MSU saw a $1.15 million profit. I doubt either is very accurate, and here’s why.

Each school often has its own unique way of accounting for some numbers and putting them in certain categories. While one program may believe its department is best served by billing lights, utilities and upkeep against its football program, another may lump it into an all-encompassing category that covers the entire athletic program’s game-day operations for all sports. Others may not be charged at all, and, instead, they may be paid under the umbrella of university repairs, maintenance and operations. Incomes streams have the same inconsistencies.

While the general statement that UM football showed a $3.3 million profit was reported – and is very impressive no matter what any numbers lead one to believe, it isn’t truly accurate.  While serving as Director of Athletics at Montana, we always estimated that the football program basically broke even.  If $4.4 million worth of tickets were sold (which is about average the past few years), there was also associated revenue from suites, club seats, event parking, corporate sales of signage in the stadium/game programs and guarantees (such as playing at the University of Tennessee) that should be included in the football revenue figures.  If the Grizzly Scholarship Association is raising about $2.2 million per year, how much is actually tied to preferential seating assignments in Washington-Grizzly Stadium (Gold, Silver and Copper levels)?  My best guess was that at least $1.3 came in from these preferred seating fees.  Another $80,000 per year on average was coming in from revenues associated with televising Griz football games. Adding this all up, we felt a fair number to be directly tied to the football program was about $6.5 million annually.

On the flip side, there are expenses that offset the income.  For example, what is the cost to process football tickets – and with 19,000 season ticket holders alone, that takes considerable manpower by the Adams Center ticket office.  The cost to get Washington-Grizzly Stadium ready for a game, with its 25,000-plus seating capacity, is a heavy expense compared to most Football Championship Subdivision schools. Administrators in the department also spend a good chunk of their time working on football-associated issues – from compliance and academic support, to business matters to fund-raising to marketing the product.  Many insurance claims come from the sport of football, and it is easily the most expensive sport to “uniform” a player.  Travel is also extremely costly – based on the number of people traveling with a team, to the difficulties of transporting a large contingency from Missoula to places such as Cedar City, Utah; Flagstaff, Arizona; and Grand Forks, North Dakota. Also, with 63 full-time scholarships allowable for FCS football, that takes up a large portion of the financial aid for UM student athletes. Add in recruiting expenses and salaries of the football staff, and we come to about $6.5 million annually. To be safe, it’s fair to say that a good portion of the UM Athletics budget goes to maintain all the operations of the football program.

Expenses are also not an entirely fair comparison.  Some schools such as UM charge their athletic program for renting their facilities, while others do not.  Many bill out expenses for utilities, snow removal, maintenance, etc., to various campus accounts – some athletics and some not. Some schools centrally-fund their benefit packages, while others do not. Some run camps “internally,” such as Montana State, while others like Montana do not.

Income is really no different.  For example, the Fiscal Year 2012 report shows UM producing $5,406,748 in ticket sales (primarily from football, with the remaining $800,000 or so coming from men’s and women’s basketball programs, and a sprinkling from women’s volleyball and soccer), compared to $2,444,244 for Montana State (of which about $1.8 million comes in football seating revenues).  Both are very impressive numbers for schools participating at the FCS level.  And while many other areas remain similar between the two schools (student athletic fees, game guarantees, NCAA/Big Sky Conference distributions and sponsorships), the two largest categories of separation – aside from ticket sales – are in the forms of direct, indirect and administrative state-funded support ($9,547,006 for MSU and $6,515,315 for UM) and private contributions ($5,854,686 for MSU and $3,355,051 for UM).  However, even the category for “contributions” is not an apples-to-apples comparison as many of the private dollars for Montana State are included in the costs to pay for their stadium expansion. Just as equal, the bottom-line profit of UM ($950,752) and $10,726 loss for Montana State are more accounting in nature than anything as MSU is putting a substantial amount of money into paying for its stadium renovation project.

One area noted in the report is a new expense line for “Transfers to Institution.”  This is now used to report funds supporting initiatives outside of athletics.  This line was only used by UM-Missoula in FY’12 and was for $245,704 in expenses.  Stated the report from Frieda Houser, Director of the Office of Accounting and Budgeting for the MUS, “The majority ($190,000) was used to make a bond payment on the interdisciplinary science building.  The remaining funds ($55,704) were used to support the marching band and the minority mentoring program.”

Overall, the FY’12 budget for Montana State Athletics was $22,583,024, compared to $19,257,617 for UM Athletics.  For a complete listing, go to the Montana Board of Regents website, and check out the agenda for Tuesday, Jan. 8, 2013.

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Do you have questions for Jim?  Use this Contact Us form and we’ll forward your questions to him for possible inclusion in future blogs.  Like this blog?  Chances are you’ll like these other Jim O’Day blogs:  Hiring/Retaining College Coaches is Becoming ToughFormer UM Coaches/Missoula Stars Making it Big in College FootballWhy I chose to Make It Missoula, The Ups & Downs of Being a Griz Fan, Once a Griz, Always a Griz.

Jim O’Day was Director of Athletics at the University of Montana from 2005-2012. Prior to that, he served as the Assistant Director of the Grizzly Athletic Association and later as the Director of Development  for Intercollegiate Athletics atUM.

Prior to returning to his alma mater in 1998, O’Day was the owner and publisher of the family-owned Western Breeze newspaper in Cut Bank, Montana.

Jim currently works for The Farran Group, a real estate development/ investment firm based in Missoula, MT.  In addition, Jim serves as a consultant for Epio Solutions out of Seattle, a sports based agency primarily focused on monitoring social media platforms for various colleges and universities.

Jim and his wife Kathy have three sons: Chris, Kevin and Brian.  Chris and Kevin are graduates of The University of Montana, while Brian is currently a senior at UM.