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Sports generate millions of dollars for UF

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Florida football coach Urban Meyer is all smiles after the Gators won their second national championship in three years in January. Football and basketball titles produced extra revenue from boosters and merchandise.

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By JOEY JOHNSTON | The Tampa Tribune

Published: June 5, 2009

TAMPA - When the University of Florida needs cash, there's one place it can always turn: its athletic department.

As part of the university's efforts to put together a worst-case plan reflecting as much as a 10 percent budget cut, the University Athletic Association was asked for a $6 million donation to help make ends meet, University of Florida President Bernie Machen said.

It's not the first time the athletic department has helped fund academics. Since 1990, the athletic association has made annual contributions to the university totaling in excess of $48 million — including more than $9.5 million two years ago.

Some of that money has gone to UF's general fund, dispersed for myriad programs. Some has gone to the library, along with earmarked money from pay-per-view football telecasts, including $100,000 last season. Most recently, the athletics donation helped fund UF's "opportunity scholarships," a need-based program for students who are the first in their families to attend college.

"It varies from year to year, depending on what kind of year we have, what kind of needs the campus has, what kind of request comes from the president's office," Athletic Director Jeremy Foley said. "That is something we have always been in a position to do. We are part of the institution, and we are proud to help when we can."

The donation comes at a time when nearly every college athletic program is weighing how the recession will affect business. Schools are considering eliminating some sports. Printed material — such as media guides and promotional pamphlets — is going electronic. Some teams will travel by bus instead of plane.

Budgets trimmed 10 percent

UF is not immune to the recession, though, said Greg McGarrity, the school's associate athletic director. Even though the athletic department's budget is separate from the rest of the university, all coaches and senior staff members were asked to trim their budgets by 10 percent this year, in keeping with the campuswide standard.

"Business as usual is no longer the way to operate," McGarrity said. "You don't want to diminish from the student-athlete experience, but at the same time, you ask yourself, 'Where can we save? What can be cut out that's really not necessary?' It's a cautious, prudent approach."

The athletic association, though, is unusually well-positioned. The Gators produced revenue of more than $106 million before expenses of $98 million during the 2007-08 fiscal year, according to figures the athletic department submitted to the U.S. Department of Education.

"Probably on any given year, only a half-dozen or so schools in Division I actually generate a surplus in their athletic department," said Andrew Zimbalist, a professor of economics at Smith College who specializes in athletics.

"Of those who do generate a surplus, the notion that they make an explicit contribution to the general fund is rare," he said.

While the Gators were generating an $8 million surplus, Florida State University and the University of South Florida pretty much broke even. The Seminoles show $45.4 million of revenue and $45.1 in expenses, while the Bulls reported $34.7 million coming in and $32.6 million going out.

UF's top revenue streams traditionally are booster contributions, ticket sales, and licensing and marketing agreements. Florida also receives a membership share of television-contract money paid to the Southeastern Conference, and last year signed a 10-year, $100 million deal with Sun Sports and its partner, sports marketing company IMG. That contract brings in money for broadcast rights and advertising at athletic venues.

UF athletics will receive $25 million a year for the life of the contracts with Sun Sports, the SEC's new 15-year, $150 million deal with ESPN and its 15-year, $55 million agreement with CBS.

Winning is an obvious key. The Gators' college football national championships in 2006 and 2008 netted less than $1 million each but created windfalls from merchandise sales and booster donations.

According to the athletic association's financial statements, donations from Gator boosters and other sources produced $3.6 million in the 2005-06 fiscal year. The next year, after UF's 2006 football title, booster contributions were $8.6 million — an increase of 138.9 percent. Figures aren't available for this year, but McGarrity anticipates they will be flat.

UF's merchandise sales and licensing income enjoyed a $4.1 million spike after the 2006 football title. The next year, merchandise and licensing profits decreased by $2.4 million.

The economic downturn may affect those numbers.

"We may see an impact on what we call the dry goods — the T-shirts, hats, clothing," McGarrity said. "You may have people more inclined to keep their old T-shirt for another year. A lot of things, we don't know until they play out."

Some things are known, though. Entering this season, the Gators have 123 consecutive football sellouts.

It's good for business — and good for the broad-based athletic success Foley craves. At a time when most athletic programs are cutting back, the Gators are adding a women's lacrosse program, complete with a $16 million stadium. That's unusual. So is the money Florida's athletic program generates.

'More with less'

USF athletics hasn't been in a position to make a contribution to academics. USF's athletic budget, $34.7 million, is the second-smallest in the Big East Conference. But Bill McGillis, USF's senior associate athletic director, said his department has developed a culture of "doing more with less.''

McGillis pointed to last year's study by The (Portland) Oregonian, which classified a USF game as the most-affordable buy in college football.

"You can attend one of our games for the same price as you could a movie," McGillis said. "We are entering a different [financial] era, and I don't see any sacred cows, anybody immune to that pressure.

"At the same time, we've taken a lot of pride in having a lean, efficient program. Our athletic director [Doug Woolard] and football coach [Jim Leavitt] have never been ones to keep up with the Joneses or get caught up in the athletic arms race. I think we may be positioned better than most [in a recession] because we simply don't have a culture of wasting our resources. We use them wisely."

Florida's athletic department is also different from most of its counterparts in that it operates as a separate nonprofit organization that funds itself. Florida State and USF operate more conventionally, with athletics under the universities' administrative umbrellas.

"It was set up as a private corporation, the underlying philosophy being money that could be used for academics would not be used for athletics," Foley said. "That's the way it always has been. We receive no money from the university. We generate our own dollars. To me, it has always been a good setup."

Recession's effect

In part, that structure has allowed the athletic department to grow into a financial juggernaut. Whether the revenue will be affected by the recession is debatable.

"College sports is very vulnerable," said Zimbalist, the Smith professor. "Every single source of their revenue is fragile right now. They are depending on fans to buy tickets, depending on corporations to buy sponsorships, and businesses and boosters to buy luxury and premium seats and make donations.

"I think there is going to be big-time hurt and for at least a couple years. … I think we are not going to see many more $5 million coaching contracts until our economy emerges out of the mess it's in."

Dan Fulks, an accounting professor at Transylvania University in Kentucky who consults for the NCAA on sports revenue, sees things differently. The University of Kentucky, for example, recently signed John Calipari to an eight-year, $31 million contract to coach its basketball team, and the University of Alabama is spending more than $80 million to expand its football stadium.

"There is a 'have and have-not' aspect to it all," Fulks said. "College athletics also has a unique quality in that it's an escape. They show that more people go to movies during a recession because they are seeking that entertainment. Sports are that way."

"It's a bit too early to know how it's all going to shift — or if it's going to shift," USF's McGillis said. "As we enter the summer, it's a big time for us to be selling [football] tickets. Clearly, everybody's discretionary spending is in question these days, but we are cautiously optimistic about our ability to continue to move forward."

In the meantime, athletic directors will be tightening budgets and watching expenses.

"There is an obvious effect," the University of Florida's Foley said. "Our season ticket sales are doing fine, and if you win a national championship, usually there is a huge windfall in terms of licensed products. But we are down from where we were in 2006. I'm sure at some point in time — although hopefully not — we'll see things such as the gift shop and concessions go down. We are going to be impacted like others."

Reporter Joey Johnston can be reached at (813) 259-7353 or jjohnston@tampatrib.com.

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