FAYETTEVILLE -- The University of Arkansas athletic department is projecting revenues and expenses to approach all-time highs of nearly $90 million in the coming school year, with revenues buoyed by anticipated increases of nearly $4.5 million in SEC and NCAA distributions.
The projected budget of $89.2 million is for the fiscal year that began July 1, 2014, and will end next June 30.
But increased expenses, attributed to higher utility and administrative costs, along with continued facility renewal, are projected to offset the gains Arkansas is figuring for the SEC's new round of bowl agreements and the inception of the SEC Network later this month.
"The financial position of Razorback Athletics remains strong," Arkansas Athletic Director Jeff Long said. "It is critically important that we continue to manage our funds strategically because there will always be competitors with more resources. However, we remain fully committed to generating and investing our resources to compete and win in the SEC and nationally."
Clayton Hamilton, UA senior associate athletic director and chief financial officer, said the athletic department managed its budget well through the 2013-2014 school term that featured one less home football game than normal.
"We've done a good job and we feel like we're in a good financial position, but the reality is we're still in the middle of the pack [in the SEC]," Hamilton said. "As we've grown, all of our competition continues to grow as well."
Arkansas' budgeting plan, put forth since Long's tenure began in 2008, has been to conservatively estimate revenues and to funnel profits back into a renewal and replacement reserve account and the department's athletic reserve account.
An example of this occurred in 2011-2012 when Arkansas' revenues soared $13 million above projections and the department was able to transfer $7.5 million to the renewal and replacement account and added $560,000 to athletic reserves.
Projects funded by the renewal and replacement account, Hamilton said, include the recent video board upgrade at Reynolds Razorback Stadium, locker-room remodeling, replacement of the indoor and outdoor track surfaces, baseball ribbon boards, parking projects, video equipment purchases and the $7 million video control room.
Arkansas' long-term athletic facility upgrade, which has a $100 million price tag, has already produced the $35 million Fred Smith Football Center, which opened last fall, and an indoor training facility for baseball and track was finished earlier this summer.
Ground was broken this year with construction continuing on the basketball practice facility and the department's academic center.
"Our debt at the end of this fiscal year was $70 million, and there's no debt on our books beyond 14 years," Hamilton said. "So we feel like we've done a really good job of managing all the facility construction without taking on significant additional debt and long-term debt at that. You see some schools leveraged out for 30 years
Arkansas' current budget proposal represents an increase of 8.6 percent over last year's budget of just more than $82.1 million and a rise of nearly 21 percent from the 2011-2012 budget of almost $74 million, reflecting the escalating revenues associated with the top tier of college athletics.
The Razorbacks athletic department has reported actual revenues topping $81 million each of the past four fiscal years.
Hamilton said the additional revenues can be mostly attributed to football ticket sales, conference distributions, sponsorship agreements and contributions from the Razorback Foundation.
"The reality for us is I think we're in a very good financial position," Hamilton said.
The largest expense lines in the UA athletic department's current budget proposal come from football ($21.3 million), men's basketball ($7.1 million), facilities ($3.9 million) and utilities ($3.9 million). Also, tuition costs at the University of Arkansas are up 5 percent from last year, an increase that is absorbed by athletics for scholarship players.
Projected revenues in ticket sales include $27 million for football, $6.45 million in men's basketball and $1.9 million in baseball.
Arkansas projects to bring in $6.6 million in multimedia rights, $3.25 million in trademark licensing and a record $25.008 million in SEC and NCAA distributions after projecting $20.5 million for such distributions last year.
Gifts and donations to the athletic department are projected to top $14 million after reaching $13.8 million last year.
The projected outlay for utilities is up about 22 percent from last year's budget of $3.2 million, with Hamilton citing additional construction of new buildings and an extra home football game.
"Even though the buildings aren't completed, we've got utility costs we're paying on as they're going up," Hamilton said.
Then there is the sixth football game.
"You've got to turn the lights on and you've got event staffing and security and etc., so there's additional costs we incur," Hamilton said. "Utilities is a big piece of it."
Expenses attributed to "administration" are projected to rise 30 percent, from $2.109 million in 2013-14 to $2.755 million in the current year. Long, whose salary and bonuses reached $1.2 million last year, was given two $100,000 raises in the past nine months that take his guaranteed pay to $1.1 million.
The athletic department plans to transfer $2.37 million to the university this year, a departure from the $1 million it has given the university the past several years. The extra amount is to help pay for a new residential dormitory.
Hamilton said Arkansas athletics is attuned to the national discussion related to full cost of attendance, which would require further expenses to alleviate out-of-pocket costs for student-athletes, which are projected between $1,500 to $7,500 per student per year.
Additionally, the NCAA has moved toward having schools pick up the tabs for as many meals as the school thinks is necessary for an athlete's participation in sports, whether it be full-scholarship players, partial-scholarship players or walk-ons.
"I think we're entering an era of student-athlete focused legislation," said Jon Fagg, UA senior associate athletic director for administration and governance. "I think it's part of the context of the big five conferences and their move toward greater autonomy."
Hamilton said the financial side of the athletic department is planning for beefed-up meal provisions.
"We're seeing additional costs related to that," he said. "We have some additional costs for medical expenses. Some of that is going to be things that tie back to the student-athletes: Medical costs, academic costs, tutor costs, meals."
Sports on 08/02/2014
Print Headline: Budget balances at 89M