When will Rutgers athletics turn a profit? New AD has a plan

[Tango Two]

Patrick Hobbs, Rutgers' new athletic director, doesn't hesitate when asked when the sports program will begin to pay for itself.



http://www.nj.com/education/2016/01/when_will_rutgers_athletics_turn_a_profit_new_ad_h.html

 

[RU-ROCS]

Fairly accurate account, but it drives me crazy that the Ledger never reports that the athletic department deficit is almost exclusively to cover the cost of funding Olympic sports not football, which breaks even, or basketball, which until this year was profitable. They incorrectly make it seem as though the two revenue sports operate at deficits , when the problem is that those sports don't generate sufficient profits to fund the other sports.

 

[Upstream]

the athletic department deficit is almost exclusively to cover the cost of funding Olympic sports not football, which breaks even,

Sort of.

Rutgers Athletics is paying about $6MM per year in debt service related to the Stadium expansion (plus additional facilities costs for maintaining the Stadium). These are reported in the "not related to specific teams" bucket. The rationale is that since the stadium is used for purposes other than football, the stadium costs shouldn't be allocated to football. But the reality is that the only reason the stadium was expanded is for the football program.

I don't really have a problem with Rutgers classifying the stadium debt service as not football related. If it was classified as football related, then the football program would be showing a loss. And then you'd have people who don't really understand the numbers calling for the elimination of the football program, arguing that Rutgers would save $6MM per year without the football program. But whether the football program exists or not, the $6MM per year debt service on the stadium expansion continues. So eliminating the football program doesn't eliminate the expense, it just eliminates the potential revenue that could be used to offset the expense.

 

[derleider]

Fairly accurate account, but it drives me crazy that the Ledger never reports that the athletic department deficit is almost exclusively to cover the cost of funding Olympic sports not football, which breaks even, or basketball, which until this year was profitable. They incorrectly make it seem as though the two revenue sports operate at deficits , when the problem is that those sports don't generate sufficient profits to fund the other sports.

Its more or less the same thing. The reason RU runs a high deficit relative to other schools is that our FB and BB programs aren't generating the money they do at other schools. And as Upstream says - in fact FB is running a pretty substantial deficit if you include the stadium expansion borrowing.

Of course none of this matters - in five years RU athletics will be making money and Hobbs or whoever the AD is at the time will be praised as the genius who turned things around.

 

[Sir ScarletKnight]

The stadium, even though the expansion was for FB, is also used for convocation, graduation, lacrosse, and other major events. Just putting that out there.

 

[Upstream]

The stadium, even though the expansion was for FB, is also used for convocation, graduation, lacrosse, and other major events. Just putting that out there.

That is the reason that Rutgers doesn't include stadium costs as a football-specific expense. But let's face it, Rutgers didn't move forward with a $100MM stadium expansion and incur $6MM annual debt service expenses for convocation, graduation, lacrosse, etc.

 

[Sir ScarletKnight]

That is the reason that Rutgers doesn't include stadium costs as a football-specific expense. But let's face it, Rutgers didn't move forward with a $100MM stadium expansion and incur $6MM annual debt service expenses for convocation, graduation, lacrosse, etc.

Nope. But without it, we probably wouldn't be in the B1G.

 

[Upstream]

Nope. But without it, we probably wouldn't be in the B1G.

Pretty sure that isn't true, considering that at the announcement that Rutgers was joining the B10, Delany indicated he wasn't aware that Rutgers had recently expanded the stadium.

 

[Sir ScarletKnight]

Pretty sure that isn't true, considering that at the announcement that Rutgers was joining the B10, Delany indicated he wasn't aware that Rutgers had recently expanded the stadium.

Well then that's just negligent, considering we'd upgraded the stadium way before that.

 

[Upstream]

Well then that's just negligent, considering we'd upgraded the stadium way before that.

Why is it negligent? Stadium capacity was a nonfactor in the decision to add Rutgers to the B10. Do you expect Delany to memorize all sorts of unimportant trivia about all 14 B10 schools. Since stadium capacity was a nonfactor, it was unimportant trivia. I'm sure Delany was well aware of the size of the markets that Rutgers brought.

 

[pmvon]

Love how the whole article talked about the overspending etc and then at the end cited complaining that we cut some sports. Classic

 

[derleider]

Why is it negligent? Stadium capacity was a nonfactor in the decision to add Rutgers to the B10. Do you expect Delany to memorize all sorts of unimportant trivia about all 14 B10 schools. Since stadium capacity was a nonfactor, it was unimportant trivia. I'm sure Delany was well aware of the size of the markets that Rutgers brought.

Exactly - its not like the Big Ten cared about the rest of our athletics department being so run down. If we had 45,000 (i.e. the expanded configuration in 2006), it would have been fine. Just another in the huge list of upgrades to get us up to Big Ten level. Nor would it have stopped us from having all of those other events there - none of them need the extra seating.

 

[RUSK97]

Back to the original post - I don't think Rutgers Athletics will ever turn a profit. And I'm fine with that. I think Barchi's goal was to be revenue neutral, not turn a profit. If the program can not be subsidized, I think everyone will be happy.

 

[RU-ROCS]

Sort of.

Rutgers Athletics is paying about $6MM per year in debt service related to the Stadium expansion (plus additional facilities costs for maintaining the Stadium). These are reported in the "not related to specific teams" bucket. The rationale is that since the stadium is used for purposes other than football, the stadium costs shouldn't be allocated to football. But the reality is that the only reason the stadium was expanded is for the football program.

I don't really have a problem with Rutgers classifying the stadium debt service as not football related. If it was classified as football related, then the football program would be showing a loss. And then you'd have people who don't really understand the numbers calling for the elimination of the football program, arguing that Rutgers would save $6MM per year without the football program. But whether the football program exists or not, the $6MM per year debt service on the stadium expansion continues. So eliminating the football program doesn't eliminate the expense, it just eliminates the potential revenue that could be used to offset the expense.

Looks like even with the debt service football turned a profit for 2015- whether its the $8 million profit as reported here (not sure if they count the stadium debt): http://www.app.com/story/sports/col...d-8-million-profit-fiscal-year-2015/79389740/ or $2 million if they failed to account for the stadium debt. That supports my point above that football is not the problem, but the answer. The deficit is largely to fund the Olympic sports and women's basketball, but the whiny anti-football crowd never acknowledges that fact.

 

[Upstream]

Looks like even with the debt service football turned a profit for 2015- whether its the $8 million profit as reported here (not sure if they count the stadium debt): http://www.app.com/story/sports/col...d-8-million-profit-fiscal-year-2015/79389740/ or $2 million if they failed to account for the stadium debt. That supports my point above that football is not the problem, but the answer. The deficit is largely to fund the Olympic sports and women's basketball, but the whiny anti-football crowd never acknowledges that fact.

Yep. The FY2015 financial report certainly makes the case that football turns a profit, even including stadium debt. Surprisingly, even MBB turns a profit (about $900K). Even taking into account possible accounting tricks to make FB look more favorable, the amount of profit seems to be great enough that it would be hard to convincingly argue that FB costs Rutgers money.

Add that Rutgers also received about $6MM in additional contributions that were not reported in FY2015 (because the contributions are being spent in future reporting years), and the financial picture looks even better.

 

[pmvon]

So when does SL do an editorial with these clarifying facts?

 

[Upstream]

So when does SL do an editorial with these clarifying facts?

http://www.nj.com/opinion/index.ssf/2016/01/has_the_tide_finally_turned_for_rutgers_athletics.html

http://www.nj.com/rutgersfootball/i...s_football_had_8_million_reasons_to_be_p.html

http://www.nj.com/rutgersfootball/i...bers_a_look_at_rutgers_football_revenues.html