Pause for a moment and think about a five-year picture of financial trends. It could be employment figures, your 401(k) statement, wages, you name it.
By BLAIR KERKHOFF
The Kansas City Star
Seeing red ink? Trend lines pointing down? Your blood pressure rising?
Now take a look at the five-year financial snapshots of the athletic departments at Kansas, Kansas State and Missouri.
Kansas States athletic budget grew by nearly 31 percent for the last reported financial year, 2010-11, and the school was identified as being the most profitable in college sports. The Wildcats athletic revenue increased more than $20 million from 2006-07.
Coaches cleaned up. The total compensation for Kansas mens basketball coach Bill Self for 2011 was $4,446,215. In the same year, Missouri football coach Gary Pinkel made $3,221,937, more than double his salary of five years earlier.
The Star examined figures provided on schools websites and obtained through open records laws from the previous five fiscal years, 2007-11, and found growth that ran contrary to gloomy financial trends, including some at other parts of the campuses.
On June 26, the University of Missouri system approved more than $35 million in cuts in order to balance its $2.8 billion budget for the 2013 fiscal year, which began July 1. Programs were either cut or consolidated, 180 jobs were eliminated and the University Press will be closed this summer.
The same day, June 26, the MU athletic department announced a $200 million plan to upgrade its facilities and received a $30 million gift to help pay for the projects, including an expansion of Memorial Stadium. The rest of the money for the first phase of the plan, which totals $102 million and was approved by the Board of Curators, will come from increased premium seating revenue.
On June 20, the Kansas Board of Regents announced a tuition increase for its six universities, including increases of more than 5 percent at KU and K-State. Earlier in June, KU officials accepted 106 requests from employees seeking early retirement after the school offered buyouts to 655 of its 4,800 workers in May.
But growth continues for college sports played at the highest level, defined today as having membership in one of the conferences with lucrative football television rights contracts the Big 12, where KU and K-State reside; the Southeastern Conference, of which Missouri became a member last week; the Pac-12; Big Ten; and Atlantic Coast Conference. They are five of the six power conferences in the Bowl Championship Series, major college footballs multimillion-dollar producing postseason structure.
The Big East is the sixth power conference, although several of its top members, such as West Virginia, have left or are leaving and the conference figures to land a TV deal that is less valuable than the others.
The BCS currently generates $155 million a year, and the money is not distributed evenly. Power-conference teams that automatically qualified for a BCS game, like Big 12 champion Oklahoma State last season, earned $22.3 million. Most of that revenue is deposited into the leagues revenue-sharing formula.
Last month, a committee of university presidents approved a four-team playoff that will start after the 2014 season and could triple the annual value of the BCS.
As near as I can tell, FBS football has been completely impervious to economic downturns, said Rodney Fort, a University of Michigan economics professor and author of the textbook Sports Economics, which is used in 135 universities.
The financial stories of NCAA schools outside the BCS arent as positive. There are 1,079 member schools among the NCAAs three divisions, 982 of which sponsor football, but only 60 Division I teams reside in the top five conferences of the BCS. Sixty more Division I schools compete at the BCS level, or what the NCAA calls the FBS, or Football Bowl Subdivision.
UMKC, which also competes in NCAA Division I but doesnt have a football team, operated in 2010-11 with an $11 million budget and looked to save money over the past two seasons by moving the majority of its mens basketball home games from Municipal Auditorium downtown to Swinney Recreation Center on campus.
The savings of about $81,000 annually in rent and other expenses is allowing UMKC to right-size the budget and get the proverbial house in order, athletic director Tim Hall said. We have to look at things more creatively.
Where does the money come from?
The majority, over 95 percent, is generated through private donations or athletic-generated income.
As a rule, ticket sales are the lifeblood of an athletic department. A national survey by USA Today found that in 2008, sales primarily of football and mens basketball tickets accounted for 25 percent of a typical BCS athletic department budget. Contributions from private donors made up 22 percent and 18 percent was from conference income, which includes revenue from the BCS, NCAA Tournament and television contracts negotiated by the conferences.
Figures from MU, K-State and KU from 2007-11 differed slightly. At Kansas State and Kansas, contributions slightly outpaced ticket sales. K-States breakdown: 28 percent contributions, 25 percent ticket sales, 19 percent conference revenue.
Kansas State counted a record amount of donations, $26.5 million, to its 2010-11 budget, money that helped pay for $93 million in improvements that included a new basketball practice facility and a press box on the west side of Bill Snyder Family Stadium.
Kansas: 26 percent ticket sales, 31 percent contributions and 15 percent conference revenue. In each of the last five years, the Jayhawks generated more ticket sales income from mens basketball than football, although the gap has closed recently.
KUs two best years for contributions were 2008 and 2009, when more than $64 million was pledged. Those included the mens basketball national championship season and consecutive bowl seasons.
Missouri: 32 percent from ticket sales, 23 percent from contributions and 18 percent conference income. Football produced more than $24 million in revenue from 2009-11 and after the sports expenses were subtracted added about $10 million annually to the bottom line.
Another income source is money generated through media rights held by the school. Kansas deal with IMG College, a multimedia company that controls the Jayhawks television and radio networks, coaches endorsements, Internet sales, signage and corporate sponsorship, was worth nearly $14 million over the previous two years.
On the expense side, coaches salaries take the biggest bite more than the money spent on all athletic scholarships.
In 2011, Missouri spent $12.4 million on salaries, which also included perks such as automobile usage, country club memberships and bonuses, and $7.6 million on athletic student aid. Kansas spent nearly $14 million on coaches and $9 million on scholarships. K-State: $9.2 million on coaches, $5.6 million on scholarships.
The revenue line poised show the largest increases over the next few years is conference-generated income. Just holding membership in the Big 12 and SEC is a boon for the area schools.
Last month, the Big 12 announced its schools would distribute a record amount of conference generated revenue, some $19 million, to each school. Last year, the average payout was about $13 million.
What it does is allow us to enhance the total athletic program at our school and enhance the overall quality of athletic programs at all Big 12 schools, said Kansas State president Kirk Schulz.
Missouri wont share in conference distributed spoils this year its $12.4 million penalty for leaving the Big 12 came in the form of withheld income from the conference but starting with the upcoming school year, the Tigers will earn more league revenue than at any time in its history. SEC schools are receiving $20.1 million this year.
The SEC, Big Ten, Pac-12 and ACC all have blockbuster network deals with another on the way with the new playoff structure what NCAA president Mark Emmert called a market shakedown of media rights while attending the Big 12 meetings in Kansas City in June.
Emmert said he doesnt blame the conferences for taking all thats offered. But hes the president of all NCAA schools, not just those at the top of the football pyramid.
There are a variety of dynamics out there that will continue to drive the gap between the highest resource schools and the lowest for the foreseeable future, Emmert said. I dont see that trend abating at all.
College athletic departments spend what they make.
Its important to understand that while schools are generating more revenue, its all plowed back into the student athlete experience and infrastructure, Kansas State athletic director John Currie said.
But should students make even more?
As billions pour into conference coffers, the same conferences cant seem to find a solution to the notion of paying athletes a stipend. Legislation passed last October to provide scholarship athletes an additional $2,000 annually but was put on hold months later for further study.
Texas coach Mack Brown wrote on Twitter last month that he thinks the stipend should be revisited in light of the new playoff and its potential payout.
It will be a very lucrative event, and those young people are the ones that make it all happen, Brown wrote.
Some schools questioned whether they could afford the new expense Texas estimated stipends would cost its school about $600,000 annually and there was concern over the recruiting advantage by those that could afford to pay and those that couldnt come up with the full amount.
The NCAA is facing another athlete compensation issue. UCLA basketball star Ed OBannon and several other former college athletes, including Bill Russell and Oscar Robertson, have filed a class-action lawsuit against the NCAA for using their images without compensation, even after leaving college.
But the area schools have more immediate challenges.
Missouris $64 million operating budget for 2011 included about $25 million in football revenue, and mens basketball generated $11 million, a 16 percent increase over the previous year. But in the SEC, the Tigers will need to step up the pace. The budget ranks Mizzou in the bottom third of its new league, and thats not where Missouri intends to reside athletically.
Prices for football tickets and parking are increasing, and athletic director Mike Alden laid out the case in a letter to fans. The $200 million in planned facility renovations are part of Mizzous plan to better compete in its new conference.
When we made the decision as a university to apply and then be accepted to the SEC, we communicated very publicly how there was no question that all of us would have to step up, Alden wrote. Academically, socially, competitively, financially, facilities, recruiting, etc.
Kansas, which reported a $75 million budget for 2011, has plenty of room for growth in football.
The Jayhawks took a huge jump in football ticket sales in the 2008 and 2009 fiscal years, Kansas last two bowl seasons.
The football ticket income fell off slightly in Turner Gills first year, and the 2012 fiscal figures likely will show a bigger drop.
Kansas carries a burden on its bottom line severance payments. Under expenses for 2010 and 2011 it lists a total of $5.7 million, payoffs for former football coach Mark Mangino and athletic director Lew Perkins. The 2012 financial year will reflect a $6 million buyout of Gill, money that athletic director Sheahon Zenger will have received through donations.
Kansas remains one of the few programs in major college sports where mens basketball generates a bigger bottom line than football. Basketball revenue minus expenses has been greater than footballs figures in each of the five years that The Star reviewed records.
At Missouri and Kansas State, football revenue minus expenses typically doubled mens basketball.
At Kansas, basketball is the tip of the spear, Zenger said. I remind our folks that were never going to lose sight of that.
Mizzou, KU and K-State also are part of the large majority of Division I schools that balance their budget with subsidies, money from student fees and state funding. In 2011, Kansas received $3.4 million, Kansas State $3.2 million and Missouri $2.6 million from those sources, which accounts for less than 5 percent of each schools operating revenue.
Dan Fulks, a research consultant to the NCAA and accounting professor at Transylvania University, said revenue generated from the large TV contracts potentially $2.5 billion to the Big 12 for 13 years from ESPN and Fox, and $205 million annually to SEC schools, a figure expected to soar as the league renegotiates its media deals should reduce the subsidies.
Twenty million a year, or at least that much, will make a difference, Fulks said.
If the sports business is good at major college level, schools like Mizzou, Kansas and Kansas State have to work a little harder within their conferences, which include athletic programs that are the nations richest.
Texas brought in a nation-leading $150 million in athletic revenue in 2011, Alabama $124 million and Florida $123 million.
The numbers suggest an uphill battle for the likes of Kansas State, Kansas and Missouri.
But you know what? Currie said. In America, competition drives you to get better, or it drives you out of business.
To reach Blair Kerkhoff, call 816-234-4730 or send email to firstname.lastname@example.org. Follow him at twitter.com/BlairKerkhoff.