Campus Corner

KU, MU athletic departments lost millions last year

Updated: 2013-03-12T15:05:21Z

By BLAIR KERKHOFF

The Kansas City Star

One year ago today, the sights and sounds inside Sprint Center provided the backdrop for a year of change in major college sports around Kansas City.

The final moments of Missouri’s Big 12 Tournament championship victory over Baylor counted down, and Tigers fans used the occasion to chant “S-E-C … S-E-C,” with the school’s official departure to the Southeastern Conference three months away.

Through NCAA financial disclosures and tax returns for the 2011-12 financial year, which ended June 30 but recently became available through open records requests, we have a better understanding of the cost of embarking on new paths.

Millions.

Missouri received $13.1 million less than Oklahoma in Big 12 revenue distribution. According to conference tax returns, the Sooners received the greatest chunk at $14.5 million, the Tigers earned $1.4 million. The withholding served as the Tigers’ penalty for departing the Big 12.

Kansas and Kansas State remained in a newly structured and financially healthy and stable Big 12 but still felt changes in their pocketbooks.

Kansas reported an $8.7 million loss for the school year, mostly because of severance payments to fired football coach Turner Gill and the assistant coaches.

Kansas State, meanwhile, reported about $6.7 million less in operating revenue than the previous year. But the Wildcats took in $12.3 million more than they spent, making K-State the only one of the three major Division I athletic departments in the area that reported a 2011-12 bottom line — revenue minus expenses — in the black.

The Wildcats’ financial performance has helped keep $93 million worth of improvement projects such as the recently completed basketball practice facility and the current luxury boxes and press box on the west side of Bill Snyder Family Stadium chugging along.

“It’s so important to have the revenue streams, the ticket sales, the conference distribution, the gifts, increasing,” K-State athletic director John Currie said.

Although Missouri and Kansas took major financial hits last year, both are banking on change bringing a brighter future.


Missouri’s total bottom-line hit for 2011-12 was $16.2 million in the red, and the Tigers weren’t blind-sided.

“It was what we projected,” said Tim Hickman, Missouri’s senior associate director for operations.

Besides losing on the Big 12 income, Missouri ran at a small operating loss, as it did in 2011 and 2010. Also, the school took some revenue from previous years to improve the gymnastics facility.

Missouri also believed it would share in some additional Big 12 income, a piece of the $45 million signing bonus the league received from Fox. But the timing worked against the Tigers.

“We left before it kicked in and didn’t get a part of that,” Hickman said.

The university will help the athletic department cover its debt, and athletic director Mike Alden said his department will begin paying back Missouri starting in 2016.

By then, the Tigers, who entered the Southeastern Conference as an equal share partner, will have collected four years worth of distribution from the conference. Last year, SEC schools received about $20 million from the conference office. But industry analysts have reported the SEC will be in a position to distribute as much as $35 million per school in two years when new television deals are struck.

“By fiscal year 2015, we expect conference revenue to kick up enough to start generating a higher positive cash flow,” Hickman said.

Also, Missouri has received three major donations totally $45 million, including $30 million from a group of anonymous donors called the Kansas City Sports Trust, but Hickman said the money from those donations won’t be reflected on the school’s fiscal reports until 2014.


At Kansas, basketball ticket revenue for 2011-12 of about $12 million nearly doubled football ticket sales of $6.5 million. That was the 2011 football season, Gill’s second and final year. By firing Gill after the 2011 season, Kansas was on the hook for the remainder of Gill’s deal, $2 million annually for three years, plus the contracts of the assistant coaches.

Add in the severance for former coach Mark Mangino, who resigned under pressure following the 2009 season, KU has paid $9 million in contracts to football coaches after they were no longer coaching the Jayhawks.

The buyout money was mostly raised through donors. For the past six years, the school has paid its head football coach between $2.2 million and $2.5 million annually.

Current coach Charlie Weis is in the second of a five-year deal that pays him $2.5 million per year.

“Football has always been critical, and conference realignment had just reinforced how much football is the lifeblood of college athletics,” Zenger said.

But Kansas also pays for success. The salary and benefits of basketball coach Bill Self climbed to $4,757,526 for 2011-12, the season that ended with the Jayhawks playing for the national championship.


Kansas State reported a record amount of revenue from conference and NCAA sources — $22 million.

Currie said the Wildcats included income from additional sources on that ledger, such as bowl expense reimbursement from the conference and student-athlete opportunity income from the NCAA.

The Big 12 portion of that income was announced at last year’s annual spring meeting as a record $19 million payout. The money distributed by the Big 12, in almost equal shares, comes from television contracts, bowl games and the NCAA Tournament, most prominently men’s basketball.

But the Big 12’s 2011-12 tax return shows no more than $14.5 million was paid to any school, and Kansas State’s take was a shade less than $14 million.

So, what’s the difference?

It’s the bonus money, the income that Missouri didn’t receive.

Steve Pace, the Big 12’s chief financial officer, said the $45 million up-front money is considered deferred revenue. The Big 12 agreed to a 13-year deal with Fox in 2011, and last year reached agreements with Fox and ESPN to run concurrently through 2025 with a combined value of about $2.5 billion.

But $45 million of that was paid up front. The eight schools that remained in the Big 12 received the money in 2011-12, which pushed their league-distributed income to about $19 million each.

Deferred revenue is counted differently, Pace said. It’s money that would have to be returned if terms of the contract aren’t fulfilled.

Kansas only reported $14 million in conference revenue in 2011-12 but actually received $19.6 million in cash distributions from the Big 12. KU will recognize the $5.3 million in deferred revenue over the life of the 13-year TV contract instead of in one lump sum.

In Manhattan, the effect of the revenue is clearly visible upon entering Bramlage Coliseum from the east. As you walk past the basketball practice facility you see the cranes rising high above the football stadium’s press box.

“You have to keep improving,” Currie said.

And that takes money.

The Star’s Rustin Dodd and Terez A. Paylor contributed to this story. To reach Blair Kerkhoff, call 816-234-4730 or send email to bkerkhoff@kcstar.com. Follow him at twitter.com/BlairKerkhoff.

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