Red not among UM athletics' financial colors

Self-supporting program has $39.4 million budget

Colleges

May 04, 2004|By Ed Waldman | Ed Waldman,SUN STAFF

The University of Maryland's athletic department stayed out of the red for the 10th consecutive year in 2003, putting it among the minority of Division I departments that make money or break even.

The department's $39.4 million operating budget included a $1.8 million contribution to the College Park campus to help ease the pain caused by state budget cuts. Revenue equaled expenditures in each of the past two fiscal years.

The university provided the figures, which were prepared by the athletic department, at The Sun's request. Last week, the university released the terms of the compensation packages for coaches Gary Williams and Ralph Friedgen in response to a court ruling on The Sun's behalf.

More than half the schools competing in Division I-A had expenses that exceeded revenue by an average of $3.3 million, according to a 2001 report done by the Knight Foundation's Commission on Intercollegiate Athletics. The commission, founded in 1989, acts as a watchdog over college athletics, focusing on issues such as graduation rates and the high finances of university athletic programs.

Maryland athletic director Debbie Yow said one of the big reasons the Terps break even is that they are successful in both football and men's basketball.

"If you look at some of the financial woes faced by a number of Division I-A programs, you'll find that they're successful in either football or basketball, but not in both," she said. "So that becomes a challenge right off the bat."

Yow also cited other "creative approaches to generating revenue" such as outsourcing the Terrapins' marketing and the team store at Comcast Center, cost-saving measures such as finding cheaper janitorial services and ending the practice of letting coaches accrue vacation.

"We have to really think strategically," she said.

The football and men's basketball teams at the university brought in $20.6 million, more than half the revenue used to run the athletic program in 2003, yet spent less than a quarter of the budget. Not including scholarships, the school spent $6.1 million on the football program and $3.2 million on the basketball team in 2003. Maryland directed nearly $6 million to its 25 other intercollegiate sports teams.

"It's not a surprise that there are only two revenue-producing sports in college athletics," said Larry Leckonby, chief financial officer of the Maryland athletic department.

Leckonby also said that about a third of the department's expenditures - about $13 million - are for coaches' salaries and benefits.

William C. Friday, chairman of the Knight Commission and president emeritus of the University of North Carolina, said he thinks only about 30 percent of Division I-A athletic programs operate in the black.

"Of course, [Maryland] had a very good year in basketball, and a good year in football. So it just may be, and I hope it is so. They can demonstrate it can be done," he said. "But the overwhelming majority of institutions in this country are not doing it now."

However, Yow said, she has "a pretty good idea" that in the Atlantic Coast Conference only two or three schools don't balance their athletic budgets: Wake Forest, Duke and possibly N.C. State. An ACC spokesman said that its members don't share their budgets with the league office.

Maryland officials stressed that they use no taxpayer money for athletic department operations. However, the school got $6.4 million in fees in 2003 from the more than 25,000 undergraduate students attending the state's largest public university.

Yow said each student's fee of $280 is not a subsidy.

"It's a transfer of assets," she said. "The students get 4,000 of the best basketball seats in the best basketball arena in the country and [11,000] seats for football and free admission to every other event that we have.

"We could not take the student fee and get all our seats back and make more money selling the seats."

According to the budget documents, in 2003 the athletic department got $6.1 million from donations and $6.3 million from what it calls "other revenue," including corporate sponsorships, licensing and novelty royalties and renting out Comcast Center.

Donations declined 16.8 percent from the previous year, which Terrapin Club president Deborah Potter attributed to Comcast Center, which opened in 2002. The Terrapin Club raises money to pay the athletic department's scholarship bill.

"People were giving more money [in 2002] for the seat assignment process related to Comcast," said Potter, an Anne Arundel County attorney. "It spiked."

The athletic department's 2003 budget of $39.4 million was nearly 17 percent more than the previous year's and more than double the $18.8 million budget that Yow inherited when she became athletic director in August 1994.

Because of a policy dating to the mid-1970s, the athletic departments at all state colleges receive no money from Annapolis for their operating budgets.

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