Since 1995 - Insightful commentary on the Georgia Bulldogs

Post How to make $100 million and still lose money

Tuesday August 28, 2012

An instructive story from Knoxville as the Tennessee athletic department announces a $4 million deficit for the most recent fiscal year. There are several unique circumstances that contributed to the loss including an oppressive tax situation. But the program still took in $106.5 in revenue while spending over $110 million. The program had to dip into its reserves, and it’s taking a look at all areas of the budget, including an annual contribution to the university.

(By contrast, Georgia’s budget for the upcoming year is around $92 million.)

If you wondered whether the turmoil around Tennessee’s big men’s programs contributed to the problem, you’re right: “Those expenses included hefty buyouts to former athletic director Mike Hamilton, football coach Phillip Fulmer, men’s basketball coach Bruce Pearl and baseball coach Todd Raleigh.” This situation handcuffs Tennessee not only in terms of how they’ll evaluate Derek Dooley’s future but also in terms of what they might be able to offer a potential replacement.

While Tennessee’s mess is largely an in-house problem, don’t think that there aren’t also macro issues that could and do affect other SEC programs. Even Florida, facing “a near-stagnant increase of revenue,” has had to dip into its reserves to maintain its own $6 million gift to the school.

The “threat” of just staying home to watch games rather than pay higher ticket prices has been talked about for several years now. With more and more homes enjoying superior HDTV setups and the economy still suffering, even top teams are struggling to sell out games. The SEC, in a token nod to this reality, will allow stadiums to show more than just one replay of even controversial plays. That’s great for those of us in the stands, but it’s not going to do much to get fans off the couch where they already have unlimited replays.

Georgia’s situation remains healthy, at least as of the most recent numbers we have. But even Georgia’s margins will face pressure. The conference distribution now has two more mouths to feed. Sanford Stadium isn’t getting any larger, and season tickets can be had with only a minimum Hartman Fund donation. The lackluster 2012 home schedule has left several thousand tickets unsold. Worse, Georgia faces only six home football games in 2013, and that will mean the loss of several million dollars in ticket sales alone. It will take some planning and tough decisions just to maintain revenue levels at present levels.

One Response to 'How to make $100 million and still lose money'

Subscribe to comments with RSS

  • This is a good thing. Prices need downward pressure. Otherwise they would just keep hiking prices up and up. Eventually economics bites you back. If you don’t show loyalty to the fans, they won’t show it back. No one cries for the airlines when a seat goes unsold.