And realizing it or not, U of L is way down this road already. I’m breaking down my analysis into a few different posts to hopefully make it easier to digest. And I start with one of my all-time favorite subjects--as I used to call it--“Bailout Arena.”
STEP 1: MOVE INTO AN ARENA THAT PUTS PRESSURE ON EVERYONE’S FINANCES
At this point, I doubt anyone would disagree that U of L basketball and the arena are joined at the hip. I always thought the arena was gonna be a problem that would end up biting us, and you could make a pretty strong argument it’s why Jurich is no longer here. But after ten-plus years, I don’t have to arm wave or pound the table about the arena. ULAA financials mostly tell the story.
Here’s a chart that contains data from the ULAA annual reports as far back as U of L archives these reports publicly. The basketball teams played their final season at Freedom Hall in fiscal year 2010. Those numbers correspond to the single large data point on each plot. The colored part of each line is our financial results at the downtown arena, the black line segments at Freedom Hall. All data are inflation adjusted to 2020 dollars, and I left off the Covid (2021) data points that skew each plot.
In the decade since we moved men’s and women’s basketball into the downtown arena, total basketball revenues have increased from $16.5 to $19.3 million, a gain of 17% in real, inflation adjusted dollars. But expenses increased by 49%, resulting in a corresponding DECLINE in operating profit of almost 25%. ULAA doesn’t recognize profit; the best way to think of this decline is how much less money is used to fund other sports and overheads in athletics. In other words, the cash cow for athletics has gotten significantly smaller.
The data in 2017 are useful--and I therefore flagged them--as the year prior to Tyra’s arrival and the new regime takeover. Revenues at that point were up 36% on a real basis with the move downtown, and expenses were up 59%. The difference again, operating profit, was up a very modest 5%. The dataset is limited prior to 2010, but operating profit was up by 145% over the last five years (2005-2010) playing basketball at Freedom Hall.
So, even under Jurich, our growth in basketball “profitability” was slowing considerably at the downtown arena, and I believe he and Doc Ramsey knew that would be a risk. Operating profits are down dramatically since he left, by 28% in just the three years shown (2017-2020). Gauging from attendance, I believe this year’s results will extend that decline.
Next up, how much of the basketball expenses are used to actually support men’s and women’s basketball? Come back to this thread in a couple days to find out…
STEP 1: MOVE INTO AN ARENA THAT PUTS PRESSURE ON EVERYONE’S FINANCES
At this point, I doubt anyone would disagree that U of L basketball and the arena are joined at the hip. I always thought the arena was gonna be a problem that would end up biting us, and you could make a pretty strong argument it’s why Jurich is no longer here. But after ten-plus years, I don’t have to arm wave or pound the table about the arena. ULAA financials mostly tell the story.
Here’s a chart that contains data from the ULAA annual reports as far back as U of L archives these reports publicly. The basketball teams played their final season at Freedom Hall in fiscal year 2010. Those numbers correspond to the single large data point on each plot. The colored part of each line is our financial results at the downtown arena, the black line segments at Freedom Hall. All data are inflation adjusted to 2020 dollars, and I left off the Covid (2021) data points that skew each plot.
The data in 2017 are useful--and I therefore flagged them--as the year prior to Tyra’s arrival and the new regime takeover. Revenues at that point were up 36% on a real basis with the move downtown, and expenses were up 59%. The difference again, operating profit, was up a very modest 5%. The dataset is limited prior to 2010, but operating profit was up by 145% over the last five years (2005-2010) playing basketball at Freedom Hall.
So, even under Jurich, our growth in basketball “profitability” was slowing considerably at the downtown arena, and I believe he and Doc Ramsey knew that would be a risk. Operating profits are down dramatically since he left, by 28% in just the three years shown (2017-2020). Gauging from attendance, I believe this year’s results will extend that decline.
Next up, how much of the basketball expenses are used to actually support men’s and women’s basketball? Come back to this thread in a couple days to find out…
