22 Million Cap
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The Artist’s head is about to explode. Surely TJ could raise $20 mm every year no problem.
Jurich already did. I sent an email to the Trustees and the athletics board last week saying as much...
Subject: “We don’t have $20 million sitting around…”
...AD josh Heird was 100% correct with this statement a few days ago. A look at his department’s financial statements the last several years confirms that. We've run operating deficits five out of the last six years. Money saved has turned into money spent.
The graph at the bottom of this email is ULAA revenues under the prior regime as reported in U of L’s fiscal reports. Many recall former President James Ramsey referring to a trend like this as “trajectory.” The compounded annual revenue growth rate for the 13-year period in the graph was 8.4%.
Athletics’ problem when the new regime took over was it stopped growing. Three years later, revenue was increasing by an average of 1.8% annually. Through last year that growth rate has still not increased. Revenues have actually been in decline after adjusting for inflation.
And this wasn’t a Covid issue. Revenue growth immediately and significantly declined in fiscal year 2018, three years before Covid.
The differences in these growth percentages yield staggering dollar amounts. The slowdown in revenue growth the first three years under the new regime produced a $60 million revenue shortfall compared to trend. $60 million divided by three years is the $20 million annually that we need.
Fast forward to now, we’re down over $200 million in combined revenue since 2017.
In 2024, we complain about not having the money to compete with the best athletic programs in the country. That wasn’t always the case. We had the money, or we raised it. We didn’t spin our wheels running off longtime fans and donors while hiring and firing coaches and paying their buyouts.
That’s the modern U of L athletic department, and it needs money.
Subject: “We don’t have $20 million sitting around…”
...AD josh Heird was 100% correct with this statement a few days ago. A look at his department’s financial statements the last several years confirms that. We've run operating deficits five out of the last six years. Money saved has turned into money spent.
The graph at the bottom of this email is ULAA revenues under the prior regime as reported in U of L’s fiscal reports. Many recall former President James Ramsey referring to a trend like this as “trajectory.” The compounded annual revenue growth rate for the 13-year period in the graph was 8.4%.
Athletics’ problem when the new regime took over was it stopped growing. Three years later, revenue was increasing by an average of 1.8% annually. Through last year that growth rate has still not increased. Revenues have actually been in decline after adjusting for inflation.
And this wasn’t a Covid issue. Revenue growth immediately and significantly declined in fiscal year 2018, three years before Covid.
The differences in these growth percentages yield staggering dollar amounts. The slowdown in revenue growth the first three years under the new regime produced a $60 million revenue shortfall compared to trend. $60 million divided by three years is the $20 million annually that we need.
Fast forward to now, we’re down over $200 million in combined revenue since 2017.
In 2024, we complain about not having the money to compete with the best athletic programs in the country. That wasn’t always the case. We had the money, or we raised it. We didn’t spin our wheels running off longtime fans and donors while hiring and firing coaches and paying their buyouts.
That’s the modern U of L athletic department, and it needs money.
Interesting is the term “revenue growth”. Revenues are growing, but more slowly. The problem is that the $20mm per year is ON TOP of current expenditure. I seriously doubt that revenue curve would have continued in the years following TJ’s departure. We just don’t have a big enough or rich enough fan or corporate base to do that. We are actually punching way above our weight, and Jurich (and many others) deserve credit there. But I don’t think there’s a chance Jurich raises an extra 20 mil every year. We would need to build up nearly a $500mm Endowment to produce that much through ROI. Unless Congress steps in to force revenue sharing (highly doubtful) I don’t see how we don’t keep from slipping to a second tier, Jurich or no Jurich.Jurich already did. I sent an email to the Trustees and the athletics board last week saying as much...
Subject: “We don’t have $20 million sitting around…”
...AD josh Heird was 100% correct with this statement a few days ago. A look at his department’s financial statements the last several years confirms that. We've run operating deficits five out of the last six years. Money saved has turned into money spent.
The graph at the bottom of this email is ULAA revenues under the prior regime as reported in U of L’s fiscal reports. Many recall former President James Ramsey referring to a trend like this as “trajectory.” The compounded annual revenue growth rate for the 13-year period in the graph was 8.4%.
Athletics’ problem when the new regime took over was it stopped growing. Three years later, revenue was increasing by an average of 1.8% annually. Through last year that growth rate has still not increased. Revenues have actually been in decline after adjusting for inflation.
And this wasn’t a Covid issue. Revenue growth immediately and significantly declined in fiscal year 2018, three years before Covid.
The differences in these growth percentages yield staggering dollar amounts. The slowdown in revenue growth the first three years under the new regime produced a $60 million revenue shortfall compared to trend. $60 million divided by three years is the $20 million annually that we need.
Fast forward to now, we’re down over $200 million in combined revenue since 2017.
In 2024, we complain about not having the money to compete with the best athletic programs in the country. That wasn’t always the case. We had the money, or we raised it. We didn’t spin our wheels running off longtime fans and donors while hiring and firing coaches and paying their buyouts.
That’s the modern U of L athletic department, and it needs money.
There's no reason to believe that any "trajectory" we were on wouldn't have continued. That's not 13 months of data prior to 2018, it's 13 years. The burden of proof is on anyone alleging otherwise.
You notice were down $60 million vs trend the first three years (2018-2020). Extrapolating no more than three years from 13 isn't a leap of faith. And that was pre Covid.
Not to mention, our "hard right turn" as I like to call it was immediate and obvious. The new regime didn't wait around proving they couldn't raise money. Financial problems ensued right away which should have revealed to anyone the direction we were headed...
You notice were down $60 million vs trend the first three years (2018-2020). Extrapolating no more than three years from 13 isn't a leap of faith. And that was pre Covid.
Not to mention, our "hard right turn" as I like to call it was immediate and obvious. The new regime didn't wait around proving they couldn't raise money. Financial problems ensued right away which should have revealed to anyone the direction we were headed...
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Predicting the present is the worst mistake any analyst can make. As far as reasons- I just gave you a big one- the limited size of UofL’s fan base, donor base, national appeal. Lacking membership in the B1G or $EC, that trajectory continuing is unlikely. Heck, UofL is only the second team in a small state. Given those facts, Jurich did a good job. But there is no basis for simply extrapolating that line.There's no reason to believe that any "trajectory" we were on wouldn't have continued. That's not 13 months of data prior to 2018, it's 13 years. The burden of proof is on anyone alleging otherwise.
You notice were down $60 million vs trend the first three years (2018-2020). Extrapolating no more than three years from 13 isn't a leap of faith. And that was pre Covid.
Not to mention, our "hard right turn" as I like to call it was immediate and obvious. The new regime didn't wait around proving they couldn't raise money. Financial problems ensued right away which should have revealed to anyone the direction we were headed...
All the Big 12 and ACC schools are already in the second tier. Financially. Including Florida State and Clemson. That's 33 schools who have no chance of complying with the initially proposed NIL-$$ distribution fix. And the 33-school number doesn't include about half the schools in the Big Ten and SEC which also have close to no chance of complying. But at least the B1G/SEC schools will have ~$8m more each season from nCFP distributions, plus ~$35-40m more each season from vastly more lucrative ESPN/Fox/CBS media carriage deals.
ACC/B12 schools have zero chance of finding and paying that extra $20-22m per season expense. That includes Kansas, North Carolina, Duke, Miami, Virginia and VT, FSU, Clemson, Georgia Tech, Syracuse, K-State, Arizona, Utah, TCU, BYU etc etc.
The answer in about 2 years is an anti-trust protected University Sports League of currently undetermined size. It may embrace FB, MBB, WBB. It would likely have a limited-union. It will need to have protections to operate with its own rules. That's probably what's coming. I just hope that college team fans will support it.
I can't speak for other schools nor can anyone else if you don't have their GAAP financial reports. All I can do is look at our own--which we have--and point out why we don't have the resources we need. In our situation, it's obvious.
And none of those "facts" are new since 2017 when U of L was rocking financially. Again, the hard right turn we took in our finances was immediate and significant, as our net position shows...
I have a question? If the court ruling allows universities to directly pay athletes won't schools that get money from state budgets/legislatures need approval from the government to do so? This is different from private individuals, companies and groups funding NIL deals.
Be interesting to see if any candidates in this election cycle run on a platform of giving athlete salary money to state universities. Private schools may not have to worry about that.
Be interesting to see if any candidates in this election cycle run on a platform of giving athlete salary money to state universities. Private schools may not have to worry about that.
We know what your take is. Pick a different horse, that one is dead and continually beating it is only a matter of self gratification. And just as a matter of actual fact, what you "believe" is a statement of faith, not actual fact.
This is a discussion of revenue. I don’t recall covering that subject before.
I’m also basing my conclusions on data, not opinions. And I was called out in post #4…
I’m also basing my conclusions on data, not opinions. And I was called out in post #4…
The point is, there’s a cap on UofL, I don’t care who is running things, that is lower than many of our peers. UofL is not alone in this regard.
No question, there are diminishing returns at some point. That's not the issue here.
We didn't mysteriously and unexpectedly hit that point in 2017-18. In fact, there were many people in this fanbase who confidently predicted that things would continue rocking along under new management. Where are those people now?...
We didn't mysteriously and unexpectedly hit that point in 2017-18. In fact, there were many people in this fanbase who confidently predicted that things would continue rocking along under new management. Where are those people now?...
Maybe I missed the point of the original post. Universities can now legally pay athletes up to 22 million per year. That we, and probably a lot of other schools, don’t have the money came later.
What schools face now is how to operate within a twisted mess of State Legislature restrictions on college expenses and hiring. Not to mention conference rules on maintaining a full athletic program.
If athletes are now employees, are hiring and human resource policies in place? Do we publish job openings for Quarterbacks and Basketball Center and take resumes ? Pretty sure the ladies and lawyers are waiting to see how the cash is split for men’s and women’s teams too. Policy varies state to state on some things. Private universities ( Notre Dame) are free to start writing checks tomorrow if they have the cash. Can’t wait to hear which state university pays the first athlete. My money would be a state school in Florida or Texas.
What schools face now is how to operate within a twisted mess of State Legislature restrictions on college expenses and hiring. Not to mention conference rules on maintaining a full athletic program.
If athletes are now employees, are hiring and human resource policies in place? Do we publish job openings for Quarterbacks and Basketball Center and take resumes ? Pretty sure the ladies and lawyers are waiting to see how the cash is split for men’s and women’s teams too. Policy varies state to state on some things. Private universities ( Notre Dame) are free to start writing checks tomorrow if they have the cash. Can’t wait to hear which state university pays the first athlete. My money would be a state school in Florida or Texas.
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It could be a discussion about the phases of the moon, and your conclusion would be the same.
“The moon was significantly bigger and more visible when Jurich was in charge and don’t even get me started on the color of the harvest moon. Ever since the clown show took over - the moon has been an unmitigated disaster!”
Based on this info:
NCAA Finances: Revenue & Expenses by School - USA TODAY
Which are the most profitable college athletic programs in the country? See a ranked listed, including total revenue and expenses. Brought to you by USA TODAY.
sports.usatoday.com
Only Indiana, Georgia, Ohio State, Auburn and Purdue profited over $22M in the latest numbers.
As for UofL, the good news is revenues are in the Top 25 of revenue at about $150M, but with our expenses we profited only $6M. That's a huge amount to make up between $22M and $6M just to break even.
I wonder how these numbers fit in with the rest of the University's earnings and whether they can move some numbers around to make it work. They can probably find places to cut expenses. Can/will boosters cover the difference?
My guess is ticket prices are going WAY up again in the not too distant future.
It seems like the days of profitability for almost all college athletic programs outside of the B1G/SEC are coming to a close.
NCAA financial numbers do not conform to GAAP accounting. It's how a school like U of L can book a "profit" while our net position (NP) is in close to an ANNUAL decline. See post #7, the white data points.
Change in NP annually is the surplus/deficit of revenues vs expenses for that year.
Our NP has declined by almost FIFTY PERCENT in inflation adjusted dollars since 2017. That's the last black data point compared to the last white data point.
No accounting in the world--except for the NCAA's--is gonna call that a profitable enterprise. If that's what your argument is as far as U of L is concerned, you or whoever told you that is wrong.
And to get back to the subject, it's why we "don't have $20 million sitting around." For once, I agree with Josh...
Change in NP annually is the surplus/deficit of revenues vs expenses for that year.
Our NP has declined by almost FIFTY PERCENT in inflation adjusted dollars since 2017. That's the last black data point compared to the last white data point.
No accounting in the world--except for the NCAA's--is gonna call that a profitable enterprise. If that's what your argument is as far as U of L is concerned, you or whoever told you that is wrong.
And to get back to the subject, it's why we "don't have $20 million sitting around." For once, I agree with Josh...
Interesting article thanks for sĥaring.Based on this info:
NCAA Finances: Revenue & Expenses by School - USA TODAY
Which are the most profitable college athletic programs in the country? See a ranked listed, including total revenue and expenses. Brought to you by USA TODAY.
Only Indiana, Georgia, Ohio State, Auburn and Purdue profited over $22M in the latest numbers.
As for UofL, the good news is revenues are in the Top 25 of revenue at about $150M, but with our expenses we profited only $6M. That's a huge amount to make up between $22M and $6M just to break even.
I wonder how these numbers fit in with the rest of the University's earnings and whether they can move some numbers around to make it work. They can probably find places to cut expenses. Can/will boosters cover the difference?
My guess is ticket prices are going WAY up again in the not too distant future.
It seems like the days of profitability for almost all college athletic programs outside of the B1G/SEC are coming to a close.
To me, one of the interesting stats from that report is that we're Top 25 in revenue. That gives me some small hope we'd get invited to the 'super conference' or whatever is coming next.
The “net position” can decline and still be positive (revenue > expenditures). You’re treating a reduced net position as a loss, which isn’t correct. Of course, if the decline continues it will eventually become a loss, I’ll give you that. UofL faces some hard decisions regarding the athletic department. The athletes (and coaches) must under stand that there’s no free lunch, and if they are to be paid employees, many of the perks they got tax-free (like, for example, room &board) will have to be born by the athletes. It will be that way at a lot of places.
Better check your nonprofit accounting...
The increase/decrease in NP is exactly the excess/deficit of revenues vs expenses. See page 7 in the last ULAA annual report. LINK
In millions, total operating and nonoperating revenues were $97.5 and $34.1, respectively. Total operating expenses were $134.8. The change in NP at the bottom of this statement was $97.5 + 34.1 - 134.8 = MINUS 3.2, not including the accounting adjustment of MINUS 1.4.
Therefore, U of L's change in NP last year was MINUS $4.68 million.
You can see from this one statement that U of L's net position is in regular decline, that is, expenses exceed revenues. As the above graph shows, it was also lower in FY2022 and 2021.
In fact, U of L has only booked one year of annual "profit" since the new regime took over. I'll ask again, how the hell can that be considered profitable?...
