A Q&A With MSU Sr. Assoc. AD Duncan McKenzie

Mississippi State Senior Associate Athletic Director/Chief Financial Officer Duncan McKenzie talks about the financial aspect of the Mississippi State Athletic Department.

You played football at Mississippi State. Once you graduated where did you go and how did you wind up back at Mississippi State?
"I graduated here with a Banking and Finance degree and worked for the Federal Land Bank for about a year and a half to two years. I decided that probably was not what I really wanted to do. And I wanted to have some flexibility in my career, so I came back and worked on an Accounting degree.

"Once I graduated I worked for a local CPA firm here in Starkville - Curry, Wofford and Charles. They were former professors at Mississippi State. They basically specialized in telephone company audits. (Two of them retired) and the other partner took over the business and moved his practice to Jackson. I worked down there for a while. But I became engaged and wanted to get off the road traveling so much so I moved back to Starkville and was going to work for Watkins, Ward and Stafford. I worked for them a very short period of time. Then Doug Messer, a guy who I had worked for in athletics while I was in school and was now at (the University of) Texas, called me (about a job). I went on an interview and they hired me as the Assistant Business Manager. I (was later promoted) to Business Manager.

"When Larry (Templeton) became Athletic Director (at Mississippi State) he called me to see if I was interested in coming back home (to Starkville). At first, I wondered if it was the best thing for me to do as far as my career. Tina and I talked about and decided that we did want to live closer to home. The main reason was our family. We both wanted to be around our parents. And living in Texas was a 13-hour drive for us to come back here and visit them. It turned out to be a great decision because my father ended up passing away not too many years after we moved back. So, that time I got to spend with him was really special."

Coming from the University of Texas, an athletic department with a huge budget, to Mississippi State University, a university with a much smaller budget, must have been a little bit of a shock to you.
"Really, there are a lot of similarities. You provide internal controls that help you determine where you are in the budget. And you do all the other things that go along with making sure you stay within that budget. So, regardless the size of the budget you are still doing similar things.

"The difference is when you want to do the big projects (at Mississippi State) you have to go out and raise money to do it, whereas Texas had the resources to do those projects that maybe Mississippi State doesn't have."

You mentioned internal controls. Do you watch the budget daily or weekly?
"We watch it daily. I see every expenditure that we make in our department and most of the deposits except for the ones through the ticket office. Everything is posted daily through the university's computer system. We try to know where we stand on a daily basis.

"Of course, we can't predict the future. I guess that is the challenge in athletics because things can happen so quickly. New things come out or maybe you go to postseason play. There are a lot of unexpected things involved in athletics. You want to plan for them the best you can but you don't always know."

Because some things are so unpredictable, how often do you have to make adjustments in your budget?
"What we try to do is get the (head) coaches involved in it as much as possible because I have found it's best to move as much (budget) management to them than to have me manage every single item.

"If they feel like they are going over budget, say in travel, and they have extra money in say equipment, then they can move the money around within their budget to manage it. We give them a monthly report of their expenses, so they can call it up and look at their line items to see if they need to move money around.

"When I get involved is if something comes through and there is no money in that line item and they send it through without an adjustment, then I'll send it back to them asking them to move money around."

Do you deal directly with the head coaches or someone else within the department, maybe the director of operations of the department?
"I deal with the head coaches."

I would have thought it would be someone other than the head coach.
"They will delegate some of it but it's really the head coaches."

I really wouldn't expect head coaches to totally understand how to deal with a budget since they probably have very little background in accounting.
"What you do is put it in a format that they understand because they may not know how to read balance sheets and other statements. The way I try to explain it to them is like it's their checkbook and this is how much money you have. You simply treat it like it's your money at home."

When and how do you come up with a budget for the different sports departments?
"I probably start working on it in February. And the budgets are normally due sometime in May. Our fiscal year is from July 1 through June 30th.

"We send a request to each coach asking them what they want. And we give them historical information of previous years to help them. Then they will send their requests to us.

"Another aspect of (the budget) that is a big portion of the budget is the scholarships. Right now, we don't know the scholarship costs. So, we have to estimate what they might be.

"We also spend a good deal of time estimating revenue - football ticket sales, basketball ticket sales, baseball ticket sales, SEC money and other things like that."

Looking back at this past season, what was the revenue like?
"This year was interesting because we had a down year. Our individual game sales were really bad. Most of that was due to the visiting teams not bringing many fans at all. And you can't always predict that. But this coming season the visiting teams on our schedule normally travel well. But this year when you are trying to budget revenue you don't know what the economy is going to do and how it will affect ticket sales and donations."

How do teams divide up the ticket sales revenue?
"Some of it is contracted. It's in the game contract how many tickets they receive. And they may need more tickets or they may send some tickets back. But you really don't know how many they sold until November and December."

What's the difference between ticket sales with an SEC school and a non-conference school?
"In SEC games we don't have a guarantee with an SEC team. Whatever they sale (for our home games) they send to us. (In non-conference games) it works differently. Some schools make the visiting team pay them whatever ticket sales they made, then they pay them a guarantee. Or you can net it. If you had a $200,000 guarantee and they sell $150,000 they keep the $150,000 and we pay them the additional $50,000."

How involved are you in the budget when it comes to scheduling games, especially non-conference games?
"Greg (Byrne) does the football scheduling. He talks to me a lot about it. And we give the other coaches (of the other sports) a budget for guarantees."

Expenditure-wise and revenue-wise, how does postseason play affect the budget?
"You probably make some money from the larger bowls, but with the smaller bowl games you are lucky if you break even. I think you hope the (revenue) benefit of bowl games is reflected in season ticket sales the next year.

"And most of the bowl payouts go to the SEC. Then, they divide that up 13 ways. So, even though we didn't go to a bowl game this past season we will still get bowl revenue from the SEC through the shares that the SEC office receives.

"But you still definitely want to go to a bowl game because that will help your season ticket sales."

What about the NCAA basketball tournament?
"With the NCAA tournament we don't benefit from that directly. We get reimbursed for most of the expenses, although not all of them. The way it benefits us is the more (SEC) teams that are in it, the bigger our share is from the SEC. Since we didn't have many teams in it this year, we will receive less money from the SEC."

Talking about revenue, when do you actually receive the different revenues during the year?
"Obviously, season ticket sales are one of them. (Football season ticket) sales for next season (the 2009 season) are coming in right now. And you put that in a deferred income account. Then on July 1st you put it in the next fiscal year. And a good bit of our money - Bulldog Club money and the SEC (payout) - doesn't come in until June 30th. "

Are you able to invest the money received prior to the fiscal year in an account where you can earn some interest on it?
"All the money we collect from ticket sales and those type things go into the university account and it's managed by the university."

Why does the university manage it instead of the athletic department?
"We are just like any other department on campus, just like the English department, the Business School. We follow university guidelines and the state of Mississippi guidelines in everything that we do. It's separated by departments."

Who writes the checks - the athletic department or the university?
"We don't write checks. We send the paperwork to the (university's) controller's office and they issue the checks."

What is the procedure when you want outside work done in the athletic department?
"The university has purchasing rules. There is one bid up to a certain amount, two written quotes up to a certain amount, then the next amount is sent out for written bids. So, it really depends on the amount."

I didn't know the athletic department and the university worked so closely together.
"We are the most audited department on campus. We have so many people involved. We have internal auditors, state auditors, we have an external audit required by the NCAA, the Bulldog Club has auditors, we've had the Department of Education auditors, and IRS audits."

That's a lot of auditors for one department.
"I think the more people who audit you is a good thing because if you are not doing something right, then they are going to let you know. And that provides even more evidence of the guidelines that you have to follow."

We talked about outside contractors. What about work the university does for the athletic department? Do they bill the athletic department for everything they do?
"We pay the campus landscape for maintaining all of our fields. We pay for custodial services. We pay for utilities. If we use them to set up an event we pay for that. We pay for scholarships. We pay for repairs to the physical plant. We pay for office supplies. We even pay the (university) TV Center for their services."

Do you pay a rental for the use of Scott Field?
"No, that's owned by the athletic department."

Is there any facility that you have to pay a rental fee to use?
"(Humphrey) Coliseum is not the athletic department's. The agreement is the concession sales from basketball go to the coliseum. In return, we don't have to pay for the space we use for offices there. They pay for the utilities but we have to pay for custodial services after a game."

What are your thoughts about how the new ESPN/CBS television contract will help Mississippi State financially?
"I think it can help us with some facility improvements, not major projects but some improvements.

"I think it will allow the sports to have more operating money. An example is more recruiting money which will allow the coaches to spread out to a more broader area than before.

"It could also help increase the debt service. What I mean by that is you may be able to incur more debt on a bigger project and use some of that money to pay some of that debt.

"And Greg (Byrne) wants coaches' salaries to be more competitive in the SEC. We are at the bottom in just about all of (the sports)."

Gene Swindoll is the publisher of the GenesPage.com website, the source for Mississippi State sports on the Scout.com sports network. You can contact him by emailing swindoll@genespage.com.

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