Why UT loses money

The Georgia athletic department had an operating profit of $23.9 million dollars for the fiscal year 2005.

The Tennessee athletic department had to borrow $1.39 million from the university to pay off Buzz Peterson's buyout.

How can Georgia be rolling in money and Tennessee be losing money?

Glad you asked.

The comparison, in many respects, is apples to oranges.

What Georgia has done is commendable. It led the nation with the highest surplus among athletic departments, according to the Atlanta Journal Constitution.

But the difference in what Georgia and Tennessee did last year was not the equivalent of more than $25 million. That's because of differences in accounting as well as donations, taxes and salaries.

Here is a closer look at the numbers.

Georgia doesn't count a $6 million annual debt service against its athletic department budget, according to UT athletic director Mike Hamilton. UT has an annual debt service of $8 million, which does count against the athletic department ledger.

The athletic department also pays $1.125 million in annual debt service on university parking garages.

Georgia has a seven-percent state income tax. UT has a 14 percent state income tax and pays $3.25 million a year in taxes.

Georgia gets $3 million from student fees and charges students $7 to attend football games, generating about $500,000. The UT women's athletic department gets $1 million from student fees and students are not charged to attend football games.

Georgia recruits mostly in-state athletes, thus has a lower budget for recruiting and scholarship monies. About 85 percent of UT's student-athletes (78 percent men, 92 percent women) are from out of state; about 85 percent of Georgia's student-athletes are from instate. Georgia also waives out-of-state tuition for female athletes. UT does not. If UT did, it would be a savings of about $1.2 million.

All Georgia football season tickets require a donation resulting in $22 million, which is $7.5 million more than UT generates because UT doesn't require a donation for all tickets. UT also forfeits about $5.5 million because of benefits to employees and students through free or reduced ticket prices.

Georgia donates about $50,000 to its university for non-athletic scholarship. UT donates $1.375 million.

UT donates $825,000 in travel and scholarship expenses for the Pride of the Southland Band. Georgia donates about $550,000.

UT sells at face value 16,000 tickets to the alumni association for academic fundraising purposes that generate some $8 million for the university. Only UT and Notre Dame have such a practice, according to Bill Myers, UT's chief financial officer.

The top three head coaching salaries at UT for 2004-05 totaled $3.7 million -- $2.05 million for the football coach, $924,500 for the women's basketball coach, $800,000 for the men's basketball coach. Those coaches at Georgia made about $2.7 million.

Georgia's $23.9 million profit was well ahead of Michigan's $17.1 million. Wisconsin was third ($15.8 million) followed by Texas ($15.3 million) and Alabama ($12.5 million). Texas had $89.7 million in revenues, Alabama $62.3 million.

Georgia had revenues of $68.8 million and expenses of $44.9 million. The cash cow was football, which had $50.9 million in revenues, $12.5 million in expenses for a profit of $38.4 million.

Tennessee showed revenues of about $20 million in football, but, unlike Georgia, doesn't count donations, marketing, concessions, souvenirs, TV revenue, SEC revenue sharing and other items in football revenues.

Myers said UT could get close to $50 million in football revenues if it used the same accounting system as Georgia.

Georgia and Tennessee have about the same revenue: over $68 million. But Georgia's expenses are $44.8 million compared to UT's, which exceeds $68 million..

``Georgia has done a good job,'' Myers said. ``They've got a handle on their expenses. Some of their expenses are smaller because they have a smaller stadium, they have more regional travel and they have Hartsfield airport so they can get much cheaper flights than you can out of Knoxville.''

And those travel expenses can add up.

``They may tell a softball or volleyball coach, `You're not traveling to the West Coast,''' Myers said. ``We have 20 sports and we try to be nationally competitive in each one. That requires travel nationally. But I doubt very seriously Georgia allows teams to travel to the West Coast.''

Because of the surplus, Georgia was able to pay outright for new scoreboards and video boards at various sporting venues. It also is in the process of buying a new plane for as much as $2 million. And it reduced its long-term debt by $10 million.

But as we mentioned earlier, it's all about your accounting procedures.

And the bottom line is, Georgia's athletic budget isn't much different from Tennessee's, not when you make an apples to apples comparison.


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