WSU’s operating loss an investment in future

AS PLANNED, Washington State's athletic department posted a deficit in the last fiscal year, Washington State athletic director Bill Moos told after releasing revenue and expense data for FY 2014. But the loss, driven in large part by debt service on construction projects, was part of what Moos called a "massive investment" to return WSU's operations to competitive standing.

WSU's fiscal year runs from July 1 to June 30, so the FY14 numbers cover the 2013 football season, not the just-concluded season.

The athletic department posted a net loss of $13 million in the period, of which $6.9 million was due to repayment on loans to build the Cougar Football Complex and the premium seating addition to Martin Stadium.

The $13 million loss compares with a $3.6 million loss in FY13. The jump in deficit spending was not unexpected, Moos said, but the size of the loss was bigger than originally forecast because of coaching needs. First, he boosted the pay of Mike Leach and other members of the football staff, such as Joe Salavea, to fend off poachers from other schools, and also paid out $500,000 in coaching bonuses for the New Mexico Bowl. Second, he bought out the remaining two years on Ken Bone's contract ($1.8 million) and then invested heavily in salary in order to lure Ernie Kent and his veteran staff to WSU.

“I think there’s really a positive story here,” said Moos. “We knew we were going to see a deficit, that was in our long range pro forma … President Floyd and I (five years ago) had a shared vision of where we wanted to go with Cougar Athletics and that was to have first-class facilities, hire and retain top-notch coaches and attract outstanding talent.”

This marked the sixth-straight year the athletic department has posted a loss, and Moos said he doesn't expect to return to solvency until FY 2019, or possibly FY 2018 depending on revenue flow.

"This was a very deliberate decision to bite the bullet for a few years in order to create a bright future for Cougar Athletics," Moos said.

He said President Floyd and Board of Regents have backed him every step of the way.

"We were so woefully behind our competition five years ago we felt we had to invest at that time even though we knew we did not have the funds available until down the road to take care of those investments. We were going to get left in the dust. We fortunately got the revenue distribution from our TV contract into equal payments … we felt that would enable us to take care of the debt service and get those facilities done right away.”

THE OTHER SIDE OF THE financial ledger -- revenue -- continues to trend in a positive direction for the department. FY14 revenue was up $2.6 million, to more than $45 million, marking the fourth straight year of revenue growth. Moos said he believes that number, fueled by the Pac-12 television contract, donations and tickets sales, will grow 5 percent to 6 percent a year for the foreseeable future.

“Our average television money from ESPN and Fox is $20.5 million – that’s the average, and we’re only going into the fourth year. We have factored that in year-by-year and it grows dramatically to 26 million at the end of the (12-year) contract. That is quite significant,” Moos said.

Additionally, Moos said they are just starting to see payouts from the Pac-12 Networks: $1.5 million in FY14 compared to zero in FY13. The potential, Moos said, is for that to swell to potentially as much as $7 million-plus per school over time. And the first-ever CFB playoff this season will increase WSU’s take from the Pac-12 by $2.5 million in FY15.

"We're not going to take a step backwards," said Moos. "We have invested heavily in needed infrastructure, facilities, student-athletes, staffing just to name a few that now have Cougar Athletics in position for success. There are no shortcuts. And I believe we are doing it the right way," said Moos.

Other highlights from WSU's spread sheet:

  • Because of the timing of certain gifts to the football construction projects, donations to athletics show a $560,000 drop in FY14, to $7.15 million, from FY13.

  • However, CAF Membership Revenue was $5.6 million in Fiscal ’14 -- a new record. In Fiscal ’13 it was $5.4 million.

  • Moos noted that WSU has invested “heavily in an area that’s very important to me and that’s nutrition,” with the Gray W Legends Lounge in the new Cougar Football Complex and the staff that comes with it (chefs, nutritionists, general manager, etc.)

  • Moos says the plan to return to the positive side of the ledger originally was 2017, but with certain changes coming from NCAA and Pac-12 such as providing the actual cost of attendance to scholarship athletes, the budget projections needed to grow.

  • On the revenue side, the difference between playing Oregon at CenturyLink Field in the 2012 season vs. Stanford there in 2013 was significant. Fueled by attendance of more than 60,000 for that Oregon game vs. 40,000 for Stanford the following year, WSU's total gate receipts in FY14 were down $1.6 million from FY13 even though the Cougs played the same number of home games in each of those seasons.

  • WSU's trip to Auburn to start the 2013 football season added up to a nearly $600,000 increase in road game revenue in the most recent fiscal year.

  • Moos also pointed out Washington State's attendance for football was at 93 percent of capacity - the fourth highest in the Pac-12 -- during the 2014 football season.

  • Moos said that while big strides have been made in recent years, fundraising to cover the cost of athletic scholarships fell $3.5 million short in the most recent fiscal year.

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