WSU athletic department finances, a new president and the Pac-12 Networks, oh my!

TUCKED NEAR the end of his recent letter to Coug fans explaining the ins and outs of the athletic department’s annual financial results, Washington State AD Bill Moos mentioned his hope that “the Pac-12 Networks will begin to generate the type of revenue enjoyed by other Power Five conferences” with their networks. That is no casual bit of commentary right there.

The fact WSU athletics has posted and will continue to post large losses – more than $13 million in each of the last two fiscal years – creates interesting questions with a new university president expected on campus soon.

How quickly will the new chief want the deficits paid back to the broader university, which covers them as a type of internal line of credit?  Will he or she be good with shortfalls that are expected to continue to 2019 and perhaps beyond? Will the new president view athletics, like Elson Floyd did, as the "front door of the university" or, as Lane Rawlins did, more like a distraction from the greater mission?

Such sticky questions are why the financial pratfall of the Pac-12 Networks looms so large on the Palouse.

Pac-12 schools have each received a little more than $1 million per year in Pac-12 Networks revenue sharing – a figure, Moos explained, that is about $4 million to $5 million less than was expected when the conference formed its television enterprise.

That chasm is notable because Moos said the expected revenue number was what his department built into its strategic modeling five years ago.

In other words, if you want to know why WSU athletics is deficit spending to the tune of $13 million-plus per year, roughly 30-40 percent of the reason is because the Pac-12 Networks isn’t performing as promised.

Jon Wilner of the Mercury News in San Jose is a devout cruncher of college athletic finances and notes the Pac-12 Networks pales when compared to its Big Ten and SEC counterparts – which generate roughly $5 million to $10 million per school per year – because its subscriber numbers are paltry: 12 million to the 60 million each of the other conferences. The ongoing and much-publicized failure of the Pac-12 to reach a carriage deal with DirecTV speaks to the woes.

So that’s part of it.

The other part of it is plain ol’ fundraising. Or lack thereof.

There are countless reasons to love Bill Moos as athletic director but after nearly six years on the job it’s pretty clear fundraising hasn't been his specialty. That’s not to say he won’t make it rain eventually and, as I understand it, he has redoubled efforts over the last year, but so far only one major gift – Greg Rankich’s $3 million spread over multiple years – has arrived on his watch. Most Pac-12 schools have four or five people doing that amount every year.

It’s important to note that Moos isn’t exactly working with an easy crowd. WSU partisans, compared with their Pac-12 brethren, are notoriously tightfisted when it comes to opening wallets for athletics. Coug fans love to toss a license plate on the car or donate to paint the Space Needle, but reaching deep for game-day excellence is a tougher sell.

That is a growing problem for two reasons:

First, because Moos must use general operating funds to cover the difference between scholarship costs and donations to the Cougar Athletic Fund. In FY15, that chasm amounted to $3.1 million ($9.7 million in costs vs. $6.6 million in donations). WSU is believed to be the only school in the conference whose fans don’t’ donate enough to cover scholarships. “Imperative” was the word Moos used last week to stress the importance of giving to the CAF because scholarships are now approaching $11 million annually. One encouraging note is that the financial numbers WSU released last week covered the fiscal year July 1, 2014 to June 30, 2015, meaning the enthusiasm of the 9-win football season and WSU’s push to increase CAF membership by 1,500 are not factored in.

The second reason Cougar fans’ miserly ways are of increasing concern is this: the athletic department has exhausted bonded financing capacity with construction of the Cougar Football Complex and Martin Stadium premium seating addition – badly needed improvements that now cost athletics about $7.5 million per year in debt service. As a result, other critical facilities needs – namely a new Indoor Practice Facility and baseball clubhouse – will need to be 100 percent financed by donations.

THE ARMS RACE IN COLLEGIATE athletics is not going to subside. Nor are the size of salaries in coaching (WSU athletics spent $10.75 million in FY15 on salaries, benefits and bonuses plus another $1 million in buyouts of dismissed coaches).

Washington State cannot control the revenue stream of the Pac-12 Networks, but Cougar fans – with Moos and his staff prodding and cajoling – can most certainly dictate whether scholarships are fully covered and whether the final $3 million needed for the baseball clubhouse is raised in a timely fashion. The IPF, estimated at roughly $30 million, is a tougher nut to crack, but the bottom line for Cougar fans is this: building a consistently competitive Power Five athletic program, which brings multiple benefits to the broader university, requires, as Moos is fond of saying, “skin in the game.”

FROM THE CF.C ARCHIVES: Bill Moos says fundraising for IPF not yet close

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