Rising Fiscal Tide

West Virginia's athletic deficit for the 2011-12 season was met with predictions of gloom and doom in some quarters, despite sound reasons for the one-year negative numbers. This year's figures, which show more than $4.2 million in profit, back up the school's rationale, and support the moves made by the WVU Athletic Department.

The department's revenue was $77,706,696 during the 2012-13 fiscal year, compared to operating expenses of $73,501,593, leaving a positive margin of $4,205,104.

A year ago, the department posted a deficit of nearly $13 million, but much of that was due to the one-time exit fee paid to the Big East conference, as well hefty chunks assigned to facility depreciation and other non-cash items.

Interestingly, the largest source of income in the past year's revenue stream came from contributions, rather than ticket sales. Given WVU's rather disappointing seasons in its two cash cow sports, football and men's basketball, the increase in donations is somewhat surprising.

"Now that our budget numbers are in, I want to say how very pleased and proud I am of our entire athletic department," WVU Director of Athletics Oliver Luck said. "And, I cannot say enough about the job turned in by our Mountaineer Athletic Club staff to reach record-breaking fundraising numbers for the second straight year. I also want to thank the MAC members, who rallied around us and the many fans who purchased tickets to various athletic events. We all know how important it is to have a self-supporting athletic department, and that goal has been reached once again."

The three largest sources of revenue for the department came from Mountaineer Athletic Club contributions ($23,916,171), ticket sales for all sports ($21,411,615) and conference revenue ($10,354,499).

While the department has turned something of a corner, this doesn't mean that it's all clear sailing from here. Rising costs of tuition, travel, housing and the like will require more money in each succeeding year, as will hoped-for improvements to West Virginia's facilities. For example, turf replacement at Mountaineer Field and the grass practice field will likely be in the $2 million range, and that's just the first in an action list that includes renovations to fan areas at both Mylan Puskar Stadium and the Coliseum, as well as an expansion or replacement of the Natatorium. West Virginia's take from the Big 12 conference will also continue to grow over the next three years until it reaches full share status, but those big ticket items will chew up much of that increase.

Still, there's no doubt that WVU, headed by Luck and President Jim Clements, made the right call in getting West Virginia into the Big 12. While there were, and still are, short term hurdles to overcome, WVU would have been in no position to proceed with any facility enhancements had it not made the move to the Big 12, and would have been facing athletics marginalization had it wound up in the American Athletic Conference, as some of its former Big East conference mates did.

The upshot of the financial picture is one, therefore, of cautious optimism. While costs continue to rise, West Virginia should have the wherewithal to meet those demands, and also continue on a measured course of facility improvements and expansion. West Virginia isn't in the same financial stratosphere as Texas or Oklahoma, but it does appear to be on the path to solid financial footing. That's the first step in being able to compete on the field with other big 12 schools, and while it's certainly not the only factor, it's one that no school can win without in the long run.

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Other statements from WVU's release:

  • The largest operating expense for the department came from compensation ($26,397,507). This line item includes compensation for all coaches, administrators and staff, as well as severance pay. It also includes the accrual for Other Post-Employment Benefits liability as required by the Governmental Accounting Standards Board Statement 45 and the accrual for vacation and compensatory time. While both items are non-cash expenditures, they must be added to compensation operating expenses to be in accordance with generally accepted accounting principles.

  • Two other additional operating expenses, facility management and student aid, combined to make up an additional 27 percent of the department's costs. Facilities maintenance and repair ($10,669,275) were 15 percent of the operating costs, but this category also includes a non-cash expense of $5,259,824 for depreciation, which must be included to be in accordance with GAAP. Making up 12 percent of operating expenditures was student aid ($8,737,980), which covers expenses paid to the University for 358 student-athletes.

  • "The financial statements are prepared in the same categories that are used for the Equity in Athletics Data Analysis (EADA) report that is required by the NCAA each year," said Athletic Business Administrator Dia Fortney. "We employ Clifton, Larson, Allen, LLP (CLA) to complete our annual NCAA Agreed Upon Procedures. CLA reviews our financial processes each year to ensure reliability, accuracy and effective overall financial performance by the department."

  • "Oliver asked all of us to trim our budgets, but do so in a way that would not affect our competitiveness athletically or hinder our student-athletes in the classroom," said Michael Szul, WVU Associate Athletic Director for Business Operations. "The athletic staff worked with the business office to tighten budgets, and along with our MAC donors' generosity, we were able to reach our goal of turning an excess."

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