Washington Huskies athletic department budget back from the brink

By the end of June, when the 2017 fiscal year comes to a close, the University of Washington athletic department expects to have a surplus of about $2,000.

That sum is, in the overall scope of things, mostly immaterial for an athletic department with revenues of $125 million. Having $2,000 in major college athletics is like the average person finding a couple of pennies under the couch cushions.

Consider, though, where UW was just a year ago, when the athletic department was projecting a 2016 deficit of nearly $15 million. To get to what is essentially a break-even point now is a major turnaround for a department that was in “triage mode” with its budget when athletic director Jennifer Cohen stepped into the role 18 months ago.

“Every decision we made,” Cohen said, “was built around our ability to increase revenues, manage expenses and align. So to be able to go into this year with a projected deficit and cut that and operate with cash flow this year is significant.”

UW ended up with a deficit of about $7.6 million in 2016, and in June 2016 the athletic department was bracing for another loss – projected at $5.6 million – in 2017.

The outlook has changed dramatically.

Football drives the bus

When Cohen was named interim AD in January 2016, the athletic department didn’t have a chief financial officer – the previous CFO stepped down abruptly months earlier – and there were strict department-wide restrictions on spending.

“We had a bunch of people managing it here in triage mode without a lot of support,” she said. “We made a lot of tough decisions during that time. … We cranked down on a lot of things.”

In November 2015, the UW football program, for example, took the unusual step of having players bused from Corvallis to Seattle after a night game against Oregon State, giving up the team’s usual chartered flight (a luxury afforded to most major-college football teams).

How did the department turn the corner so quickly?

“The game-changers,” Cohen said, centered largely on football and fundraising. During her formal introduction as the athletic director in May 2016, at a news conference inside Husky Stadium, Cohen had vowed to reinvigorate the program. “We’re going to get this place rockin’ again,” she promised then.

A year later, the department is right on track.

Last fall, the Huskies won the Pac-12 football championship and advanced to the College Football Playoff for the first time, generating much pent-up excitement from a fan base that hadn’t seen much football success since 2000.

In turn, the football team’s return to prominence helped spur a boost in fundraising, which has become a renewed point of emphasis under Cohen’s watch. Shortly after Cohen was promoted as the full-time AD, she hired Kate Cullen as the department’s new CFO.

The average attendance for UW’s seven home games last fall was 64,589 – up 2,670 from the year before. The gate sales for football were $2.8 million above what UW had budgeted, and UW has also reported strong sales for new season tickets for 2017. In addition, the department beat its fundraising goal by more than $3 million, with $27.7 million in total contributions expected by the end of the 2017 fiscal year.

“We created a new annual fund that we never had before,” Cohen said. “We had projected a $3 million fundraising (gain) the first year – and we ended up doubling that.”

The department also reported $2.6 million in additional revenue from the football team’s appearance in the Peach Bowl.

And another byproduct of that football success were early payouts from season-ticket holders in Husky Stadium’s luxurious Don James Center. Every five years, each season-ticket holder in the James Center is required to pay a donation on top of the price of their tickets, and they have a two-year window in which to make that donation. The surprise of so many paying in the first year brought in $1.5 million more than the AD was anticipating this year, adding to the overall revenue increase.

With added revenues came some unexpected expenses – about $5 million in all for 2017. A large portion of that was related to Cohen’s decision to dismiss men’s basketball coach Lorenzo Romar, who had a $3.2 million buyout in his contract.

New revenue ideas

The Pac-12 distributed about $28.7 million to its 12 member schools, according to the San Jose Mercury News, a number that lags well behind the SEC, Big Ten and Big 12. Closing that gap remains one of the most pressing issues for Pac-12 athletic directors, Cohen said.

In the athletic department’s financial presentation to UW’s Board of Regents in April, the AD’s budget projects a surplus of about $2.1 million for the 2018 fiscal year, but deficits in each of the three years after that – years when the Don James Center contributions are not being paid.

As expenses continue to rise – salaries for UW football assistant coaches, for example, rose from $3.54 million to $4.675 million from 2016 to 2017 – Cohen said the department will explore new revenue streams.

One possibility being studied by UW graduate students is the effects of increased beer and wine sales. Right now, UW has two designated sections inside Husky Stadium dedicated to general beer and wine sales. Cohen said there are no plans to expand that, but more widespread alcohol sales is an approach some 20 Division I schools have tried, she said.

“I am not fundamentally behind any of those ideas yet,” she said. “What I am behind is recognizing that the game-day experience has to constantly be our No. 1 priority – that access to beer and wine seems to be a priority for our fans; that’s why they leave (the stadium) at halftime. I would love to have a secured, intimate game-day experience for Husky Stadium, and at some point in time that may require different offerings.”

Cohen is pleased with the progress made over the past year in balancing the budget, but she said there’s more to be done.

“We still have a lot of work to do,” she said, “and we recognize that the campus expects us to run a solvent business.

“The reality with what we do is it’s volatile,” she added, “and it’s quite frankly pretty unpredictable.”