Each year lately, we hear about the plan to reduce the athletics debt at Washington State University.
Each year, the athletics department’s accumulated deficit – the amount it “owes” to other departments at the school – grows. Today, for example, the school’s Board of Regents is expected to hear a report that pegs the sports debt at $103 million by 2023, significantly higher than last year’s estimate.
And yet, in no year does the plan include reducing spending in sports at WSU. Not in past years, and not in future years, so far. Sports are too vital to the university, officials say, and the Joneses must be kept up with.
“The most damaging thing to the university is a failed athletics program,” said athletic director Pat Chun on Thursday, adding, “Athletics at Washington State is the most efficient Power 5 program in the country, relative to expenditures.”
That means that WSU spends less on sports than any other school in the biggest five athletic conferences.
Less than everybody else, but more than it has.
Chun and other WSU officials will present the latest budget picture to the regents at a retreat in the Tri-Cities. The bottom line for athletics is this: The accumulated debt is accumulating more than expected.
Last year, the university forecast an $85 million deficit for athletics by 2023. Now that figure is projected at $103 million.
Part of that is a result of an accounting change – including capital projects, which were not included before. Part of the increase is tied to the departure of a basketball coach and arrival of a new one – WSU will essentially pay two coaches for a few years. Part is a result of hoped-for fundraising that didn’t materialize, such as the sale of naming rights on some facilities.
The athletics debt is the biggest challenge in the university’s overall work to steady its financial ship, which grew leaks in the hull during the tenure of the late President Elson Floyd. WSU is in the midst of a three-year plan to bring every department into the black; with the exception of athletics and the medical school, the university is on target to hit that goal, said Stacy Pearson, vice president for finance and administration.
The plan for athletics is to balance its budget by 2023. An annual deficit of roughly $9 million in each of the next two years is forecast, before the deficits drop and turn into a surplus. But even as the department moves toward that goal, it carries debt from years of spending millions into the red, and will be expected, eventually, to repay it.
“It accumulates,” said Phil Weiler, vice president of marketing and communications. “It doesn’t go away.”
That balance has grown and grown. It is estimated to reach $78 million for fiscal year 2019; $94.4 million in 2020; $99.7 million in 2021; and $103 million in 2022. The following year, the projections call for WSU athletics to be in the black and for the carried debt to shrink a bit.
The goal at that point will be for athletics to shift its focus not to retiring that deficit, but to building up reserves, Weiler said. Then, at some point in the future, athletics will start “chipping away” at the debt.
The plan to improve the fiscal health of athletics leans entirely on raising more money – something which becomes easier when marquee programs are successful, as last year’s football team was. Chun said that successful sports programs help the entire university, from enrollments to alumni engagement to donations. He said that he has turned over a significant part of the staff responsible for raising money, maximizing ticket sales and other revenue-generating activities, and has a team in place and a plan to start bringing in more money.
The current budget calls for donations to athletics to increase from $8.7 million in fiscal 2019 to more than $11 million in 2024. The current fiscal year record for such donations is $7.76 million, set in Chun’s first year on the job.
It also calls for overall athletics spending to increase from $77 million a year to $85 million a year over that period.
The debt grew over a period of years – thanks in part to a shortfall in expected revenues from a TV deal, and thanks to other big-spending decisions made by people who are no longer at the university. Chun, Pearson and others in President Kirk Schulz’s administration are trying to address problems they didn’t create.
Pearson notes that the kinds of budget decisions that were made to bolster athletics – relying upon the reserves of healthier departments to reinforce others – aren’t unusual in large organizations. But there is an effect – the money shifted to sports isn’t available for other purposes.
The Housing and Dining Services department has been the biggest contributor to athletics; transfers from that department are expected to reach $59 million this year. Maintenance projects have been postponed in that department in the past two years as result; some of those projects may be up for funding in the upcoming year, Pearson said.
“We made a financial decision to say we’re going to stop these projects for now and get the university in a better financial situation,” she said. “This is a common (strategy) at institutions in financial distress.”
The university remains committed to a plan that does not include cost-cutting in athletics – not even paying lip service to the idea. Chun reiterated that other big-time athletic programs spend more and that WSU spends less than any other school among the Power 5.
Which is true. Less than the others, but more than it has.
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