This bill requires that the WSU Board of Regents specifically approve, in an open public meeting, the annual budget for
ACTION ITEM #3 2018-2019 Athletics Budget Approval (Joan King) June 8, 2018 TO ALL MEMBERS OF THE BOARD OF REGENTS SUBJECT:
2018-2019 Athletic Budget Approval
PROPOSED:
That the Washington State University Board of Regents: (1) Approve the 2018-2019 WSU Athletics budget; (2) Approve the plan for reducing operating deficits in future fiscal years; and (3) Approve transfers necessary at FY18 year-end to cover the deficit balance.
SUBMITTED BY:
Joan King, Associate Vice President/Chief University Budget Officer
SUPPORTING INFORMATION:
ATTACHMENTS:
Washington State University has implemented a 3-year fiscal health restoration plan and has nearly completed the first year of the plan. As a part of the University’s plan, WSU Athletics has developed a targeted plan to ensure that it will return to an operating breakeven position in the next few years. The Athletics plan also ensures that WSU is fully compliant with Substitute Senate Bill 6493, which was passed by the 65th Legislature during its 2018 regular session. This bill requires certain actions of the boards of the state’s colleges and universities, related to intercollegiate athletics programs. (See SSB 6493, attached.) This bill requires that the WSU Board of Regents specifically approve, in an open public meeting, the annual budget for the Athletics program; the plan for reducing the operating deficits in future fiscal year; and any transfers that are necessary at year-end for WSU Athletics. The three prior fiscal years’ financial statements for the program will also be conspicuously posted to the University’s web site. Attachment A: Substitute Senate Bill 6493 Attachment B: FY15 – FY17 Athletics Actual Revenues and Expenditures
Finance and Compliance Committee – BOR Retreat June 7-8, 2018 Page 1 of 2
Attachment C: FY18 Athletics Budget, including estimates of May and June activity plus FY 2019-2023 Proposed Budgets with breakeven in 20-23 Attachment D: Transfer Process and Projected Amounts, based on financial information as of 4/30/18
Finance and Compliance Committee – BOR Retreat June 7-8, 2018 Page 2 of 2
Washington State University FY15 - FY17 Athletics Actual Revenue & Expenses ( $ M) FY15
Actuals FY16
FY17
REVENUES: 01 - Ticket Sales 02 - Direct State/Gov Support 03 - Student Fees 04 - Direct Inst. Support 05 - Less Xfer to Inst. 06 - Indirect Inst. Support 06A - Debt Service, Lease, Rentals 07 - Guarantee Revenue 08 - Contributions 09 - In-Kind 10 - 3rd Party Compensation 11 - Media Rights 12 - NCAA Distribution 13 - Conference Distribution 14 - Program/Concessions etc. 15 - Royalties/Advert. etc. 16 - Sport Camp Revenue 17 - Endowments 18 - Other Revenue 19 - Bowl Revenue Total Revenue
6.8 1.1 3.7 1.2 0.4 6.4 0.2 17.0 1.3 8.2 0.2 4.0 0.4 0.6 2.4 54.1
5.5 0.8 3.7 0.4 0.3 7.6 0.1 17.9 1.3 9.4 0.2 6.3 0.4 0.6 2.1 1.9 58.8
7.7 1.6 3.3 0.4 0.3 8.1 0.1 18.8 3.2 10.7 0.9 4.4 0.4 0.6 1.4 2.4 64.3
EXPENSES: 20 - Athletic Aid 21 - Guarantee Expense 22 - Coaches Comp: WSU 23 - Coaches Comp: 3rd Party 24 - Admin Comp: WSU 25 - Admin Comp: 3rd Party 26 - Severence 27 - Recruiting 28 - Team Travel 29 - Equipment 30 - Game Expenses 31 - Fund Raising/Marketing 32 - Sport Camp Expense 33 - Spirit Groups 34 - Facilities: Debt/Lease/Rental 35 - Direct Admin Expense 36 - Indirect Inst. Support 37 - Medical/Insurance 38 - Dues & Memberships 39 - Student-Athlete meals 40 - Other Expense 41 - Bowl Expenses Total Expenses
9.7 1.3 10.7 12.1 1.0 1.2 4.0 2.4 2.4 1.9 0.3 0.2 11.5 0.0 1.2 1.1 1.8 4.5 0.0 67.4
11.0 1.7 11.7 12.8 0.0 1.1 4.0 3.0 1.6 2.4 0.3 0.2 9.7 2.3 0.4 1.0 1.8 0.8 4.1 1.7 71.7
10.7 1.6 11.8 13.4 0.1 1.2 4.1 2.0 1.8 2.2 0.3 0.2 9.3 2.4 0.4 0.8 1.7 1.0 4.9 1.9 71.8
Net Operating Income
(13.3)
(12.9)
(7.5)
Cumulative Deficit
(38.6)
(51.5)
(59.0)
Attachment B
Washington State University FY19 through FY23 Athletics Budget ( $ M) REVENUES: 01 - Ticket Sales 02 - Direct State/Gov Support 03 - Student Fees 04 - Direct Inst. Support 05 - Less Xfer to Inst. 06 - Indirect Inst. Support 06A - Debt Service, Lease, Rentals 07 - Guarantee Revenue 08 - Contributions 09 - In-Kind 10 - 3rd Party Compensation 11 - Media Rights 12 - NCAA Distribution 13 - Conference Distribution 14 - Program/Concessions etc. 15 - Royalties/Advert. etc. 16 - Sport Camp Revenue 17 - Endowments 18 - Other Revenue 19 - Bowl Revenue Total Revenue
Estimated FY18 Y-end
Budgets as of 5/25/18 FY20 FY21 FY22
FY23
0.4 0.0 8.2 1.6 19.6 1.3 11.9 0.9 2.9 0.3 0.6 1.9 2.3 65.6
9.5 1.5 3.4 0.4 0.3 7.7 1.6 20.6 1.3 12.1 1.0 4.1 0.3 0.6 1.8 2.5 68.6
8.6 2.3 3.5 0.4 8.7 1.6 21.6 1.3 12.8 1.4 4.2 0.3 0.6 1.7 2.6 71.7
10.3 2.3 3.6 0.4 0.2 9.6 1.6 22.8 1.4 12.5 1.4 4.3 0.3 0.7 1.8 2.7 75.9
10.4 3.2 3.7 0.4 9.9 1.6 23.9 1.4 13.0 1.5 4.4 0.3 0.7 1.8 2.8 79.1
11.5 3.2 3.8 0.5 0.3 10.7 1.6 25.2 1.5 12.9 1.5 4.6 0.3 0.7 1.9 2.9 83.0
EXPENSES: 20 - Athletic Aid 21 - Guarantee Expense 22 - Coaches Comp: WSU 23 - Coaches Comp: 3rd Party 24 - Admin Comp: WSU 25 - Admin Comp: 3rd Party 26 - Severence 27 - Recruiting 28 - Team Travel 29 - Equipment 30 - Game Expenses 31 - Fund Raising/Marketing 32 - Sport Camp Expense 33 - Spirit Groups 34 - Facilities: Debt/Lease/Rental 35 - Direct Admin Expense 36 - Indirect Inst. Support 37 - Medical/Insurance 38 - Dues & Memberships 39 - Student-Athlete meals 40 - Other Expense 41 - Bowl Expenses Total Expenses
10.5 1.7 12.7 13.8 1.0 1.5 4.1 2.3 2.4 2.2 0.3 0.2 9.2 1.7 0.4 0.9 2.2 1.0 4.3 2.4 74.7
11.4 1.7 13.3 14.0 1.5 4.3 2.0 2.4 2.1 0.3 0.2 9.2 1.8 0.4 0.9 2.2 0.9 4.3 2.5 75.3
11.6 1.8 13.8 14.1 1.5 4.6 2.0 2.3 2.2 0.3 0.2 9.2 1.9 0.4 0.9 2.2 1.0 4.4 2.6 77.0
11.9 1.3 14.9 14.3 1.6 4.6 2.0 2.5 2.2 0.3 0.2 9.2 1.9 0.4 1.0 2.3 1.0 4.6 2.7 78.8
12.2 1.8 15.4 14.6 1.6 4.7 2.0 2.6 2.3 0.3 0.2 9.2 1.9 0.4 1.0 2.4 1.0 4.7 2.8 81.1
12.5 1.4 15.9 15.0 1.6 4.8 2.2 2.7 2.3 0.3 0.2 9.2 2.0 0.5 1.0 2.4 1.0 4.8 2.9 82.9
Net Operating Income
(9.1)
(6.7)
(5.3)
(3.0)
(2.0)
0.2
(68.1)
(74.8)
(80.1)
(83.1)
(85.1)
(84.9)
Cumulative Deficit
8.5
FY19
Attachment C
1.6 3.5 -
Washington State University Athletics Transfers at Year End Attachment D ACTUAL FY2014 FY2015 FY2016 Cumulative Athletics operating deficit before transfers (25.3) (38.9) (51.5)
Cash balance FY2017 as of 5/23/18 (59.0) (78.2)
Note: Additional revenues and expenses are expected before the end of the fiscal year. These may change the FY18 results significantly. Three possible scenarios are shown below. Athletic's projection of FY18 (full-year) activity is (9.1 M), which would result in a cumulative deficit of (68.1 M). This is the FY17 cumulative deficit (59.0 M) plus the FY18 projected deficit (9.1 M) after all revenue and expenses have been booked from May and June activity. This actual fiscal year end number will not be known until late in July. Projection Projection Projection 1 2 3 Best Case Midpoint Worst Case Current position for Athletics based on snapshot of cash balance as of May 23, 2018
(78.2)
(78.2)
(78.2)
Possible range of additional anticipated revenue through June, 2018
14.2
13.2
11.7
Possible range of additional anticipated expenses through June, 2018
(2.1)
(3.1)
(4.0)
Anticipated ending balance on 6/30/18 + Transfers required
(66.1)
(68.1)
(70.5)
Transfers to offset deficit at the end of the fiscal year Housing and Dining Parking & Transportation Creamery Building Reserve Misc. Auxiliaries and Self-Sustaining Activities Health and Wellness Services Real Estate Management Total Transfers
44.6 4.8 2.7 8.2 4.7 1.1 66.1
44.6 4.8 2.7 8.2 4.7 3.1 68.1
44.6 4.8 2.7 8.2 4.7 5.5 70.5
WSU & Intercollegiate Athletics: A Closer Look June 8, 2018 Kirk H. Schulz, President Washington State University
Benefits of Pac-12 membership
Benefits of Pac-12 membership
Affiliation with other world-class institutions
Benefits of Pac-12 membership
Boosts student recruitment
Benefits of Pac-12 membership
Tuition and fees paid by student-athletes
Benefits of Pac-12 membership
Boosts economy of Pullman and eastern Washington
Benefits of Pac-12 membership Mid-career alumni median salary 96
95
Boosts career salaries of alumni
94 92
92
90
$ thousands
90 88 86
84
84
83
82 80 78 76 Pac-12
ACC
Big Ten
Big 12
SEC
Builds WSU brand
Builds WSU brand
National TV broadcast Friday night football vs. USC
Cougcenter.com
Builds WSU brand
Ol’ Crimson on ESPN College Game Day
olcrimson.org
Builds WSU brand
Enriches the student experience and Pullman’s college town reputation
Athletic budget: A closer look
Athletic budget: A closer look
WSU revenues vs Power 5 peers, FY17 160 143 140 129 120
100
101
85
98 83
82
80 64
WSU
Average
Iowa State
Average
Ga. Tech
Average
Purdue
20
Mizzou
40
Average
60
Average
$ millions
102
98
0 SEC
Big 10
ACC
Big 12
Pac-12
Athletic budget: A closer look
WSU expenses vs Power 5 peers, FY 17 140 125
124
120 107
104 97
100 86
85
80
74
72
WSU
Average
Ga. Tech
Average
Mizzou
Purdue
20
Average
40
Average
Kansas State
60
Average
$ millions
86
0 Big 10
SEC
Big 12
ACC
Pac-12
Athletic budget: A closer look
Athletics revenues & expenditures, FY13 to FY23 90 80 70
$ millions
60 50 40 30 20 10
0 FY13
FY14
FY15
FY16
FY17
FY18 (estimated)
Revenues
FY19*
Expenses
FY20*
FY21*
FY22*
FY23*
Total cumulative deficit approximately $84.9 M
Athletic budget: A closer look
Projected athletics revenue, FY19: $68.6 million Direct inst. support, 3.4
Bowl revenue, 2.5
Royalties, advertising, etc, 4.1
Media rights, 20.6 Contributions, 7.7
Other sources , 8.7 Conference distribution, 12.1
Ticket sales, 9.5
$ millions
Athletic budget: A closer look
Projected athletics expenses, FY19: $75.3 million Equipment expense, 2 Fundraising & marketing expenses, 2.1 Dues and memberships, 2.2
Guarantee expenses, 1.7 Recruiting, 1.5
Game expenses, 2.4
Administration compensation, 14
Bowl expenses, 2.5
Team travel, 4.3
Coaches compensation, 13.3 Other expenses, 8.8
Facilities: debt/lease/rental, 9.2
Athletics aid, 11.3
$ millions
Athletics budget: A closer look Series 1 7 6.4
Cougar Athletic Fund giving at record level
6
$ millions
5
4
3
2.6
2
1
0 FY10
FY18
Athletics budget: A closer look Series 1 9 8
8
Football gate at record level
7
$ millions
6
5
4
3
2.8
2
1
0 FY10
FY18
Athletics budget: A closer look
Decreased institutional support for athletics contributes to the athletics debt
Building a fiscally sound athletics program
Building a fiscally sound athletics program
4 principles moving forward
Building a fiscally sound athletics program
No. 1: The WSU community must solve the challenges
Building a fiscally sound athletics program
No. 2: Athletics must achieve a balanced budget
Building a fiscally sound athletics program
No. 3: Athletics must build budget reserves
Building a fiscally sound athletics program
No. 4: Athletics will repay central reserves
Looking ahead
Thank you
