College Sports Revenue 2011: The Longhorns’ Big Bucks

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See Also:
- College Sports Revenue 2011: Michigan Money
- College Sports Revenue 2011: Auburn Closes The Bama Gap
- College Sports Revenue 2011: The List
- College Sports Revenue 2011: Changes
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Update (10/30/11): Texas’ total revenue for 2010-2011 came in at $150.3 million. $95.7 million of that was “football revenue” and $24.6 million was “unallocated”. So just an updated frame of reference since the detail below comes from the 2009-2010 EIA report and Texas budget.

The most eye-popping figure on the list of top college athletics programs by revenue is right there at the top – the Texas Longhorns brought in $143.5 million in 2009-10.

Browse the revenue figures down the list and you’ll get an idea of what a huge number that is. Alabama had to see a ton of growth (stadium expansion) from 2008-09 to reach $129 million; Ohio State managed $123 million and the big, tradition-rich fan bases of Michigan and Penn State generated $106 million each. The No. 2 revenue school in the Texas’ conference (Oklahoma) brought in 45% less than the Longhorns.

There’s a tendency to go with the “everything’s bigger in Texas” notion and just accept that the Longhorns – a top-tier but not dominant football program – are going to be the big, big dogs just because they are Texas. But I wondered what, exactly, makes up that $143.5 million in revenue, and conversely how does Texas end up with “just” $114 million in their Equity In Athletics (EIA) expense report, which would lead careless media members to report a rather large “profit” of $29.5 million for Longhorn athletics.

A quick rundown of the EIA numbers Texas reports:

2009-10 Revenue

First off – $93.9 million in “football revenue” is a huge, huge number. It is, in fact, 30% more than the next-biggest “football revenue” school (Alabama) and more than double the amount of all but 15 other schools in the NCAA. Texas football is big, but is it really that big?

The ‘Horns should be pretty comparable to Ohio State – both have massive enrollment and alumni bases, huge stadiums and in 2009 both were conference champions, BCS participants and Top 5 finishers (The Longhorns having lost to Alabama in the BCS title game). Texas likely had a good extra boost from the BCS title game run, though the program’s revenue only grew 3.7% from 2008-09. And they played a conference championship game that generated money for the program.

But Texas also existed then in a conference that didn’t generate great money for its members (but more for Texas) and only hosted six games in Austin that season. Ohio State hosted seven games and sold a total of 129,781 more tickets than Texas that year. Even at a modest $30 ticket price (not factoring in any required contributions, etc), that’s almost $4 million more in ticket revenue. And Ohio State had that Big Ten Network money coming in.

So how, then, does Ohio State “only” generate $63.75 million in “football revenue” while the comparable Texas program brought in $30 million more than that? Simple – EIA “football revenue” figures are a product of each athletic department’s accounting scheme and are meaningless to compare. Yet the media will run their simple little Excel formulas and report what’s spit out as real and meaningful without even passing those figures through a most basic logic filter. I’m sure they’ll do it again this year. Generates pageviews, I guess.

I’ll look a little closer at how universities report “football revenue” and the like in a later post, but that’s such a huge number at Texas and reported so often that I felt it worth mentioning here.

OK, I’ve got my “stupid media” rant out of the way on this one. What say we actually look at the Texas budget?

We can look a little deeper into the finances of Texas athletics by poking around the budget documents of the university. This involves decoding a good bit of accounting ledger work, but Texas provides enough detail to get quite a lot of context about its athletics budget.

At Texas and many schools, Intercollegiate Athletics is an “auxiliary enterprise”, which basically means a related but separate business the university runs. Things like dining halls and parking also typically fall into that category. An auxiliary enterprise might have transfers to or from the university in the budget, but by and large they generate their own income and spend their own money.

In university budget documents, Texas’ Intercollegiate Athletics revenue looks like this:

2009-10 Revenue (Budgeted) ^-1-

I’ll address the rather glaring difference between $110 million and $143 million below, but first some understanding of the income categories.

- Auxiliary Income is what’s generated from operations. Ticket sales, bowl / postseason payouts, TV revenue, etc.
- Restricted Income is university-speak for gifts. “Booster” contributions ($35.45 million of that total), earnings from endowments (Texas has a Head Swim Coach Endowment among others) and the like. ^-2-
- Designated Income is the revenue from things like summer athletic camps run by the university but not part of intercollegiate competition. For whatever reason they are accounted for separately. ^-3-
- Transfers are income items that are assigned to the athletic department but originate elsewhere. The two biggest transfer items are Trademark income ($2.55 million of the total $7.5 million budgeted to be generated from licensing) and Endowed Scholarships ($1.8 million). I suppose the scholarships are specific endowments set up for athletes but are accounted for in the place where Texas accounts for all scholarships.

So all of the above makes pretty good sense. Note that Texas accounts for the Longhorn Foundation (boosters) within the university budget. I’ll write more about how booster money plays in to EIA reporting in a future piece, but it’s important to note that Texas does roll its booster group directly up into the athletic department and/or university budget. That’s not unusual, but it’s hardly universal. For example, LSU’s Tiger Athletic Foundation is managed and budgeted separately from the university. So what shows up as “income” for LSU is only the $17.7 million given to LSU from TAF in 2009-10, not the entire $32.4 million in revenue TAF generated. Likewise, TAF expenses aren’t part of LSU’s budget.

If the TAF was accounted for in the same way at the Longhorn Foundation (or Alabama’a Crimson Tide Foundation, which is also rolled up into the university), LSU might show $124.6 million in revenue, which might put the Tigers No. 3 in total revenue behind only Texas and Alabama. But LSU doesn’t do it that way while others do. Again … can’t compare EIA figures across universities with any measure of accuracy.

OK, so now for the glaring difference. In EIA reporting, Texas says it generated $143.5 million in 2009-10. But the university’s budget only expected to have $110.2 million in income generated that year. I can’t find a financial report that shows what the ultimate income was in 2009-10, but a 23% spread between budgeted and actual income is pretty huge. And the thing is, it happens every year. In 2008-09 the university’s budget expected $107.7 million in revenue but Texas reported $138.5 million in revenue to EIA. The story is the same back to 2003-04, the first year EIA figures are available. There’s no way the budget office would accept the athletic department under-estimating income by 20+% year in and year out.

What’s going on? Well in the 2009-10 budget, Texas added a note that hadn’t appeared before. That note showed “other athletics managed funds – not included in athletics summary above”. And in that is $17.9 million in revenue generated by the Frank Erwin Center (UT’s indoor arena) and the $4.95 million in Trademark licensing revenue not transferred to the athletics department.

Add that $22.9 million into the regular budget and you get $133.2 million in revenue, which Texas now calls “Total Funds Managed By Athletics”. And that’s a lot closer to the $143.5 million in revenue reported to EIA – a revenue overage of just 7%. So I think it’s pretty likely that when looking at Texas’ EIA revenue figures, the arena and other licensing revenue is part of the mix. And while money is money and at least one other university (UNLV) counts arena revenue as “athletics revenue”, I don’t think people stand in awe of Texas’ “athletics budget” because they bring in a nice chunk of change from Taylor Swift concerts.

What’s more, the arena expenses don’t seem to appear in the athletics department’s budget, which leaves Texas showing a $29.6 million “profit” in EIA data. If you add arena expenses into the budget (the line-item for arena operations seems to indicate a break-even expectation), the “profit” drops to just under $6.7 million. The expenses shown in Texas’ budget are 95% those shown in the EIA report, so obviously those arena expenses just aren’t getting reported in the EIA rollup.

Once you understand that Texas includes all of its sizable booster revenue in its budget and apparently gets to count concert and other non-sports revenue from its arena as athletics revenue, that massive $143.5 million figure starts to make more sense. I don’t think there’s any doubt that an apples-to-apples comparison of Longhorn athletics with other big-time programs would show Texas to be a top-level money maker. But I think it’s a lot less likely that Texas is running away with the fiscal arms race like a shallow look at EIA figures would suggest.

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Previously: College Sports Revenue 2011: Setting The Stage
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Citation links:
-1- Part I of the UT 2009-10 fiscal year budget (PDF), page H. 15.
-2- Part II of the UT 2009-10 fiscal year budget (PDF), page J. 112 & 113.
-3- Part I of the UT 2009-10 fiscal year budget (PDF), page G. 47 & 48.