CRAWFORD: Barnhart keeps UK in financial fast lane responsibly
LOUISVILLE, KY. (WDRB) -- Two of the most interesting interviews I did all of last year were on a subject that might make your eyes glaze over -- athletic department finances at the University of Kentucky.
Most of those discussions never saw the light of newsprint. It happens. Editors decide to go another direction. Perhaps I put them to sleep.
I was reminded of them today, though, when UK athletic director Mitch Barnhart announced that UK would increase basketball ticket prices to pay for a bump in budget, up to a school-record $91.9 million.
I had several conversations with Barnhart over the financial picture at UK last year, including one wide-ranging, extensive interview. I also had an interesting discussion with Joe Peek, then a UK economics professor, but now a senior economic advisor at the Federal Reserve Bank of Boston.
After a good deal of analysis, this was my conclusion on UK: It is a model athletic program in terms of its financial structure and practice. It does not take a dime of university money. Its student fee is modest and hasn't increased in a decade. It gives money back to university efforts -- including money that is not on the books (it splits merchandise revenue 50-50 with the school, even though estimates are that 90 percent of that revenue is athletics-generated, and uses $500,000 of its athletics media commercial time to promote university, rather than athletic, initiatives). The UK athletic department is not carrying a high debt load. It is truly self-supporting, and has become so without becoming overly commercialized or corporate in nature. It funds a broad-based athletic program that sponsors the most sports of any school in the Southeastern Conference.
This has not always been the case at UK. Much of what now is in place is the product of Barnhart and the administration he has built. Talk to him about UK athletic finances and you're going to hear the word "stewardship" a great deal. He's serious about it.
Against the landscape of College Sports Inc., with universities subsidizing their athletic departments or finding any number of ways behind the scenes to funnel money their way, UK has, in this area, what I would think most universities should aspire to.
But there are faculty members who believe that still isn't enough, and aren't afraid to say so. Peek, to boil it down, felt like athletics should give the university more, that athletics spends whatever it takes in, that it operates without some rules that the rest of the university has to abide by.
If a professor gets a big research grant, for example, Peek said that the university takes a large chunk for itself as overhead, with some universities taking 50 percent or more. For athletics revenue, the university takes no overhead. The notion that athletics "gives back" 50 percent of merchandise revenue, in his view, is backwards. Athletics is using the university's name. In the view of the athletic department, 90 percent of those merchandise revenues would not exist without sports. From the academic perspective, they argue that without the university, 100 percent of those revenues wouldn't exist.
To me, it is a fascinating discussion, and frankly, a healthy one.
When UK announced its budget today, I began to write a column about the financial tightrope Barnhart has to walk.
In the Southeastern Conference, ground zero of the college facilities arms race, he's trying to remain competitive across the board while also remaining financially responsible within a collegiate -- not a corporate -- model.
UK doesn't play in the Farm Bureau Rupp Arena or play in the Thornton's Commonwealth Stadium. Its game timeouts are not filled with commercials, though there are some. UK has resisted this kind of commercialism, though more and more it is having to utilize it to keep pace with its conference brethren.
Consider: Eight years ago Alabama completed a $50 million expansion of its football stadium. Six years later, it came back and did another one at a cost of $70 million. Auburn did expansions in 2006 and 2010. Georgia added suites 1993, 2000, 2003 and 2005.
UK, meanwhile, had to bend over backwards to install new video boards in Commonwealth Stadium last year. Because of legislative restrictions, it can't bond money. And because the university has so many other infrastructure needs, some there oppose lending athletics money for construction, even at interest.
One place UK can turn for more revenue is basketball. But even it has huge untapped potential, because it plays in a facility without many of the bells and whistles programs use to make money -- suites and the like.
And then there's football, a program that, even while struggling, brings more ticket revenue than any other. A program that, if ever truly a player in the SEC, would certainly be a financial game-changer for UK.
Last year UK ranked eighth in athletic revenue in the SEC, and even with a school-record budget has just the sixth largest in the SEC in the coming year. Soon, if you look only at those numbers, it removes you from the real world.
But as a sportswriter, sometimes you have to step back into the real world. Having to scrape up an extra $3.5 million so you can give your men's basketball assistants and your women's basketball head coach a raise is not walking a budgetary tightrope.
Having a university with plunging state appropriations and faculty and staff employees that haven't had a raise in three years and are facing hundreds of layoffs is a tightrope.
UK athletics is to be praised for operating on its own and even giving back. Barnhart could've avoided a ticket increase if he'd wanted to just keep within athletics the funds that athletics generates. Instead, UK athletics upped the amount it gives the university scholarship fund by $1.3 million.
This has been, in my view, an underreported element of UK's athletic story. And it's one of those cases where both sides are correct. UK athletics, in the fierce financial footing of the SEC, is holding its own while holding a responsible financial line. And for those voices within the university academic community calling for more from athletics, the call isn't likely to make it happen, but it's still a worthwhile argument to make, and one worth debating more -- at more places than UK -- as times get tougher in higher education.
Copyright 2012 WDRB News. All Rights Reserved.