Tennessee athletics had largest revenue in history but still had deficit
A Supreme Court ruling that increased student aid spending and pandemic-deferred facility upgrades were among the unique circumstances that led to a $2.5 million shortfall for athletics of Tennessee in the 2021-22 fiscal year despite record revenues.
UT posted revenue of $154.6 million, its highest total in school history, and the university expects more growth in the 2022-23 fiscal year. This was offset by expenses of $157.1 million for a deficit of $2.5 million, its largest in four years.
Some rising expenses were not surprising.
Athletics employee payrolls rose by $10.5 million, the biggest increase for the department in at least a decade. Much rewarded coaches after a year of widespread success.
That’s notable, as soccer coach Josh Heupel and athletic director Danny White recently got big raises and contract extensions. Heupel and White’s increases will appear on the 2022-23 report.
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But other new expenditures were the sign of a unique era.
UT was among a handful of major colleges to pay student-athletes stipends of up to $5,980 each for academic achievement, following a Supreme Court ruling authorizing such payments.
And athletics facilities needed improved utilities, phone lines and other renovations that had been put on hold as cost-cutting measures during the COVID-19 pandemic.
The 2021-22 fiscal year ended on June 30. Universities were required to submit their annual financial reports to the NCAA in January, and Knox News obtained the report through a public records request.
Here are the key takeaways from UT Athletics’ 81-page financial report.
Supreme Court ruling sent student aid up
In June 2021, the Supreme Court’s decision in Alston v. NCAA allowed universities to provide education-related benefits and amenities to student-athletes, as well as direct financial support, if they met certain academic standards.
Under the ruling, schools can pay a student-athlete a maximum of $5,980 per year. The SEC was the first conference to allow its member schools to set their own academic and payment benchmarks.
Last April, ESPN reported that UT was among just 22 of 130 major college football schools that intended to pay their student-athletes for academic achievement.
Paying UT student-athletes nearly $6,000 each for academic achievement contributed to a $2.6 million increase in student aid spending. This was more than the $2.5 million deficit.
Danny White spent on long-term growth
It was UT’s biggest deficit since a $6.5 million shortfall in the 2017-18 fiscal year, caused by the buyouts of football coach Butch Jones and director of… sports John Currie.
But a $2.5 million shortfall in fiscal year 2021-22 is a small gap in college athletics’ big budgets, with spending outpacing revenue by 1.6%. And UT sees long-term investments in this latest budget shortfall.
The athletics department added staff and implemented new plans to increase revenue during White’s first year on the job. It is an approach that required new costs in the first year to reap benefits for several years.
So far, UT likes compromise.
He garnered the highest revenue in the history of the athletic department. And UT is about a year ahead of its revenue and financial growth projections, according to assistant athletic director/COO Ryan Alpert.
“Fully in line with what was outlined in our Rise Glorious strategic plan, Danny and our entire administration have been aggressive in driving investment in the student-athlete experience – particularly student-athlete well-being. , the facilities and the success of the team,” Alpert told Knox. News. “Recent competitive and academic performances reflect this investment.
“And as we build on the momentum generated in a fiscal year that saw record revenues, we expect continued revenue growth while ahead of schedule for multiple objectives in the annual strategic plan.”
Coaches got raises for winning in a memorable year
The athletic department’s payroll increased by $10.5 million, combining coaches ($4.6 million) and support staff ($5.9 million). In the past 10 years, it had never increased by more than $3.7 million in a single year.
Widespread success on and off the pitch explained why coaches were paid more.
Men’s basketball coach Rick Barnes got a raise after the Vols won their first SEC Tournament title since 1979. Kellie Harper got a raise after Lady Vols basketball reached the Sweet 16 for the first time since 2016. Baseball coach Tony Vitello got a raise after the Vols reached the 2021 University World Series.
Wage bills have skyrocketed for non-coaching staff
There was a larger increase in the salaries of administrators and support staff.
UT filled administrative positions that had been frozen during the pandemic. White has expanded his leadership team, adding positions to help with student-athlete mental health and employee human resources.
Additionally, ticket sales staff were hired when White moved the UT ticket sales operation from a third-party vendor inside the athletics department.
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Ticket revenue was about the same as before the pandemic: $35.1 million in 2021-22, compared to $36.1 million in 2018-19. But UT believes it will eventually pay off, as 7,500 new football season tickets have been sold since September.
For a change, no redemptions have been reported
UT did not say it paid buyouts for fired coaches and administrators for only the second time in seven years. It’s a positive change after UT paid out $21.4 million in severance packages since 2015-16.
In 2020-21, UT said it paid $5.4 million in severance pay to retired athletic director Phillip Fulmer and assistants under fired football coach Jeremy Pruitt. They can still receive severance pay, as per the terms of their contract, but full buyouts have been reflected in prior year expenses.
Pruitt did not receive a $12.6 million buyout because he was fired for cause as part of an NCAA investigation into alleged recruiting violations.
Football made big profits in Heupel’s first season
Football recorded a surplus of $51.9 million. It was supported by increased revenue from licensing, bowl profits, parking, concessions and ticket-related donations compared to pre-pandemic levels.
It was a rebound year for UT football in Heupel’s inaugural 2021 season. The Vols posted a 7-6 record, including a trip to the Music City Bowl, and rekindled the excitement in the program.
UT football generated $99.1 million in revenue, its highest total since $100.1 million after the successful 2016 season under Jones. In Heupel’s first season, the football program brought in $47.2 million in expenses.
Olympic sports suffered bigger than normal losses
UT reported a $36.4 million deficit for Olympic sports — a catch-all term for all sports other than soccer, men’s basketball, and women’s basketball.
A huge deficit is normal for Olympic sports, which are subsidized by football revenue. But in the previous five years, Olympic sports had deficits between $22 million and $25 million.
So why has the deficit increased so sharply?
Coaches’ salaries were increased by $2.7 million, including Vitello’s increase from $600,000 to $1.5 million. Overhead costs increased by $5.4 million as UT made facility upgrades that had been postponed during the pandemic.
Increases in student aid following the Supreme Court ruling have had the biggest impact on Olympic sports, as it includes the majority of UT athletes.
How fast is Tennessee’s financial growth?
The 2021-22 financial report is old news for UT Athletics, which is seeing major progress more than halfway through this fiscal year.
UT’s strategic plan, released in July 2022, called for significant increases in revenue, spending, and fundraising over five years. He called for the operating budget to be increased to $170 million in 2022-23 and $180 million in 2023-24.
Alpert said UT’s trajectory is about a year ahead of schedule in most, if not all, of those metrics.
Additionally, the Tennessee Fund had a record year with $80.8 million in total fundraising and $68.6 million in cash receipts in 2021-22.
Only $32.7 million of these funds were included in the financial report, as they must be used in that year to be reported. Remaining funds will be reported in future years when spent on capital projects or other expenditures.
Contact Adam Sparks at [email protected] and on Twitter @AdamSparks.