Big 10

U-M Athletic Department expects $161 million budget and a small surplus

June 16, 2016

ANN ARBOR, MI — After closing the previous fiscal year with its first deficit since 2001, the University of Michigan Athletic Department expects to break even for the 2015-16 fiscal year.

The department brought in $152.6 million in revenue for 2015-16, with $154.8 in operating expenses. The department will break even, Athletic Director Warde Manuel said, after a $2.2 million debt-stabilization return.

“We would have come to a balanced budget without that,” Manuel said following the Thursday, June 16, Board of Regents meeting. “Debt stabilization is a policy by the university by which they return money to units based on predicted capital expenditures.

“They return money we gave to the university for these projects back to us,” he explained. “Without that we would have moved less money out of deferred maintenance, and shifted that to cover budget expenditures.”

Manuel presented a new Athletic Department budget that projects an operating surplus of $800,000 for the coming year, with $161.8 million in operating revenues and $161 million in expenses.

“That’s through the addition of a home football game and an increase in corporate sponsorships, primarily due to the Nike apparel agreement,” Manuel said.

The department projects corporate sponsorship revenue increase from $16.2 million this year to $17.7 million next year, Manuel said, due the the new apparel agreement.

Football ticket sales are projected to increase due to an eight-game home schedule this fall, compared to seven games last year. Budgeted facility revenues are projected to increase by $1.4 million due to a special event in Michigan Stadium following a fiscal year with no such events.

The operating budget saw lower-than-budgeted spectator admissions in basketball, which brought in $3.6 million in net spectator revenue, compared to $3.9 million last year.

U-M also projects an increase in team and game expenses, from $8.5 million in 2015 to $10.5 million in 2016. Manuel attributes the increase to the football team reaching a bowl game, a trip to the NCAA tournament in men’s basketball and a trip to the College World Series in softball.

The athletic department’s deficit in 2015 came as a result of payouts to high-earning officials, and a drop-off in ticket sales.

The deficit originally was projected to be $7.9 million at last June’s Board of Regents meeting. According to an independent audit presented to the U-M Board of Regents in an Oct. 15 meeting, however, the department’s operating deficit for the 2015 fiscal year was $342,000.

Low football ticket sales, the severance agreement made with former athletic director Dave Brandon, and the mandatory payout to fired football coach Brady Hoke — who each received $3 million buyouts – were significant contributors to the deficit.

Manuel credited the Athletic Department staff for getting the budget in a position to break even.

“You come in and see the numbers, and you want to make sure you have a balanced budget, and at minimum, a little surplus to put toward future endeavors. For the most part, I was pleased with what I walked into, in terms of budgetary controls we had in place throughout the department.”

Martin Slagter covers higher education for The Ann Arbor News. Reach him at mslagter@mlive.com or on Twitter.

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