In his first three years at Kansas, athletic director Sheahon Zenger has often use carpenters’ terms to describe his business and leadership style. Measure twice before you cut. Precision is more important than haste. The details should be savored, not swept aside.
So perhaps this explains why after one of the most lucrative years in KU athletics history, department officials are hoping to clarify the narrative of cha-ching on the balance sheet. Kansas reported $93 million in revenue in the 2013 fiscal year, according to documents filed with the NCAA. But a closer inspection, officials say, tells a more complete story.
Yes, it was a record-breaking year for KU, which boasted the third-highest athletic revenue in the Big 12 behind football powers Texas ($165.7 million) and Oklahoma ($123.8 million). It also resulted in a surplus of more than $13 million when factoring in KU’s reported expenses of $79.7 million.
But Pat Kaufman, the chief financial officer for KU athletics, says much of that surplus is because of future pledges and donations that had to be counted this year because of accounting rules. In fact, Kaufman says, a change in the department’s fundraising cycles caused nearly a year and a half’s worth of contributions to be counted in 2013. Kansas counted nearly $33 million in contributions in 2013, up from $22.4 million the year before.
“It’s kind of an anomaly this year,” Kaufman said, “because we adjusted our cycle.”
KU officials say the department’s operating expenses, which increased from nearly $79 million to $79.7 million over the last year, are a better reflection of the amount of cash the department brings in each year.
“We really don’t have a significant cash surplus,” Kaufman said, before adding: “We pretty much know what our revenue numbers are going to be, and we budget to live within our means.”
A similar occurrence took place two years ago, when Kansas State reported a $23.4-million surplus, making it the most profitable athletic department in the country in 2011. Long-term contributions, such as large donations pledged for major facility upgrades, must be counted the year the pledge is made. So a school’s cash on hand can be different than the revenue numbers filed each year to the NCAA and to the U.S. Department of Education.
Still, Kansas benefited from other areas of growth in 2013, landing among the most high-end revenue generators in college athletics. Kansas’ $93 million in revenues ranked 19th in the country, according to figures filed to the U.S. Department of Education.
In some ways, KU is a unique member of the top 20. Of the schools on the list, almost all would be considered traditional football powers.
To understand the growth, it’s best to look at some recent trends.
In 2007, the Big 12 paid Kansas $8.4 million in television money. Six years later — after the sea change of conference realignment and skyrocketing television deals — that number hit $20.8 million. It’s an increase from $14.1 million in 2012.
Schools all over the country are benefiting from the boon, but the infusion comes at a good time for KU. A year ago, Kansas reported an $8.7 million deficit after shelling out more than $8 million in severance payments to fired football coach Turner Gill and his assistants.
As one might expect, firing coaches can be an expensive decision in the short-run. The payments to Gill and his staff came on the heels of multimillion-dollar settlements with former football coach Mark Mangino and athletic director Lew Perkins in the previous two years.
The ledger has been clear of costly buyouts over the last two years, and while the football program as remained at the bottom of the Big 12, stability in the coaching ranks has been healthier for balance sheet.
KU officials say the 2013 surplus — even after factoring in the inflated contributions — is not connected to any upcoming projects or expenditures such as facility upgrades. But KU is poised to finish — and begin — a host of projects this year.
Construction crews are rushing to put the finishing touches on Rock Chalk Park, a $39 million project in west Lawrence that will house new facilities for track and field, soccer and softball. The project features a 30-year leasing agreement between KU and Bliss Sports, a Lawrence-based firm that built the facilities. Under the arrangement, KU will play $1.3 million per year to lease the new venues.
The snowy winter slowed construction, but KU associate athletic director Jim Marchiony said the track facility would be ready for a “soft opening” for this year’s Kansas Relays.
Meanwhile, construction is set to begin this year on the DeBruce Center, an $18 million home for James Naismith’s original rules of basketball. The center, a joint project between KU Endowment and the athletic department, will be built adjacent to Allen Fieldhouse and serve as a new on-campus dining center for students.
KU also recently announced plans to build the first phase of the Fieldhouse Apartments, a new on-campus home for KU basketball players and other students. According to a plan submitted to the Kansas Board of Regents in January, the first phase would include a commons area and 33 bedrooms at an estimated cost of $11.6 million. Private donations would finance $7 million to $7.5 million of phase one.
The Kansas legislature denied KU additional bonds for the project in February, and Marchiony said final cost estimates could change, depending on fundraising.
Next up: Further renovations at Allen Fieldhouse and the removal of the track at Memorial Stadium have been on the docket for some time. As is the case with most major projects, the final hurdle is fundraising.
In total, Kaufman says, KU has spent close to $150 million in improvements for facilities over the last 10 to 15 years, while accruing just $49 million in debt. And officials believe the department is in good financial shape moving forward.
“To put it in context, over the last 11 or 12 years, we’ve been able to improve our athletic facilities, student-support facilities and our office facilities to the tune of 150 to 160 million dollars,” Kaufman said.
“We only have debt of $49 million, so the other two-thirds we’ve been able to fund through operations or fundraising or other revenue sources.”
K-State surplus: $11.1 million
Kansas State’s athletic department brought in more revenue than ever in the 2013 fiscal year, but its expenses also hit an all-time high, according to figures filed with the NCAA.
The end result was a surplus of roughly $11.1 million, down 9.33 percent from the year before. K-State reported nearly $70.5 million in gross revenue and more than $59.3 million in operating expenses.
The bulk of K-State’s revenue came from its football program. Behind coach Bill Snyder, the Wildcats’ gross football revenue reached $42.2 million, maintaining a rapid ascent from $35.8 million in 2012 and $23.5 million in 2011. Net football revenue in 2013 was $26.2 million.
Another notable increase came in royalties and licensing. K-State made $2.3 million in that category in 2013, up 17 percent from the year before. K-State also profited more than $15 million off of ticket sales. K-State received nearly $18 million in contributions and it took in nearly $25 million from the NCAA and the Big 12.
Those positives were negated by a drop in men’s basketball revenue, from $6.8 million to $5.5 million, and increases in coaching/administrative staff salaries and team travel.
The Wildcats spent $7.5 million on team travel, 46.6 percent more than in 2012. They also significantly raised the salaries of administrators and support staff, bumping their total up 33 percent to 12.1 million.
This is the fourth straight fiscal year in which K-State has reported an athletic department surplus of more than $11 million.