The University of Mississippi Athletics
STAFF BLOG: Hartwell With Overview of Athletics Budget Process
5/14/2009 | Athletics
The Ole Miss athletics department's senior staff and leadership publish biweekly blogs on OleMissSports.com to offer fans added insight into the overall operation of the department. John Hartwell is in his seventh year at Ole Miss and serves as Senior Associate Athletics Director for Finance.
May 14, 2009
It is that time of year again that we are nearing the completion of our annual budget process. I thought that it would be informative to give some insight into this process and show how each head coach and department head are involved in this process.
Our budget process normally begins in March when the new budget worksheets for each sport/area are generated. The budget worksheets consist of three years of budget detail and actual expenditure detail. The most recent actual figures used on the budget worksheets are nine-month, year-to-date figures (i.e. July 1, 2008 through March 31, 2009). The head coaches (or their designee in some of the larger sports where they have an operations person handle the budget) or department heads then have at least three weeks to prepare their requests for the new fiscal year’s operating and recruiting budgets. Each sport has both an operating budget and a recruiting budget. In addition to these two areas, each sport is asked to prepare a list of requested capital improvements or major maintenance items for their facilities. This list is compiled by the facilities department and is reviewed by the sport administrators, the facilities director and the athletics CFO in order to determine which projects will be budgeted for the next two fiscal years.
There are 44 accounts that make up the athletics department budget. These accounts include the following:
Each one of these expenditure accounts has the following areas:
Each head coach (or designee)/department head has a meeting with the athletics CFO in order to go through their budget worksheet and requests for the upcoming fiscal year. These individual budget requests are then accumulated into the overall athletics draft expenditure budget. This total number is then compared to the draft athletics revenue budget, which is prepared by the athletics CFO and reviewed with the Director of Athletics.
The Athletics Revenue budget is made up of the following areas:
Subcategories in these revenue budgets include the following:
Three important factors to keep in mind when talking about the Athletics Budget are:
Once the final athletics budget is completed and approved by the Director of Athletics, it is submitted through the University to the IHL Board for approval. Final budget approval normally comes in June. Once our FY10 budget is complete, we will provide an overview of it here on OleMissSports.com.
October 14, 2008
In the wake of the recent turbulent economic times in the country, I have been asked on several occasions how this is affecting how we manage the finances of our Athletics Department. There is no question that there has been, and will continue to be, an impact on how we conduct business. The effects are felt both in revenues (Ticket Sales/ Concessions/ Merchandise Sales) and expenditures (travel costs/ food costs/ equipment and supply costs).
When we prepare our annual budgets for each of our sports and operating areas, we are careful to budget very “conservatively.” This means that we budget our revenues slightly lower than what we expect, and budget our expenditures slightly higher than we expect. In addition, we budget in a contingency amount for unforeseen items that can occur during the year. This approach to budgeting allows us to “weather the storm” when revenues are down and expenses are up. We also consider the economic factors that might affect the budget, such as the fuel prices that impact travel costs, as well as shipping costs for many supplies.
Our attendance at home football games through the first four games has been a much discussed topic. We firmly believe that the high cost of fuel, the shrinking value of investment and retirement accounts, and other economic concerns that affect all of our families have played a part in our less than capacity crowds. There is a direct correlation between attendance and concession sales, merchandise sales, and priority seating donations.
We will continue to make every effort to make the gameday experience a rewarding one for our fans. It is important that the product on the field, the events surrounding the game (video board, ribbon boards, band, spirit, etc), and the overall fan experience is one in which our fans feel like they are getting their money’s worth. We appreciate the time, effort, and financial commitment that you, our fans, make to support all of our teams.
Increasing travel costs have been the biggest expenditure impact area for our budgets. On average, these costs are up 15-20 percent from last fiscal year. The main reason for this is the increase in fuel costs. This impacts commercial airline costs, charter airline costs, charter bus costs, mileage rates and cab fares. In addition, other travel costs have increased significantly such as hotel rates, rental car fees, luggage fees, etc. The indirect impact of rising fuel costs has increased our costs in such items as food and supplies, which require transportation costs.
In these lean economic times, it is more important than ever for us to be good stewards of the Athletics Department funds. We must continue to provide every opportunity necessary for our student-athletes and teams to be successful in the classroom and on the playing fields while being mindful of balancing our budgets.
May 11, 2008
One topic often discussed among Ole Miss fans is football scheduling. Whether they are talking about who we should schedule or who we shouldn’t schedule, it is often debated. For that reason, we felt it would be appropriate to give some insight into our scheduling philosophy.
Since the NCAA made the decision prior to the 2006 season to permanently go to a 12 game regular season, Ole Miss has scheduled with the intent to play seven home games and five road games each year. Due to the fact we play eight Southeastern Conference games each year that are scheduled by the league office, we know that four home and four away games are put on the schedule by the SEC. It is the remaining four games that we are responsible for scheduling. Using the seven home and five away guideline with the SEC games already scheduled, the mix of the remaining four games is three home and one away. When scheduling these other four games, a variety of factors come into consideration such as availability of desired opponents, NCAA guidelines, type of contract, amount of guarantee, strength of schedule, and the appropriate breakdown of home and away games.
Our goal with the four non-conference games is to have two home games as part of “guarantee” contracts and the other home game and one road game as parts of “home and home” contracts. “Home and home” contracts are those in which you agree to play an opponent once at your home stadium to be followed the next year (or in a subsequent year) by a game at their stadium, or vice versa. These games normally involve the home team in a particular year paying the visiting team an amount of money for travel expenses ($200,000 - $250,000 is average), and that same amount is exchanged in reverse when the game is returned. Examples of this type of contract that we will play in future years are Georgia Tech (2010 and 2011), Texas (2012 and 2013), and Clemson (2015 and 2016). “Guarantee” contracts are typically a one game agreement in which the home team pays a lump sum to the visiting team to play, and there is no return game. We try to schedule one Division I-A opponent, along with one Football Championship Subdivision (formally known as Division I-AA) opponent in guarantee games each year. Another change that the NCAA made when they went to a permanent 12 game regular season for 2006 is to allow one of the six wins necessary to become bowl-eligible to be against a Football Championship Subdivision opponent. Examples of FCS opponents we have on future schedules include Samford (2008), Southeastern Louisiana (2009), Jacksonville State (2010) and Southern Illinois (2011).
Guarantee contracts are sometimes hard for us to negotiate due to the fact we play in a league that is known for paying out large guarantee amounts. Some schools in the SEC are regularly paying guarantees in excess of $800,000 for a single game. There are schools that have contracts for future games with guarantees at $1,000,000 plus. The ability to generate these large guarantees is a pure numbers game. When you have a stadium that seats 40,000 more fans (example: Tennessee vs. Ole Miss), and the average ticket price is $50, that is $2,000,000 per game more in just ticket revenue. That does not even take into consideration the revenue from concessions, parking, merchandise sales or priority seating that will be generated from those additional fans. These revenues are what allow them to pay such large guarantees. Our largest guarantee for a future game is currently $525,000.
Another factor in determining opponents is strength of schedule. This is extremely important playing in the SEC, because you know that for at least eight of the 12 games on your schedule, you will be facing some of the best teams in the country. Therefore, you want to make sure at least a couple of the non-conference games you schedule are games that “on paper” you should be favored. This is sometimes difficult to do because of the length of time in advance that you have to schedule, and the parity in college football today. There is not a greater example of this than last year when Appalachian State went to Michigan and won.
One more key factor is the mix of home and away games in a given season. Although it is not always possible, we try to avoid playing three or four consecutive home games. This type of schedule is good from the standpoint of having a home field advantage. However we understand that it is difficult for the family from Pascagoula or Brookhaven, for examples, to come to Oxford for that many consecutive weekends.
As you can see, there are many factors that go into determining future football schedules. We will continue to work with our football coaching staff and administration to schedule quality opponents for the Ole Miss Rebels.
October 17, 2007
Overseeing a $34.4 million annual athletics budget and a $13.8 million annual UMAA Foundation budget, I pay as much attention to dollars and cents as wins and losses when it comes to Ole Miss athletics.
It is important for us to win, and it is equally important for us to operate within our budgets and to make sound financial decisions. Ultimately our job as administrators is to provide our coaches and student-athletes with the facilities, equipment, nutrition, travel arrangements, etc., that they need to be successful both within the Southeastern Conference and nationally. This goal has to be balanced with running a fiscally sound operation in which we don’t spend more than what we bring in revenue wise.
This balancing act is made more challenging by two significant factors: 1) rising costs that are beyond our control, such as tuition costs and energy costs which affect travel costs; and 2) the continuing “arms race” in collegiate athletics in terms of building newer and bigger facilities. In many ways running the business of a Division IA athletics department requires the same management and financial skills it takes to run a business. I’ve spent 18 years as a CPA, and I often have to call on this experience to make sound business decisions for Ole Miss athletics. The last thing I want to do is to tell a coach or fellow administrator “no” when he or she makes a reasonable request, even though sometimes you have to because we just couldn’t make it work financially. However, I never want to tell a coach or administrator that unless I have exhausted every effort to grant their request. In these cases, I then ask the person to prioritize the need versus other financial needs their sport or area has, and whether or not the request is going to help the success of our student-athletes on the playing field, in the classroom, or in preparing them to be positive contributors to society after they leave Ole Miss.
In our budgeting process, we involve each head coach (or their designee) and department head by asking them to identify their needs for the following year. This is done in February each year and is the first step of a three-month process to develop the following year’s budget. Our budgeting system is a “zero-based” budget meaning that each year each sport/department has to justify their needs to determine a budget, as opposed to giving across the board percentage increases.
Accountability is of utmost importance in the financial operations of any business and the Ole Miss Athletics Department is no exception. We have a wide array of groups that we must be accountable to. These groups include the NCAA and the Southeastern Conference (for compliance reasons), the State of Mississippi and its IHL Board (for fiduciary and state guidelines to include procurement, ethics, etc.), University Administration, donors to the UMAA Foundation, and our coaches and our student-athletes (to ensure they are given every opportunity to be successful).
The following is an executive level breakdown of the Ole Miss athletics budget for FY2008 (which runs from July 1, 2007 through June 30, 2008): REVENUES: EXPENSES: