Tuesday, January 29, 2013
Tennessee's debt exceeds $200 million
By Chris Low
There's a general feeling out there that all of the SEC's so-called big boys are swimming in cash.
Then you stop and read Michael Smith's telling piece in SportsBusiness Journal on the financial woes of Tennessee's athletic department, and it's obvious that everybody in the SEC isn't just printing money.
According to Smith's story, Tennessee's athletic department is more than $200 million in debt, which is the most in the SEC. Moreover, Tennessee has reserves of just $1.95 million, which is the least in the SEC.
How did the Vols become mired in such dire financial straits?
Dave Hart, Tennessee's athletic director, pretty well sums it up with this quote: "We've got to get football healthy."
Tennessee has suffered through four losing seasons in the last five years, and home attendance has steadily declined. The average this past season for the Vols at Neyland Stadium was 89,965 -- the lowest since 1979.
Pricey buyouts also haven't helped. Tennessee fired Derek Dooley following this past season and owes him $5 million. That's after paying Phillip Fulmer a $6 million buyout (over 48 months) when he was forced out following the 2008 season.
According to Smith's piece, Tennessee’s reserves have been depleted by $21 million in transfers back to the university over the last three years and $11.4 million in buyouts to fired coaches in football, basketball and baseball, as well as administrators. Former Tennessee athletic director Mike Hamilton walked away in 2011 with a $1.335 million buyout.
That $11.4 million figure doesn't count the $5 million owed to Dooley, nor an additional $2 million to his assistants. That means $7 million will have to be found in this year’s budget.
Most of the athletic department's dept came from a series of expansions and upgrades to Neyland Stadium, which included a reduction in overall capacity and an increase in premium seating. Those renovations cost more than $130 million.
Hart is committed to building reserves into the $50 million range. He said most SEC schools are hovering between $50 million and $100 million.
Ultimately, much of the Vols' financial future will be dictated by how well they do on the football field.
"That's our economic engine. When that program is successful, everybody wins," Hart said.