Money Matters
by Will Stewart,, 5/11/97

Lately, I've come across some interesting financial figures concerning Tech athletics that I thought I would pass on to you and discuss a little bit here at Hokie Central. I drew my information from two sources:

  • A gender equity report posted by The USA Today
  • Financial information distributed at the VT Athletic Fund (VTAF) annual membership meeting prior to the Spring Game on April 19th

The figures I've been able to compile from those two different sources answer some questions that I'm sure many of you have had about the financial end of Tech athletics, and it makes for interesting reading. I've divided this Special Feature up into the following sections:

Income and Expenses - how much money Tech athletics makes, and how it is spent.

VTAF Membership Figures - how many people belong to the VTAF at each level.

The Merryman Center - how much money has been donated and pledged for the new facility.

The picture that the figures paint is a bright one indeed, due mainly to the football revenue from TV appearances and the Orange Bowl invitation, as well as the efforts of the VTAF reps in raising money and Hokie Club members donating money for the Merryman Center.

Let's take a look at revenue and expenses first.

The Revenue Picture - Income and Expenses

Note: all figures courtesy of The USA Today

Recently, The USA Today posted a special report on gender equity in college athletics, and a portion of the report included financial figures for all 1-A football-playing schools in the major conferences: ACC, Big East, Big Ten, Big 12, Big West, Conference USA, Mid-American (MAC), Pac-10, SEC, WAC, and the major independents.

Financial figures were given for each school for the following categories, and here are Tech's numbers. The USA Today provided the Revenue and Expense numbers, and I calculated the Balance numbers myself:

Football $11,615,916 $3,413,219 $8,202,697
Men's Basketball $2,577,103 $802,376 $1,754,727
Women's Basketball $26,804 $577,041 -$550,237
Other Men's Sports $1,316 $1,093,084 -$1,091,768
Other Women's Sports N/A ($0?) $1,196,560 -$1,196,560
TOTALS $14,222,139 $7,082,280 $7,138,859

Of course, athletic fund-raising efforts can greatly add to the revenue picture at some schools, but I'll restrict the conversation here to gate revenues, TV contract income, bowl game income, and basketball tournament income, which these figures cover.

If you've ever doubted that football and men's basketball are the cash cows that drive an athletic department's revenue picture, then you need to come out from under your rock. In Tech's case, those two sports provide 99.8% of the revenue for Tech sports.

Out of the 107 schools included in the report, Tech ranked 16th in football revenue. Washington was the king with over $24,000,000 in revenue. Here are the other teams that totalled higher revenue than Tech (note that this is just revenue, not revenue minus expenses):

  • 6 schools from the SEC: Alabama ($16.9m), Auburn ($19m), Florida ($22.8m), Georgia ($16.8m), South Carolina ($11.7m), and Tennessee ($18m).
  • 3 schools from the Big 10: Michigan ($16.8m), Ohio State ($13.2m), Penn State ($17.8m).
  • 2 from the Big 12: Nebraska ($13.7m), Texas A&M ($12.3m).
  • 2 from the PAC-10: USC ($11.8m), Washington ($24.3m).
  • 1 from the ACC: Florida State ($11.646m, just barely more than Tech).
  • 1 independent: Notre Dame, of course ($15m).

A quick scan of the football expenses of those teams reveals that out of the 15 of them, Nebraska ($9.6m) and USC ($5.5m) both spent enough money that their total "take" off of football was less than Tech's. This doesn't mean that Tech was ranked 13th in football revenue minus expenses, because it's quite possible that some schools that made less than Tech in revenue also spent less than Tech, to the point that their total profit from football was greater than Tech's. I didn't analyze the numbers to that kind of detail to find out, and The USA Today didn't provide those figures themselves.

(A side bar: how in the world did Nebraska spend nearly $10 million? Most teams spent in the $2 million to $4 million range.)

But you get the point. Tech did quite well, indeed, aided by only 4 road games and a bid to an Alliance Bowl, not to mention that the Big East has the sweetest revenue sharing deal among the conferences that are in the Alliance. It was reported after the bowl games that Virginia Tech, at $3.8 million, made more money off their bowl game than any other team. The Big 12, SEC, and ACC all spread the wealth around more than the Big East. The other conferences dilute the reward for the team that actually goes to the bowl more than the Big East does.

As for the women's basketball totals (a loss of over half a million dollars), Tech's figures are not unusual. Out of the 107 teams listed in the report, only 4 actually made money from women's basketball: Texas Tech ($176,000 profit), Washington ($164,000), BYU ($52,000), and ... Central Florida? (yes, $72,000).

In all fairness, perennial women's basketball power UConn was not included in the report, because they don't have a 1-A football team (yet. But that's another topic). It's possible that UConn made money off of women's hoops, but even if they did, that would still only be 5 teams in the black out of 108.

It was surprising how much money some of the power teams in women's basketball lost: Tennessee ($619,000 loss), Virginia ($553,000 loss), and Stanford ($465,000), just to name a few, all lost big money on women's hoops. Every school in the SEC, perhaps the strongest conference in women's basketball, lost at least $400,000 on the sport. Tech's loss of $550,000 is therefore just run-of-the-mill.

So in women's basketball, if you're an athletic director, the goal is not to actually make money from the sport. The goal is to cut your losses.

Hokie Club Membership

Note: all figures provided by the Virginia Tech Athletic Fund, Inc (VTAF).

Let's be honest. Donations to the athletic fund at some schools totally dwarf the donations that are made to the VTAF. I remember hearing one time when I was in college in the mid-80's that Clemson's boosters donated $17 million per year to the Clemson athletic fund.

The VTAF total for the last year? $3.8 million. Kind of pales by comparison, doesn't it?

I don't even want to think about what schools like Notre Dame, Michigan, and Penn State rake in. But that's not really the focus of this Special Feature. Let's get back on track and talk about Virginia Tech Athletic Fund donations.

From what I can tell by looking at the information that was distributed at the April 19th VTAF Annual Membership Meeting, the VTAF measures their "donation years" from July of a given year to April of the following year. Here are the totals for the last three years of the VTAF:

July '94 - April '95 July '95 - April '96 July '96 - April '97
$2.5 million $3.6 million $3.8 million

There are some more interesting figures in the following table. They show the membership totals at each donation level. Unfortunately, since I'm not a Hokie Club rep (yes, I guess you could say that Hokie Central does represent Tech in some fashion, but not as a Hokie Club rep), I don't have the dollar amounts that correspond to each level. Here are the numbers:

Donation Level # of Members
As of 3/31/96
# of Members
As of 3/31/97
Full Scholarship 185 203
Lifetime Golden 134 156
Platinum 16 14
Golden 285 343
LifeTime Silver 53 62
Silver 477 547
Bronze and
Lifetime Bronze
661 728
Orange & Maroon
and Lifetime O&M
1,111 1,368
Hokie Club and
Lifetime HC
4,155 4,327
Gobbler 724 712
Less Than $50 267 228
TOTALS 8,068 8,688

I can't add a whole lot to those figures, except to say that in the last year, a 7.7% increase in VTAF membership only led to a 5.5% increase in donations. So more people are giving, but the average donation per person went down, from $446 per person as of 3/31/96 to $437 per person as of 3/31/97. Still, whatever makes the total number go up is fine with me, and with other Hokies.

As a side note, Tech is pulling two shrewd marketing moves in an attempt to increase Hokie Club membership. The first is the creation of the "Hokie Kids Club," which is advertised in each issue of the Hokie Huddler. Details are vague, but the submission form prompts kids to join the Hokie Kids Club, promising "the Hokie Bird Birthday Party, a free football and basketball ticket, autograph sessions, newsletters, and much more. You get all this and more for only $20!"

It's always a smart move to hook kids on something early. Just ask the tobacco industry, which created "Joe Camel" not only because cartoon characters are trouble-free, timeless icons, but also because they appeal to kids. The idea is to get kids interested in something early, and you've got a friend for life.

The other smart marketing move is a "New Graduates" program that the Hokie Club has created. I have misplaced my information on this program, but going from memory, here are the basic details of the program: new graduates of Virginia Tech are offered free Hokie Club membership for the first two years after their graduation, plus season tickets at half price for one or two years. I assume that the Hokie Club membership is at the lowest level, which would be Gobbler Club.

Again, it's a smart move. The time period just after graduation is a time when enthusiasm and devotion to Virginia Tech is still high, but unfortunately, the funds to join the Hokie Club are often not available (remember what you were getting paid at your first job?). After a few years, the funds might be available, but perhaps memories of Tech and the devotion to the school are not as intense as they were the year after graduation. Sacrilege, I know, but it happens.

The "New Graduate" program therefore provides a nice bridge between the time period just after graduation and two or three years down the road. The ploy of hooking a customer on a product by offering low or free rates and then upping the price later is a common marketing tool, and Tech has applied it to the Hokie Club. Look for this to pay off big in the coming years, and for Hokie Club membership, donations, and season ticket sales to continue to rise.

The Merryman Center

Note: again, all figures provided by the Virginia Tech Athletic Fund, Inc.

When the Merryman Center project was first announced, it was billed as a state of the art, $7 million facility. As of April 13, 1997, it had become an $8 million facility, and is still growing.

The increase is not due to construction overruns or anything so mundane, but rather, the increase is due to the simple fact that to this point in time, that's how much money Hokie fans have donated or pledged to the construction of the facility.

As of April, 1996, cash and pledges of $4.9 million had been collected for the Merryman Center. In the year since then, that number has grown by another $3.1 million to just over $8 million, and it continues to grow, even as you read this. $150.00 of that $8 million is mine, as I have pledged nearly all of my donations in the last two years to that facility.

If he wanted to, Dave Braine could use any athletic department revenue, including bowl money, in the construction of the Merryman facility, but Tech is taking the approach that the project will be funded entirely from donations.

As of April 13th of this year, the total amount collected was $3.1 million. Another $3.9 million has been pledged (I assume the donors will come through on those pledges when the money is needed during the construction process). The total is $7 million for those two figures.

According to the VTAF, there are "additional verbal pledges" of $633,000 not included in the above figures, as well as another $376,000 available in the "Jamerson/Cassell" account, which I assume must be left over primarily from Tech's Cassell Coliseum roof renovation project of last year.

This brings the total figure to just over $8 million earmarked for the Merryman Center. It has been a long, hard road, but the money and pledges are there, and I hope that more money comes in during the course of construction, which has already begun. Although the project was originally estimated at $7 million, the inevitable overruns will no doubt occur, and even if they don't, the bottom line is this: Tech will spend whatever they have available, and extra funds will only mean that the place will be that much more impressive ... to football recruits.

Ahhh, there lies the true importance of the Merryman Center. In my February "My Opinion" piece about recruiting, which is contained in the February 23rd archive, I named "facilities" as the number one area in which Tech needs to improve in order to woo good recruits away from UVa and the out-of-state big boys. And although Tech is making great improvements in the track and softball facilities, as well as the Rector Field House, the Merryman Center is the crown jewel of Tech's efforts to improve athletic facilities.

Make no mistake about it: if football is truly the cash cow (and it is), then the Merryman Center is the prime tool that will be used in the coming years to make that cow give more milk. I commend Hokie fans, and Hokie Club reps, in their donation and fund-raising efforts, respectively. We have done all we can, and now it's time for the guys with the bulldozers and concrete to do the rest.

In Closing

I hope you enjoyed that little look into the financial side of Tech athletics. This article obviously isn't intended to be a comprehensive summary of the athletic department's financial matters, but I hope I educated and enlightened you some along the way.

Remember that the kind of stuff we've talked about here is a subject that is near and dear to Dave Braine's heart. I'm sure that when Dave thinks about running the Tech athletic department, he takes the approach that success begins with a healthy financial bottom line. And a $7 million profit like we've seen in the last year is healthy, indeed.

That surplus has paid for the new softball field, the new outdoor track complex, a new baseball press box, and $500,000 worth of improvements to Rector Field House. As I've said before, when the next great conference realignment occurs, Tech's great facilities and healthy financial bottom line will greatly enhance our attractiveness to any prospective suitors.

It wasn't too long ago, 1991 in fact, that Tech was in such dire straits financially that Dave Braine sold a home game against FSU to the Citrus Bowl in Orlando for a guarantee of $850,000. Braine later said that it was the only decision he has ever regretted making for money.

"When I saw the looks in our kids' faces when they ran out of the tunnel into a stadium full of Florida State fans, when it was supposed to be a Virginia Tech home game, I regretted what I'd done," Braine said. "I promised myself that I would never do that again."

You don't have to, Dave. It was only 6 years ago, but that was a long time ago, indeed.

Reference: "Gender equity in 1997" by The USA Today


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