Now that the spring sports season is almost over, it is time for the fiscal year 2008 update of the Virginia Tech Athletics financial information. As noted in prior years, the following standard caveats and comments are made:

• The 2008 data includes the 2007 football seasons and the 2007/2008 basketball season.
• There can be various differences between current and prior year numbers within the same school depending on how the school chooses to present its reports.

As in prior years, the information for Virginia Tech, UVa and other colleges presented is derived from the published NCAA reports on the Virginia Auditor of Public Accounts web site. My last year's report also contained information for the other ACC and selected other schools as derived from the U.S. Government's Office of Postsecondary Education (located at http://ope.ed.gov/athletics/). I decided not to include all the ACC schools information in my report this year because I believe the volume of information presented in that report somewhat overwhelmed my primary intent of providing relevant comparative financial information for Virginia Tech and the University of Virginia athletic programs. However, this year I have provided information for the four out-of-conference teams that we play in the 2009 season to allow a comparison of the athletic budgets and other data of those schools to Virginia Tech.

For this report, I have presented the past three years for both Virginia Tech and UVa. In the first presentation the Virginia Tech numbers are presented for the past 3 years and a report of the changes between the 2008 and 2007 years are also reported.

You will notice in the prior table that Tech's football ticket revenues decreased in FY 2008 (2007 football season) due primarily to the playing of 7 home games in the 2007 season as opposed to 8 home games in the 2006 season.

Although not specifically reported in the schedule, the football guarantee expenses for the 2007 season were $2.106 million, the 2006 season expenses were $2.235 million and the 2005 season were $.537 million. The average per team in the 2007 season was $702k, the 2006 season average was $581k and the average for the 2005 season was $268k. That is a substantial increase per team, and most likely what we will be seeing at in the future, if not more.

For a bit of additional information, I have included the out-of conference football opponents Tech played in the 2007, 2006 and 2005 football seasons. Six out of conference basketball opponents (those visiting Blacksburg) were paid a total of $694k or an average of approximately $116k. In the 2006/2007 the average was $78k. I am not sure why there was a substantial increase in the FY 2007/2008 season. There were seven out of conference games played in Blacksburg in the 2006/2007 season (including Iowa of the ACC/Big Ten Challenge).

Student activity fees applied to athletics increased in 2008 by approximately 2%, but still remain relatively stable when compared with the prior two years. There was a substantial decrease in contributions in 2008 (approx $5 million) and an increase in conference/NCAA revenues in FY 2008. The decrease in contributions is likely related to the flow of contributions related to the West Side Expansion of Lane Stadium, since a lot of the payments on the construction were concentrated in prior years and the application of contributions to the payment on that project. It should be noted here that the box rentals and personal seat licenses for the various club seats are included in contributions.

FY 2007 was also the first year for Virginia Tech to receive a full conference revenue distribution. Also remember that these revenues include reimbursements for travel expenses to bowl games. The 2006 year (2005 football season) includes the Gator Bowl against Louisville, the 2007 (2006 football season) year includes the Peach/Chick-fil-A bowl against Georgia, and the 2008 (2007 football season) includes the Orange Bowl against Kansas.

On the expense side, the cost of athletic student grants in aid increased 9% in 2008 and 35% in 2007. As noted in last year's report, I am not sure why there was such a substantial increase in 2007 other than possibly an increase in the number of out of state students receiving scholarships in the athletic programs. Tuition and fees have increased from year to year, but not 35% in one year.

Team travel expenses increased 19% in 2008 and 27% in 2007 when compared to the prior year. Although not shown in the table above, in 2008 team travel for football increased approximately $459k or 38%, men's basketball travel decreased approximately $23k or 5%, and women's basketball decreased approximately $11k or 3%. The football travel is primarily related to the bowl game in Miami as opposed to Atlanta, plus there was the trip to LSU. Salaries, benefits and bonuses increased by 2%, which appears reasonable.

As in prior years I have also reported revenue and expense summaries for the three revenue generating sports, which indicate the financial success of the football program and the men's basketball program. And there are comparative amounts for debt owed on facilities and the corresponding change, in this case decrease or payment, of debt service form 2007 to 2008. For 2008 the principal payments alone were over $4.6 million and the scheduled interest payments were approximately $3.3 million. So, in 2008 the total debt service requirements were approximately $8.0 million. That's a fair chunk of change to pay out of a $64 million operating revenue budget.

Also, if you look at the total bottom line, the Virginia Tech Athletic Department reports an excess of revenue over expenses of over $5.2 million for $2008 and $9.5 million for 2007. That is, in my opinion, due to the excellent support of the Virginia Tech fan base, plus excellent management of resources by the Virginia Tech athletic department.

The reported finances for the University of Virginia indicates that football season ticket sales and guarantees revenue increased by over $2 million in the 2007 football season when compared to the 2006 season, and increased only approximately $760k from the 2005 season. The 2007 football season was Chris Long's senior season and the Wahoos had Virginia Tech as a home game. Those two events, plus their winning season were probably the primary reasons for the increase in revenues. In 2007 (2006 football season) UVa had a losing football record. The men's basketball revenue increased by approximately $800k in 2008, or approximately 24% over 2007 revenues. 2007 was the second year of operations of the new basketball arena. The cost of athletic grants in aid decreased 9% and salaries, benefits and bonuses increased approximately 9% in 2008.

Additional information indicates that football made approximately $2 million in 2008 compared to a loss of over $2.9 million for FY 2007. In 2008 UVa allocated conference distributions and postseason revenues in the amount of $5.5 million in 2008 (2007 football season -- played in the Gator Bowl), but did not allocate any conference distributions and postseason revenues for the 2006 football season. The reason is probably due to the fact that the 2006 team did not go to a bowl game. Approximately $958k was allocated in the prior year when they went to the Music City Bowl.

UVa paid out $1.35 million in football guarantees for out of conference opponents for the 2007 football season and $1.25 million for the 2006 season. This is an average of $675k for each opponent as opposed to Tech's average of $702k. So, both schools are fairly close in payment for out of conference football opponents to play at Tech and UVa

There have been various newspaper articles and discussions on the TSL message boards relative to guarantees paid by various schools for out-of conference opponents escalating to amounts approximating $1 million or more. Adding those costs plus potential additional travel costs for intersectional games (Jim Weaver reported that our travel costs to Nebraska cost an additional $500+k over budget in the 2008 season) will cause more stress on college athletic department budgets.

As I noted in last year's report, it appears that both and Tech and Virginia will be paying more in the future to quality (or maybe not so quality) out of conference opponents, which will result in higher football and probably basketball ticket prices. It also appears that if you can secure a home and home game with a quality opponent, this cost may be kept under control. However, the travel element can also be volatile as happened in the trip to Nebraska this past season.

Also, and I repeat my comments from last year, if this pace keeps up, the playing of an additional conference opponent will appear to be even more appealing by the various BCS leagues. If the ACC and other BCS leagues (PAC 10 already does this) decide to go this route, I believe that some of the FCS (1-AA) league schools may have problems supporting their programs because there will be fewer out-of conference games scheduled by the BCS schools.

At least one ACC school is playing two 1-AA teams this year, and I believe several played two 1-AA schools in the 2008 season. If economics dictate the playing of an additional conference game, the Big East, only having 8 football members, may be in even more of a bind than other BCS leagues that have 10 or more members, since they will still have to schedule four out of conference games each year, unless they add more members.

It is also interesting that UVa's men's basketball is finally reporting a net income on operations for 2008. UVa played nine out of conference opponents in the new facility in FY 2008 and 2007 and paid guarantees totaling $773k and 710k, respectively, or an average of approximately $85k and $79k, which is very close to Tech's average payout per team of approximately $78k in 2007, but way less than Tech's average of 2008 ($116k). UVa did have Syracuse play in Charlottesville in 2007.

Student activity fees allocated to athletic operations at UVa continue to be much higher than those at Tech.

UVa's conference and NCAA revenues have averaged approximately $10.7 million over the past three years, while Tech's has averaged $10.6 million. However, Tech's overall share has increased more than UVa's primarily because of the winning of the ACC football division title, the respective reimbursements for costs for higher tier bowl games, and the payment of a full share of conference revenue distributions for VT beginning in 2007.

As noted in last year's report, when UVa opened its new basketball arena, the increase in operating costs for its sports facilities was substantial. And they still have operating costs for U-Hall, which is reportedly full of asbestos and will likely be very costly to remove when and if they decide to raze the facility. Although the athletic department is not directly in charge of the operations of the new basketball facility, it does appear that the athletic department pays a substantial amount of the operating costs of this facility.

If you look at the overall debt as reported in UVa's NCAA reports, a substantial amount of debt has been added to the athletic side of the equation over the past few years, plus there was an additional issuance of approximately $3.6 million in debt in 2008. The overall debt increased over $33 million from FY 2006 which is net of debt service paid over the past two years.

As noted in last year's report, I am not sure why there is a substantial increase, unless the new basketball arena debt was on a draw-down basis, where a ceiling is set on the total amount of the debt and loan proceeds are only drawn as needed to the ceiling amount. In most cases, the debt is sold to an investor and the total debt proceeds are placed in a trust or similar fund. The payments on the construction bills are then generally made from that fund. Another scenario is that approximately $48 million or more in debt may have been transferred from the University side to the athletic side in 2007. Regardless, if the athletic side has to pay all of the debt, that is a tremendous burden to bear.

If you look at the total bottom line of UVa's athletic report, you will note a net loss of over $1.4 million for 2008, and net loss of approximately $800k for 2007. That's a net loss of over $2.4 million over the two year period.

As most of you know, UVa charges admission fees to some of its Olympic sports; notably lacrosse, soccer and baseball. In 2008 it began charging admission for its volleyball games. After some significant resistance to the reseating of the football stadium for the 2008 football season, it appears that a fair number of those former football season ticket holders that also had men's basketball season tickets also elected not to renew their basketball season tickets, either. Plus, overall attendance at the men's basketball games declined significantly this past season.

In March 2009 UVa jettisoned their basketball coach to the tune of a $2.1 million buyout, and hired another for $1.7 million per year plus a signing bonus of $500k. It is rumored that the buyout was funded by the folks that pledged the major funds for the new basketball arena. My guess is those folks told Craig Littlepage that such funding was in jeopardy if Dave Leitao was not fired, and probably agreed to fund the signing bonus and maybe some of the pay of the new coach. But, that is just my guess. If you figure that UVa averaged approximately 4,000 empty seats per game at an average ticket price of $30, that amounts to $120k a game, plus losses on concessions and related revenues. That would approximate $2 million a season.

In February, 2009 there were newspaper reports of the UVa's athletic administration requesting donors to contribute additional funds to support the athletic programs. After the fallout related to the reseating and the current economic conditions, it could be a very rough fiscal 2009 and possibly fiscal 2010 year for UVa athletic finances.

The above information includes a comparison of current year financial activity for Virginia Tech, UVa, James Madison and William and Mary. As noted previously, James Madison and William and Mary are presented to show the larger Virginia Public College Division 1-AA programs in comparison to Tech and Virginia. As usual, there is a very significant financial difference between the 1-A and 1-AA programs. The presenting of non-football schools, as was done in prior years, is not, in my opinion, relevant to the overall presentation.

The season ticket prices and number of games for all of the ACC schools and our out-of-conference opponents is presented with the following caveats and comments:

• Some schools have various ticket pricing scenarios that include sideline seating ticket prices, end zone seating prices, club seating and other arrangements. Clemson, for example, has a higher seat price for club/suite seats ($355) than normal season ticket prices ($299).
• The prices shown in this schedule do not include personal seat licenses which can substantially increase the cost of individual seats. You can equate this to club and suite donations required to purchase tickets in those areas at Virginia Tech.
• In cases where there are significant variances in season ticket costs by location at the various schools, I have attempted to equate the "normal" season ticket cost as comparable to what is charged at Virginia Tech. Generally, this means I used sideline seating ticket prices as the norm since I believe that price to be comparable to VT. Others with degrees in quantitative analysis or similar disciplines may arrive at different amounts.

Visiting another school's official web site when looking for season ticket information can be an interesting endeavor. This information was easily found on most sites. The N.C. State site took substantially more effort than the others. And there can be interesting information regarding charges for other sports at the various schools. Nebraska charges admission for 12 sports, which includes wrestling, swimming and diving, softball, soccer, gymnastics track and field.

Other items of interest -- Alabama charges $55 for each SEC game, Florida State is charging $65 for the Miami game, N.C. State has two 1-AA schools on the schedule this year (trying to buy two wins I guess -- Murray State and Gardner-Webb), Marshall has personal seat licenses, and on-site parking requires a $600 donation in addition to the $18 per game parking fee -- parking across or down the street requires a $300 donation in addition to a $10 per game parking fee, Miami, Georgia Tech and N.C. State have personal seat licenses which vary according to the seat locations.

Although Tech only has six home games in 2009, the Alabama game in Atlanta will probably result in as much if not more net revenue than a home game. I believe VT is expected to receive in the neighborhood of $2 million for the game. Assuming travel costs to be in the $200k range, Tech should net $1.8 million. Plus, there will not be the out-of-pocket costs associated with a home game.

I decided to present this information so you can compare Virginia Tech's athletic operations to those of their out-of-conference football opponents. This schedule indicates that Virginia Tech has a larger (sometimes much larger) undergraduate enrollment than all of their out-of-conference opponents; however, it also shows that Tech's football revenues are substantially less than Alabama and Nebraska, and much greater than Marshall or East Carolina. The discrepancies are mostly due to stadium size, conference payouts and fan and donor support. The element detail for Tech's out-of-conference opponents (as for VT) is not available to fully document this assessment.

A friend of mine who graduated from East Carolina recently told me that he believes ECU needs to get in the Big East in order for the school's athletic operations to remain financially viable and competitive. He also stated that travel costs in Conference USA were killing them. He believes Terry Holland was hired by ECU to get them in the Big East. I responded to his comments by saying that would be a good move football wise, but the Big East is basically a large basketball conference and would need to either have 17 teams (probably not likely) or a basketball school would have to leave.

Travel for basketball in the Big East is not cheap either, when you have to travel to the Midwest as well as up and down the East Coast on a regular basis for basketball and the Olympic sports. Further, I believe the revenue streams for Big East football are going to be strained in future years, and I do not see the Big East allowing East Carolina in the league without trying to extract a lot of blood money from them, like they did with Connecticut, Louisville, Cincinnati and South Florida.

Also, I fully endorse Jim Weaver's decision to schedule East Carolina for the long term in football. They have a great fan base, are conveniently located for travel both for our fan support and the team, and their fans will travel to Blacksburg.

• While watching the April 17, 2009 football practice I had a chance to talk to a high school football coach from West Virginia who was attending the high school football coaching clinic held on the evening of April 16 and during the day of April 17. This gentleman earlier in the month had attended a similar clinic at West Virginia University. When I asked him for a comparison of the two, he said that at West Virginia all they gave them to eat was a sub sandwich and drink, and he thought that the WVU coaches had talked down to them, like they should feel privileged to be there. He said that Virginia Tech fed them very well, basically whatever they wanted from the menu where they ate, and spoke to them like they were part of the Tech coaching staff. A good attitude and good treatment of folks will go a long way in the referring of athletes to Virginia Tech.
• After watching the Spring football game, I am much impressed by the talent the football staff has accumulated and am very optimistic for this coming season. It appears that we are miles ahead of where we were last year at this time. Although the football season is about four months away, many of us eagerly await the season opener with Alabama. The football recruiting season apparently never ends anymore, and all the talk of recruits committing and the upcoming summer football camps will keep the football fires burning all summer.
• It was recently reported that Tech has had many more women applicants this year than in past years. Assuming this event results in an increase in acceptances by women, the Title IX issues will become evident. As mentioned in previous articles, it appears that women's golf will be Tech's next varsity sport when the construction of the River Course club house is completed. This addition should remedy Title IX issues for a while.
• It appears that the economic downturn has affected our Hokie Club donors. The extent of the contribution dollars impacted by this will probably not be fully known for a while. Jim Weaver acknowledged this during various Hokie Hotline talks during the football and basketball seasons. As some of you are probably aware from reading the TSL message boards, there has been a decrease in the number of Hokie Club members at both the Diamond and Platinum levels, and the economy probably has affected the amounts given within the individual giving levels. How this plays in to the number of football season tickets sold this year should be known soon. However, with the excellent home schedule we have this year, I would not think this would result in a significant decrease in season ticket sales. I have not yet seen any billboard or newspaper ads for Tech football season tickets. However, I have seen a lot of ads for UVa.
• As most of you are aware, there is a lot of ongoing and new construction activity underway for athletic facilities. The new basketball practice facility looks very impressive from the outside, the new football locker room and wrestling complex drawings indicate that this facility will really be nice when completed, the baseball indoor batting complex and storage facility is taking shape, and the Christiansburg Aquatic Center looks like it should be complete in a few months. All of these projects will enhance Tech's ability to produce excellent intercollegiate athletic teams. Please support these projects with contributions if you can.

Have a nice summer and Go Hokies!