Even though Fiscal Year 2016 just ended (June 30, 2016), we are going to look at FY15 today. The link to the numbers (plus previous years) is here. You can see last year's post here.I want to start off with the overall numbers and then look at a few key aspects to the numbers. So, let's dig in.
The overall situation does not look great here. Cal started FY15 with approx $6.7 million in the bank and ended it with $1.7 million in the negative. So, over the course of the year, Cal lost $8.4 million. How did it lose this much money and did it actually lose even more money than that?
The fundamental structure of the Department remains unchanged from year to year. Cal has 2 profitable products but sells 29 of them. In specific, football made $20 million and MBB made $2 million. Women's sports, overall, lost almost $12 million. It is tough to run a profitable business when you have so many money-losing products.
The numbers are actually a little bit worse than that. If you look at the revenue, it is $89 million. The expenses are $80 million. This is all before debt service and loan repayment, which we will get into in a bit. So, that sounds good, Cal made $9 million in profit, right? However, endowment this year was $9.2 million. I cannot get a bead on whether that is principal pulled directly from the endowment (bad) or income earned from the endowment (acceptable). It refers to it as "endowment and other investment income," which leads me to believe the latter, but it remains unclear to me. If it is the former, we broke even and then pulled out $9 million or so. If it is the latter, we made $9 million. Even if it is the latter, that $9 mil would be best turned into principal for further investment.
That $9 million usage of endowment is actually down slightly from the last few years. If the $9 mil is the extent of the endowment income we actually made then that is not great, because that means it went down substantially from prior years.
Making $9 million sounds good, right? Sure, but then we have $17.6 million in debt service sitting there. This is paying off of the $440 million loans for the construction and renovation of new Memorial Stadium. Expect to see this every year until at least the 2050s. Cal has a gameplan in place, which appears to be on pace to pay off the loan and make hundreds of millions of more by the 2050s. That certainly sounds promising, but we have to check in each year and see whether we are still on that pace. We discuss that more in depth in another post about the ESP seats.
Here, we have to look at the $17.6 as an additional expense not counted in the initial $80 million. So, our expenses are really approximately $97 million. That is how Cal technically lost $8.5 million on the year. That is how Cal went from almost $7 million to almost negative $2 million. Ugh.
Last year, we talked about the money in versus the money out. What we see now is that we are actually giving more back to the school than receiving from the school. This is a major issue that we have discussed for years now. If you all remember, Athletics looked into potentially cutting sports due to its budget concerns. One of the issues raised was the fact that UC Berkeley was giving Athletics millions of dollars a year.
Now, according to the chart here, Direct Institutional Support is approx $3.5 million. However, if you look near the bottom, Transfers To Institution is at approx $3.7 million. So, Athletics is actually giving back approx $200,000.00 to UC Berkeley. It was the case last year that Athletics was giving money back and so that should end any complaining. It won't, because I hate people.
One odd thing is the massive decrease in ticket sales from FY14 to FY15.
I wanted to focus in on ticket sales, because this is very interesting. If you look at FY14, ticket sales are $14.2 mil (which is $300,000.00 less than FY13). All of a sudden, it collapses down to $11 mil. If you dig deeper, you will see that ticket sales for MBB actually went up slightly from FY14 to FY15. What that means is that it was football that was the culprit here. In fact, from FY14 to FY15, football ticket sales went from $10 million to $7 million. Why the $3 million drop???
FY14 is July 1, 2013 to June 30, 2014. FY15 is July 1, 2014 to June 30, 2015. So, FY14 includes the 2013 season and the run up to the 2014 season. FY15 includes the 2014 season and the run up to the 2015 season. 2013 was one of the worst seasons in Cal history, if not the worst. However, hopes were high in the run up to the 2013 season as Dykes was a fresh coach. So, ticket sales in 2013 were probably fairly strong (and similar to the 2012 season back in New Memorial). 2013 also included a pretty good schedule in Northwestern and Ohio State. Those two games are going to be a big boost compared to SacSt and a post-Thanksgiving BYU game.
However, after the 2013 season, interest waned amongst the local community. Thus, the 3 million drop in football ticket sales from 1 year to another. That is a massive drop. If you look at the chart, the only time that that happens is FY12, which included the 2011 football season. That was a one off season at the much smaller ATT Park. The next year the sales jumped back up.
So, we are seeing what happens when you field a historically horrific team, it leads to a massive drop in our most important financial engine. That is a key part of how you lose so much money.
Oddly, however, contributions did not change materially from FY14 to FY15.
If you look at FY13, you can see that $4 million dollar jump. FY13 included the firing of Jeff Tedford and hire of Sonny Dykes. That enthusiasm led to the spike there. However, by FY14, the bloom was well off the rose. It is interesting to me that the amount did not decrease significantly from FY14 to FY15. These donations are significantly higher than all other previous years. I think that a)the ESP seats donations are tied in with this and b) we may be looking at low $20 millions as the baseline for donations with increases for better play over time. If #thisisourreality, then that is very good. We are seeing donations potentially settling in at $10 mil above our previous best case scenarios. YAY!
This is a minor note, but in FY15 (as in FY14), Cal is paying millions in severance payments. In FY15 it was $2.2 mil. This is assigned to football, which means we are still making payments for the firing of several football staff members. Hopefully, that will disappear soon, because that is a LOT of dead money.
In FY14, Cal's sports camps made over $600,000. In FY15, it lists $875. Not $875,000. Eight hundred and seventy five bucks. On $10,000 in costs. Firstly, that is not a good revenue versus cost model. But secondly, what the fuck happened there? They just cancel most of their camps???? Why even hold a camp if it is going to cost 10 large and you made a sweet $875? PREPARE THE NICK YOUNG CONFUSION MEME
In FY14, Cal just lists NCAA/Conference Distributions at $22 million. However, in FY15, they split it up into three separate categories. You have media rights at $17 mil, NCAA distributions at $2 mil and conference distributions at $6 mil. So, combined that is $25 mil. That means that those distributions went up $3 mil, which is a good increase. However, the Pac-12 lags behind many other major conferences in payouts. That is not necessarily something that Cal can control, but our increasing and gaudy numbers are not that much in the new arms race of college football.
Those are a few of the key aspects I wanted to focus on here. What are your thoughts? Thanks and GO BEARS!