The Kroger Roth Report
    June 14, 2012
    Fiscally efficient Tech able to maintain success in athletics while keeping fees remarkably low
    The Roth Report
    By Bill Roth

    As you probably know, this has been a troubling and disconcerting time for administrators, fans and athletes at some major universities throughout the country who are currently facing huge athletics department deficits, sinking revenues and rising costs. Some schools are even considering dropping sports as a result of their financial situations.

    Many of you probably read The Washington Post story last November about the financial struggles in the University of Maryland’s athletics department. A university panel recommended cutting eight sports, including men’s track and field and men’s cross country, along with men’s and women’s swimming and diving, men’s tennis, women’s water polo, and aerobics and tumbling (formerly known as competitive cheer).

    In early May, news broke that Florida State’s athletics department was facing a $2.4 million budget shortfall. A better-than-expected ACC payout enabled the Seminoles’ administrative staff to cover the shortfall.

    No one at Virginia Tech wants to be in a similar situation, so steps are being taken – and have been taken for quite some time – to keep the athletics department on firm fiscal footing. At Virginia Tech, the administration has been able to maintain success on the field, build and expand new spectacular facilities and pay competitive salaries, all while operating in the black and keeping student fees among the lowest in the country.

    “Athletics at Virginia Tech are amazingly self-sufficient,” said Larry Hincker, Virginia Tech’s associate vice-president for university relations.

    Data provided by the university shows that Tech’s athletics revenues this past year were $66.9 million. Expenses for the year were $62.5 million. In a time when many schools – including some in the ACC – are suffering financially, Tech is doing quite well. The athletics department was roughly $4.4 million in the black.

    Hincker suggests that a “culture of fiscal responsibility” at Tech, and commonwealth of Virginia laws that ensure various departments within the university do not overspend, creates a solid financial picture even in a tough economy.

    “Remember in Virginia, only monies specifically collected for athletics can be used for athletics,” Hincker said.

    No tax monies are used for facilities or salaries. No state funds are used for travel, or to build football locker rooms, basketball facilities or baseball stadium enhancements. The Tech athletics department will not get a dime of state money for its next big project – the building of a new field house and the renovation of Rector Field House, a project with an estimated cost of around $25 million.

    This isn’t Connecticut, where the state built a $91 million football stadium, Rentschler Field, for the University of Connecticut football team (www.rentschlerfield.com). In fact, the taxpayers paid for the whole thing, and the state actually owns the facility.

    This isn’t New Jersey, where a public debate over how much of a $100-million renovation to Rutgers Stadium should come from state dollars dominated the news several years ago.

    Virginia law prohibits the use of state funds for any athletics facilities (college or pro), which forces schools to raise money, sell tickets or charge students fees for revenues in addition to collecting their respective conference distribution. Additionally, checks and balances are in place. Virginia Tech requires the athletics department to hold millions in reserves, requiring, in essence, for the department to have the money before it spends it.

    What’s perhaps most impressive at Tech is that the Hokies’ athletic fee is just $267 per student, lowest of all Division I schools in the commonwealth. This is a fraction of what other state schools, like UVa at $657 per student or William & Mary at more than $1,400 per student, charge. Longwood charges more than $2,000 per student.

    “As a university, we want to keep our comprehensive fee low, not just the athletic fee, but all fees,” Hincker said. “Whether it’s the dorm and dining hall system, or athletics, we want to keep fees low to lower the total cost of education to our students.”

    Tech students are getting quite a deal compared to their colleagues at other state schools. In addition to getting to see quality non-conference games in both football (e.g. Nebraska) and basketball (e.g. Kansas State), they also get to witness games against longtime ACC programs like Duke, North Carolina, N.C. State and Maryland.

    “We allow 3,400 students in basketball games for free, and 17,000 students in football games for free,” Hincker said. “Our students are able to see world-class athletics events at the highest level.”

    Keeping the athletics fee low is important because the cost of tuition continues to rise. That gets back to Hincker’s earlier point about keeping the total cost of education as low as possible. Virginia Tech is taking care not to gouge students by raising certain fees in addition to the cost of tuition.

    “We have relatively high tuition costs at Virginia Tech because we have high-level, high-cost programs,” Hincker said. “Engineering, computer science, agriculture, finance, or any competitive program or one with a lot of support facilities are expensive to operate.”

    Lower athletic fees force the athletics department to rely on other revenue sources and savvy fiscal management to stay in the black. The athletics department obviously gets a portion of its revenue from the conference’s payout each year, but the department also receives money from its contract with IMG, the school’s multimedia rights holder, from contributions to the Hokie Club and from ticket sales. The Hokie faithful gobble up season tickets for football every year.

    Of course, one needs to manage that money in a proper manner, which is where Jim Weaver, Tech’s AD, and his staff come into play. Thanks in part to their leadership and fiscal strategy, the Hokies have been more than competitive in the ACC and nationally.

    “Jim has done a good job of managing it,” Hincker said. “We have reserves, so we are able to borrow cheaply to help fund these new facilities. We pay our coaches well. We spend money on salaries, but we’re smart with our money.”

    It’s important to note that, when comparing financials among schools, we’re not always comparing “apples to apples.” Tech has more students than many other schools, so it can keep its student athletic fee lower. It also has more alums than many schools in the ACC, and thus can have a stronger fundraising effort than many of its peers.

    As a fan, you want to look at the standings and see Tech succeeding. But it’s also encouraging to see that the Hokies are exceeding on the spreadsheets as well. And that’s tremendously encouraging as we look to the future.

    For updates on Virginia Tech Athletics, follow the Hokies on Twitter (@hokiesports).


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    The Roth report appears monthly in Inside Hokie Sport and is posted for the general public on hokiesports.com.

    The opinions expressed here are solely those of the writer and do not necessarily reflect the views of the Virginia Tech Athletics Department, hokiesports.com, or its advertisers.
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