The University Record, October 1, 1996
Athletic Department financially independent from U, Regents told
By Julie A. Peterson
News and Information Services
The U-M Athletic Department is one of the few major collegiate sports programs to operate without subsidies from the University, Athletic Director M. Joseph Roberson told the Board of Regents Sept. 20 in a presentation on the department’s budget.
In fact, Roberson said, the department is a net financial contributor to the University because it pays tuition on behalf of student athletes who are offered scholarships. Total transfers from Athletics to other University units over the past three years have been about $9 million per year, including such items as tuition, housing, utilities, insurance, repairs and maintenance, and security costs.
Grant-in-aid payments for student scholarships and housing make up more than one-fifth of the department’s expenditures, second only to salaries and benefits, which comprise one-third of the expenditures. Athletics spent nearly $6.5 million in tuition, housing and fees for student athletes in 1994-95, by far the highest figure among schools in the Big Ten. Roberson said the department’s budget is particularly sensitive to tuition increases, which raise its costs for scholarships.
The bulk of the department’s revenue comes from ticket sales, with football tickets—a “tremendously important source of revenue,” according to Roberson—making up nearly 40 percent of this year’s income. By the year 2000, the price of football tickets will have increased an average of 3.2 percent per year over a 10-year period. The current ticket prices are scheduled to remain fixed through the end of the century.
Licensing royalties—income received from the sale of merchandise bearing the block “M” and other U-M symbols—are another sizable source of revenue.
“The University of Michigan is by far the largest generator of licensing revenues” among all American universities who report such income, Roberson said. However, the department is careful not to become overly reliant on licensing royalties because they tend to fluctuate quite a bit from year to year, he said. Royalties, driven by the success of Michigan’s teams in bowl games and NCAA championship tournaments, peaked at just under $6 million in 1994 but dipped below $5 million in 1996.
Television and radio rights, post-season revenues, facilities revenue, concessions, parking, program sales and private donations make up the remainder of the department’s revenue sources.
Because of a revenue-sharing agreement with the Big Ten, the University contributes a portion of its ticket sales and television revenues to a pool that is shared equally by all Big Ten member schools. The size of Michigan’s stadium and the popularity of its teams mean that the U-M, along with Penn State and Ohio State, contributes considerably more into the pot than other Big Ten schools, Roberson said.
For example, in 1995-96, the University had a net loss of nearly $850,000 in gate receipts for football and men’s basketball as a result of the revenue sharing agreement.
Regent Philip H. Power noted, however, that the figure is considerably smaller than it would be if not for an agreement negotiated by the U-M a few years ago to limit the University’s contribution into the pool. Currently, Michigan keeps 65 percent of gate receipts and contributes 35 percent to the pool, with a cap of $675,000 for each home conference game.
In his presentation to the Board, Roberson also noted that the Athletic Department is in the process of developing a strategic plan that will guide it over the next five years. The department also is undergoing athletic certification, a process which will last through January.
Roberson also outlined planned investments in athletic facilities, including renovations at Michigan Stadium, Crisler Arena, Canham Natatorium and Yost Ice Arena.
