Stanford Athletics has regained its financial footing at last, projecting a balanced budget for the upcoming 2010-11 year — its first balanced budget since the economic crisis in 2008. To achieve this bottom line, however, the Athletics Department will keep in place the operating cuts from the past two years.
“In order to balance the budget for FY11, we have primarily maintained previous budget saving measures and have not undertaken many new, incremental cuts,” wrote Stanford Athletics Chief Financial Officer Brian Talbott in an e-mail to The Daily.
When the endowment dropped 27 percent in fiscal year 2009, the Athletics Department was faced with a $5 million shortfall.
Stanford Athletics responded by eliminating 25 staff positions, freezing salaries and slashing travel and facilities budgets, according to the 2010-11 budget. After cutting $1.6 million in FY09 and an additional $3.5 million in FY10, the department still operated at a loss of $1.51 million in FY09 and a projected $156,000 loss for FY10.
The cuts, however, were enough to stave off eliminating any of Stanford’s 35 varsity sports, although the fencing program had to self-fundraise its $250,000 operating cost in FY09 to keep varsity status.
For now, all the Cardinal sports programs are safe.
“Given our current forecast, we believe we will be able to balance our budget and meet our financial obligations without discontinuing any sport programs,” Talbott said.
At $85.7 million, the 2010-11 budget for Athletics operations and financial aid makes up 9 percent of the University’s billion-dollar administrative and auxiliary unit expenses. Stanford Athletics is an auxiliary unit of the University, meaning it is a self-contained entity that runs on the revenues it generates. According to Vice Provost for Budget and Auxiliaries Management Tim Warner, all the revenues that Stanford Athletics collects go straight toward paying its own expenses.
“The basic idea is that [Athletics] covers its costs, particularly the Intercollegiate Program, with the revenues it raises through ticket sales, TV revenue, fundraising, et cetera,” Warner said.
Physical education and recreation programs for the entire student body, on the other hand, are supported by the University’s general fund.
Hopes of bolstering the department’s budget now rest on the renegotiation of the broadcast deal once the University’s television contract expires.
The addition of Colorado and Utah to the Pac-10 is expected to help Stanford work out a better television deal. Earlier this month, Director of Athletics Bob Bowlsy told The Daily that the renegotiation of the media contract is projected to increase funding two- or three-fold.
But this won’t occur for at least another year, according to Talbott.
“It is unclear what impact the addition of Colorado and Utah to the Pac-10 will have on the conference’s broadcast revenue,” he said. “However, we fully expect that when a new deal goes into effect for FY13 that we will see a significant increase in broadcast revenue over the current deal.”
In the meantime, the drop in the Athletics endowment will be most critical for the athletic scholarship budget, which is typically funded through endowment payouts.
“Athletic scholarships are paid through restricted endowments, so in other words people will give a gift to the endowment for a particular athletic scholarship as opposed to a general need-based scholarship,” Warner said.
These endowments actually overfunded athletic scholarships in FY09 and FY10.
In FY11, however, $2.5 million must be transferred from the operating budget to the financial aid budget to pay for the $19.6 million in scholarships for varsity athletes. Athletic scholarships have increased from $18.9 million last year in accordance with the tuition increase.
In the next few years, Talbott said, the department will make a fundraising push to bridge the financial aid gap.
“We have a plan to raise $25 million in new scholarship endowments which, combined with modest increases in endowment payouts, will allow us to again fully fund athletic scholarships through endowment payouts within a few years,” he said.