UT athletics - a Midas touch

PDF: UT Athletic Program document

KNOXVILLE - The University of Tennessee boasts one of the richest athletic programs in the country and, for its size, generates and spends as much on its intercollegiate sports programs as any school in the country.

Despite the carousel of football coaches in Knoxville in the past couple of years, UT men's athletic director Mike Hamilton still finds gold on Rocky Top.

"We're fortunate," Mr. Hamilton said. "A lot of people care very deeply about the success of our university's academic and athletics."

In a fiscal year in which the recession forced cuts to many state and university budgets, UT athletic spending jumped by more than 13 percent to top $100 million for the first time this year. Tennessee is among only a handful of colleges reaching that nine-digit spending total this year.

For its size, no public university is spending any more this year on its athletic budget.

Among major public schools, only the University of Texas, Ohio State University, University of Alabama and the University of Florida have had bigger budgets in the past couple of years than what UT is scheduled to spend this year on intercollegiate sports.

The record high budget for UT athletics this year reflects Southeastern Conference's recent blockbuster television contract, as well as the fruits of new sky boxes and upgrades at both Neyland Stadium and Thompson Boiling Arena. Mr. Hamilton credited an eighth home football game last season for bumping revenues, as well.

"It's been a combination of good things," he said.

But sustaining that level of support, especially during tough economic times, is a continuous challenge for Mr. Hamilton, a fundraising expert known more for his business - not athletic - acumen.

New UT football coach Derek Dooley's appeal to donors will also go a long way toward determining the department's financial fate.

Mr. Hamilton has hedged his bets - and possibly his future with UT - on Mr. Dooley being the answer that Lane Kiffin wasn't in his year of football coaching at Tennessee.

"I think the jury's still out on that," Mr. Hamilton said. "Frankly, I think that he will be received very favorably. And I think that will be reflected from a development and ticket perspective."


Unlike most universities - all but "a dozen at most," according to Mr. Hamilton - Tennessee is able to fund its sports program without any taxpayer, institution or tuition support.

Although students pay $1 million a year in fees allocated to women's sports, the athletic program expects to transfer nearly $6 million in general support for university programs this year, in addition to nearly $14 million of payments for athletic scholarships and facility support.

"Dollars actually flow back in the other direction here," Mr. Hamilton said.

And while most of UT's 20 athletics programs have won conference or national championships, Mr. Hamilton - like his predecessors - realizes that football "is the economic engine that drives the train."

The eight home football games last fall accounted for three-fourths of all the ticket revenue and concessions the university expects to generate from all of its intercollegiate sporting events this year. Tennessee sold nearly $27 million of football tickets last fall, even though there were as many unsold seats at Neyland Stadium as what UT has had in years - thanks in large part to just two of the eight opponents using their entire 9,500-ticket allotment.

"As you watched college football on television this year, you saw a number of empty seats nationwide," Mr. Hamilton. "It's indicative of the economy that we're in."

Fans aren't traveling as much to away games, he said.

"We count on certain numbers of (visiting fans) traveling. This year, South Carolina returned 2,000 or 3,000 tickets," he said.

But UT fans didn't snatch up those returned tickets, either.

And that's another reason why Mr. Hamilton said the coaching shuffle in the football program has been so critical - to reinvigorate UT's winning tradition and sustain generous fan support.

"We're not in one of our best runs in football right now, and people will always judge a lot of what we do based on football," he said. "In this league, it's historically been cyclical. What we've got to do is everything we can do to make sure that we cycle back up to where we want to be."


Despite atypical football mediocrity in recent years, UT remains one of the most successful athletic programs in the country. In the annual Director's Cup Standings among all NCAA schools, Tennessee has remained among the top 25 schools in the country - and it's usually ranked higher when football is winning big.

"We're competing at the highest level in all of our sports," Mr. Hamilton said. "This has always been a place - and we're always going to be a place - where football is going to have significant importance. But I want us to be known as a total sports program."

But keeping a championship program is costly. Phillip Fulmer was paid $2.8 million a year and Lane Kiffin was given a starting salary of $2 million a year ago - with plenty of options to earn more. But those pay levels placed Tennessee only about average among SEC coaches salaries.

UT men's basketball coach Bruce Pearl is being paid a $1.9 million salary this year, plus $500,000 in longevity pay, and women's basketball coach Pat Summit is being paid $1.4 million, plus performance bonuses, according to The Associated Press.

The average pay for UT's most prominent head coaches is nearly 12 times greater than the $164,292-a-year salary for Tennessee's governor.

Changing coaches can be even more expensive.

Dr. Terry Neal, a University of Tennessee accounting professor who heads a panel that helps oversee UT's athletic spending, said the athletic budget booked a $3.2 million net loss in fiscal 2008-2009 because it had to absorb the buyout costs for coach Phillip Fulmer and other assistant coaches in late 2008. The athletic program dipped into its reserve account to absorb the one-time expense.

Despite that paper loss, the athletic program continues to generate a positive cash flow, Dr. Neal said.

"Considering the economy, the athletic program continues to do very well," he said.

Athletic officials say the growing salaries for top coaches - and the increasing turnover for such coaches - reflects the market demand for those who can help a university win games and attention.

Mr. Hamilton said he shares the concerns voiced by some NCAA and academic leaders about the increasing costs of collegiate athletic programs.

"It's tainted things a little bit," Mr. Hamilton concedes. "It concerns me, because one of the things I like best about college athletics is the concept of the educational process. I still believe in that part of it, and we've gotten a little bit away from that, with the salaries getting to where they've gone, and the costs getting to where they've gone, and the prices getting to where they've gone. I

Major college football coaches are spending an average of five or six years per destination now, when a decade used to be far from an exception.

"The reality is that the dollars being paid to the higher-profile coaches are very significant, but the expectations that come with those are very significant," Mr. Hamilton said.

There is also a direct correlation between financial benefits and championship expectations, Mr. Hamilton noted.

"We're a victim of our own doing in the sense that we're charging larger prices," he said.

Fans who pay $70 to come to a game, make a $2,500 gift to get tickets, shell out $20 to park and $5 for a Coke expect top performance for that investment, he said.

"That's where some of the pressure comes, he said. "And then the other pressure ... media coverage. It's 24-7-365 ... ESPN has ESPN, ESPN2, ESPNU, ESPNNews ESPNDeportes, ESPN.com, and so on and so forth. There's an incredible amount of pressure that comes from the coverage, and the fight for coverage."


The growing attention and budget for Tennessee athletics comes as other university programs are being gutted.

The UT system faces a $110 million budgetary shortfall when federal stimulus funding runs out in 2012. UT Interim President Jan Simek said falling state funding may force the system to eliminate more than 500 faculty and staff positions systemwide.

Students have been told to expect fewer classes, larger classes, delayed graduation and higher tuition. The school's nursing, business and engineering programs just announced significant hikes to tuition for this coming fall.

Some faculty say it is difficult to watch academic quality dwindle as the monetary gains for athletics continue to mount.

"It certainly is discouraging to see faculty salary levels flat and then look at these enormous salaries that the coaches get and the amount of money in the football program," said John Nolt, a philosophy professor at UT and former Faculty Senate president.

Still, he said most faculty don't blame athletics, which help the university with fundraising, scholarships and direct aid. The state and public are the ones with mixed up priorities, said Dr. Nolt.

"The problem is with the fact that athletics is a very lucrative business and academics is not as highly valued to the public," he said. "They want to see football games, not excellent scholarship or fine art. It is a matter of public perception and public interest."

Reporter Joan Garrett contributed to this story.

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