DeLoss Dodds: The Warren Buffett of Collegiate Athletics
Posted by srr50 on May 4th, 2010
Like a lot of folks over the past couple of years, several big-time collegiate athletic programs have seen their endowment portfolios drop faster and deeper than a Cole Green curveball.
According to the Bloomberg News, however, UT is one of the few programs who actually saw its operating revenues go up since 2007, thanks to its investing in stadium expansions rather than securities.
Bloomberg News reports that of the athletic departments with more than $90 million in operating revenue, the biggest gainers were the Texas, up 32 percent to $138.5 million; LSU, up 32 percent to $100.9 million; and Texas A&M, up 33 percent to $98.1 million.
Bloomberg News received financial statements for the fiscal years ending in 2007 through 2009 from 51 public universities in the Atlantic Coast, Big East, Big Ten, Big 12, Southeastern and Pacific 10 conferences after filing open-records requests.
For Texas, the robust figures were driven by the decision in 2006 to renovate both DKR Texas Memorial Stadium and UFCU Disch-Falk Field.
Texas is already realizing a $10 million a year return on its investment in expanding DKR.
The annual debt on the renovations to DKR is $14 million. However, the addition of 13,000 seats along with 2,200 club seats starting at a minimum $2,000 annual donation, as well as 47 suites priced from $62,000 to $75,000 has helped to generate an additional $24 million for football.
UFC Disch-Falk Field now has 19 suites priced from $32,000 to $40,000 plus catering; 400 club seats at field level priced at a minimum $750 annual donation plus the tickets to help increase the revenue stream for baseball.
Meanwhile again according to Bllomberg News, 45 of the largest U.S. college athletic programs lost a combined $209 million in their investment portfolios between June 30, 2007, and June 30, 2009.
Texas’ decision to invest in expansion rather than equities proved to be a case of perfect timing.
“Had we gone with endowments, we’d be down 30 percent,” Dodds said. “This is a huge success.”
Most of the programs won’t know the total damage done by this recession on their bottom line at least until the 2009-10 data becomes available later this year. Meanwhile, thanks to the combination of on-the-field success, and an upgrade of facilities, UT expects donations to increase this fall.
Facility upgrades are just part of the story of the overall strength of the UT athletics program. A look at the revenue breakdown from 2008 (the last year where full numbers are available) paints a picture of a program that was well positioned to take advantage of the success of the football team beginning with the Vince Young Era.
Ticket Sales: $44,691,119
Texas led the nation in combined ticket sales revenue (Football, Basketball and Baseball).
Contributions and donations to athletics: $35,057,421
Again, winning makes it easier to hit the alumni and donor pocketbooks.
Money from the NCAA and conferences: $11,346,333
There is still a great deal of resentment among other Big 12 members for Texas blocking any kind plan that is an NFL-style revenue sharing plan. When the Big 12 implodes, this will be used by some of the programs left behind as a reason to bitch.
Money from licensed products, advertisements and sponsorships: $16,639,171
When Dodds arrived at Texas, the football and basketball coaches were making their own TV and radio deals for extra income. It was a system fraught with peril, including possible conflict of interests and money laundering problems. It led Texas to be a pioneer among major athletics programs in outsourcing first the local media rights to Host Communications, thus taking the coaches out of the money raising business, to eventually making a turn-key deal with IMG for everything from media to sponsorships and licensing.
It has been a rousing success.
Ever since Vince Young led the Horns over Michigan in the 2005 Rose Bowl, Texas has led the nation in licensed apparel sales.
When Texas defeated USC for the national championship in 2006, the Horns set a record for licensed apparel sales with over $8 million. Michael Jordan helped put North Carolina at the top of the sales charts on a yearly basis for almost two decades, and now Texas has been the champ for the last five years.
Alabama was second this past year, and has seen their sales increase 46% since the hiring of Nick Saban.
The Texas basketball teams’ fall from grace this past season has been chronicled here on Barking Carnival in painful detail. It remains to be seen if it is just a blip on the Rick Barnes Era radar, or if it is the indication of fundamental cracks in the program. Right now, the financial bottom line is still thriving.
For the moment, BEVO can still relax, since Texas basketball turned a $6.9 million dollar profit in 2008-09.
Texas basketball still remains among the elite when it comes to making money. In 2008-09, the program was the 8th most profitable D-1 basketball program. According to a CNBC survey, Louisville turned the most profit at $16.9 million. Kansas was sixth on the list, while Oklahoma State was 12th.
As for on-the-court success, nine of 15 most profitable basketball programs did not make it out of the first weekend of play in the 2010 Tournament. Michigan State and Kentucky were the two programs listed just behind Texas in the Top Ten.
Dodds has been Athletics Director at Texas for 29 years, and has taken more than his share of hits over that time, especially for some of his hiring decisions. There can be no doubt however that over the past two decades he has helped guide Texas through some economic shark-infested waters and has the set program as the Gold Standard of collegiate athletics.
At 72 he obviously is nearing retirement. Perhaps he has one more task to attend to — leveraging this unique position of strength into the best possible deal for Texas when the next round of musical chairs takes place in the BCS conferences.