"We've got to generate more revenue"
HattiesburgAmerican/Munz:
The financial divide within college athletics has long been extreme.
In 2005, the University of Alabama’s total revenue sat somewhere just north of $62 million per year, while East Carolina’s was nestled near the $21 million mark.
A decade later, that yawning chasm continued to deepen as the likes of Texas, Michigan and Ohio State boasted income figures well past the $150 million plateau, according to data compiled by the USA TODAY Network. In 2015, Alabama generated $148.9 million while East Carolina pulled in $48.9 million.
So where does Southern Miss fall in this financial spectrum?
Southern Miss was once a contemporary of East Carolina, both members of Conference USA in 2005. At the time, the Hattiesburg university trailed East Carolina in the revenue race by less than $3 million. Ten years later, Southern Miss has seen a 33 percent increase ($23.97 million in revenue in 2015, next-to-last among Conference USA institutions whose budgets are public record) while East Carolina, now an American Athletic Conference member, has experienced growth more than four times that rate.
“Obviously, we’ve got to generate more revenue,” new Southern Miss athletic director Jon Gilbert said.
Stimulating a cash flow stream that has lagged well behind even Southern Miss’ newest peers within Conference USA is priority No. 1 for Gilbert. The former Tennessee deputy athletic director, who was hired in January to replace Bill McGillis, has spent the majority of his career doing just that.
Gilbert began efforts to make inroads to that end as soon as he officially took office in February at Southern Miss. One of the pillars of the athletic department’s annual budget has been lucrative — sometimes record-breaking: single-game guaranteed football contracts. Recent road games against the likes of LSU, Nebraska and Alabama have all grossed more than $1 million each. And future games against Tennessee (2017), Auburn (2018) and Alabama (2019) will also each clear the million-dollar level — some by a significant amount.
However, the net value of such matchups is considerably lower than the flashy numbers bandied about on the official contracts. Travel expenses as well as opportunity costs (income associated with hosting a game) are factored in before a final dollar amount is deposited.
Nevertheless, part of Gilbert’s philosophy is less dependent on large, one-time payouts and more so on longer-term deals that would likely generate more fan interest as well as a higher degree of competitiveness. A prime example being the four-year, home-and-home agreement between Southern Miss and its former Conference USA mate Tulane that was announced last week. The first game between the two is set for 2022.
“Games like this are really good from a revenue standpoint,” Gilbert said. “For both schools. We will bring a passionate fan base to New Orleans, and their fans can drive up (for the games in Hattiesburg in 2023 and 2027). As we look at how we move our department forward, I think we’ve got to get more regionally-based games.”
Southern Miss has never eluded financial challenges, but those trials have been exacerbated in recent years thanks to a wide array of factors. Conference USA’s year-old media rights contract (which saw a drop in annual income for each member institution from more than $1 million annually to roughly $200,000) as well as the advent of cost-of-attendance (defined by the NCAA as the cost of tuition, fees, books, room and board, transportation and personal expenses for an academic year) are hardships Southern Miss, along with most of its peers, has incurred lately. Southern Miss spent $330,000 on cost-of-attendance for fiscal year 2017. Athletic department officials expect that number to rise to $530,000 for fiscal year 2018.
“I don’t think we’re any different than our peers with this, but the biggest challenge of the last year is the TV contract,” senior internal operations director Kent Hegenauer said. “In my years here, I don’t think we’ve had one line item change quite that drastically.”
Where the gap significantly widens, though, is in the dollar amount schools generate in student fees and direct institutional support. Southern Miss ranked fourth in Conference USA in total ticket sales in 2015 ($2.28 million) and fifth in contributions ($4.19 million). But it slid to ninth in student fees and institutional support and 13th (out of 13 schools) in subsidy percentage — 36.65 percent of the school’s total revenue is made up of student fees and institutional support.
While Southern Miss received $8.8 million in direct subsidy in 2015 — only up from $7.5 million a decade earlier — many of its contemporaries have left the Golden Eagles in the dust. In 2005, Middle Tennessee brought in $11.4 million through student fees and institutional support. In 2015, that number was up to $19.4 million. Western Kentucky’s subsidy amount nearly doubled over that span. South Alabama, a Sun Belt Conference member — which generated $28.1 million in total revenue in 2015, received approximately $19.9 million in student fees and institutional support in 2015.
The timing of the financial surge for schools with similar profiles as Southern Miss couldn’t have been worse. The school bought out former football coach Ellis Johnson for $2.1 million when it fired him after the winless 2012 season. An NCAA investigation of the men’s basketball program began in 2014, and the basketball program's bottom line suffered as a result, dipping from $2.03 million in revenue in fiscal year 2014 to $1.15 million in fiscal year 2016, according to documents obtained by the Hattiesburg American through a public records request.
Gilbert is confident, though, he can make a difference.
“I’m still getting into the financials,” he said. “I’ve been working with our (chief financial officer), getting an outline for where we are and how we’re going to move forward. But I think the first thing we have to do is stabilize our operating budget. We want to make sure we’re good stewards of our resources. Then, you go out and solicit gifts to the department for capital projects, which programs need to move forward.
“I need everyone to buy in to that vision. If you have the resources to buy a ticket, we need you to buy a ticket. If you have the resources to join the Eagle Club, we need you to do that. As people are investing, they’re investing in the health and well-being of our student-athletes.”
By the numbers
Southern Miss increased its total annual revenue every year from 2004-05 to 2013-14, but it dipped in both 2014-15 and 2015-16.
2004-05: $13.6 million
2005-06: $15.2 million
2006-07: $16.3 million
2007-08: $18.4 million
2008-09: $19.1 million
2009-10: $19.3 million
2010-11: $19.7 million
2011-12: $20.2 million
2012-13: $22.5 million
2013-14: $24.4 million
2014-15: $24.2 million
2015-16: $24.0 million