$17m early buyout agreement per Blaud

[upstater]

It isn't a real cost in that that's not what the school pays to house feed and educate student athletes.

No one actually pays the full cost of out of state tuition. Inevitably it is discounted.

UConn pays $40k+ for those students.

This isn't hard to figure out. The true cost per student is published. It is $45,750 per student. Add in room & board. What does it cost to house, feed, pay utilities? If the school charges $13k a year, let's say they are making a big profit (which I doubt). Let's say it only costs them really $7k. You're over $50k a year per student.

The tax subsidies, research subsidies, endowments and grants subsidize that $45k to bring it down to $17k for in-state students, and $40k for out of state students.

The school together with the state have calculated how many out of staters they will take, how many they need, according to how many in-state students the state taxpayers are willing to subsidize. Since OOS tuition is so close to the true cost, the school figures that it is only subsidizing OOS with some research and endowment money, so essentially, it pays to have more OOS.

If you then foist the lost income for these OOS athletes onto the academic side, it's a loss for them.

Every single AD in the country does it this way--except for possibly North Carolina, though the move to make it all instate is highly controversial down there precisely because the politicians realize it will be a loss to the school's academic budget.

 

[CL82]

UConn pays $40k+ for those students.

This isn't hard to figure out. The true cost per student is published. It is $45,750 per student. Add in room & board. What does it cost to house, feed, pay utilities? If the school charges $13k a year, let's say they are making a big profit (which I doubt). Let's say it only costs them really $7k. You're over $50k a year per student.

The tax subsidies, research subsidies, endowments and grants subsidize that $45k to bring it down to $17k for in-state students, and $40k for out of state students.

The school together with the state have calculated how many out of staters they will take, how many they need, according to how many in-state students the state taxpayers are willing to subsidize. Since OOS tuition is so close to the true cost, the school figures that it is only subsidizing OOS with some research and endowment money, so essentially, it pays to have more OOS.

If you then foist the lost income for these OOS athletes onto the academic side, it's a loss for them.

Every single AD in the country does it this way--except for possibly North Carolina, though the move to make it all instate is highly controversial down there precisely because the politicians realize it will be a loss to the school's academic budget.

Do you have a link to that “true cost per student” number? I’d like to understand how it is calculated and what it represents.

Essentially, you seem to be saying that schools operate at operating breakeven. That seems unlikely to me.

 

[upstater]

Do you have a link to that “true cost per student” number? I’d like to understand how it is calculated and what it represents.

Essentially, you seem to be saying that schools operate at operating breakeven. That seems unlikely to me.

The UConn budget is exactly the same as its revenue. It's a non-profit. It is breakeven within a couple million every single year. When the state told Herbst it was going to cut $30m from its taxpayer subsidy, I'm sure her hair was on fire. That's an almost unfathomable amount when you consider how little of the budget is fungible. But at the end of the year, the budget had to be breakeven.

Even if the cost of educating athletes in non-material intensive majors is considerably less (and yes, the schools break costs down by major, each department is responsible for its own budget based on the headcount of butts in seats, & majors), the cost is still considerable. Say the $45k number represents an average of engineering students and philosophy students. It costs $60k to educate the engineer (which is why 40% of every science research grant goes to the lab/project itself rather than the university) and $30k to educate the philosophy student. Even if you make this argument (essentially that athletics is subsidizing engineering) you end up forgetting that 60% of research grants offset tuition and subsidize the education of athletes. With research in the amount of $400m, that's 30% of the budget, and a 18% subsidy for philosophy students.

By the way, it shouldn't surprise that it costs $30k to educate a philosophy student when you consider that it costs $20k to educate a kindergartner in the state of Connecticut.

 

[UConnNick]

If I owe you 5 million and you owe me 5 million either I can write you a check and you can write me one or we can both call it even and save the cost of the stamp. In this case though Chief is correct that we now have 5 million dollar hole in the budget that needs coverage.

Yes, only a few people seem to understand this simple truth. Forgiving debts to the AAC for money presently owed by the league, and probably already paid to all the other schools, doesn't exempt that money from being part of the 17m, just because UConn didn't physically write them a check. In accounting terms it's just as if we did write a check. 5m just disappeared from our "projected earnings". That's a virtual check to the AAC. That's a lot of money. How does it get covered?

 

[UConnNick]

Do you guys know how to add?

It's $17m!

If you don't believe so, I'd like to borrow some money from you.

I cannot believe that many in this thread think it's somehow better that most of the $17m will come from AAC FB and BB payouts.

It's WORSE! That money was going to be paid to us. It was an account receivable. We just turned a huge account receivable into an automatic deficit. Where's the money going to come from to offset that huge loss? Yes a little will get saved from a $2m difference in travel (3 bus trips from 1 1/2 to 3 1/2 hours long - enjoy those kids!), but unless we start getting a ton of revenue from the SNY deal, and I'm talking 8-9m per year (won't happen) plus large numbers of payday FB games) (may happen), we're not going to EVER replace that money completely, and that money is going to improve most years, making for a widening gap. Writing a check from the UConn bank account is better than giving away money you're already entitled to.

You know what the only real solution is? Kill football. I'm afraid that's what the pinheads in the UConn administration are leaning toward.

 

[UCDaveD]

Kill football. I'm afraid that's what the pinheads in the UConn administration are leaning toward.

Stop it. There's been absolutely zero indication that that's what the administration is "leaning towards"

 

[UConnNick]

Sure there’s games in Nebraska, Ohio, and Indiana but those are now the far games. In the AAC those would be the close games. Our closest school was Temple. There’s 4 Big East schools closer to us than Temple is (tossing Nova in there for arguments sake).

That's ridiculous. Temple and Nova cancel out. There are three NBE schools closer to us than ANY AAC school, period.

 

[AZHuskiePop]

Yes, only a few people seem to understand this simple truth. Forgiving debts to the AAC for money presently owed by the league, and probably already paid to all the other schools, doesn't exempt that money from being part of the 17m, just because UConn didn't physically write them a check. In accounting terms it's just as if we did write a check. 5m just disappeared from our "projected earnings". That's a virtual check to the AAC. That's a lot of money. How does it get covered?

Just a question say UConn makes the NCAA tourney and makes a small run
Like sweet 16 .
That’s a bunch of money the AAC gets that’s earned by UConn who will never see a penny.
$1.670,000 just to make the tourney
About $5;000,000 for the sweet 16.
Shouldn’t they or did day make future earnings deductible from exit fees .
I would hope do.

 

[UCDaveD]

Just a question say UConn makes the NCAA tourney and makes a small run
Like sweet 16 .
That’s a bunch of money the AAC gets that’s earned by UConn who will never see a penny.
$1.670,000 just to make the tourney
About $5;000,000 for the sweet 16.
Shouldn’t they or did day make future earnings deductible from exit fees .
I would hope do.

Any monies owed to UConn would count towards the buyout.

 

[UConnNick]

Any monies owed to UConn would count towards the buyout.

Yes, we'd just owe them that much less money to make up the difference.

UConn to the FF this coming season! Maybe we'll win the NC and wipe out most of the rest of our AAC debt. We could be the second coming of Louisville, when they essentially got paid nothing for the 2013 vacated win.

Interesting question. When Louisville's 2013 title was vacated by the NCAA, they also vacate their entire NCAA earnings. Did the other Big East schools have to pay back any money they received from the Louisville distribution?

 

[David 76]

$17 million buy out.
$3.5 million buy in

Will this hurt the KO situation?

 

[Husky25]

$17 million buy out.
$3.5 million buy in

Will this hurt the KO situation?

How are they related?

 

[Chief00]

Are we though? @$16.5M is due to accounting for scholarships at the full out of state rate. No one pays that. If you account it for it based on actually out of pocket cost, it is a fraction of that number. Rent for the XL and the Rent, is essentially an accounting fiction moving money from the UConn AD budget to the CRDA's budget making our numbers look worse than they are and their loss look less bad.

I'd like UConn to fix both of those so that, going forward in our NBE years, our budget numbers look better. That creates a narrative that makes UConn look like innovators rather than victims in this process.

I am all for fixing all the artificial accounting fabrications that muddy the waters. I have long advocated for UConn to take over these two venues not because they have s history of managing things well but at least there would be a direct line of accountability. The finances would become more transparent too.

 

[Chief00]

Yes, only a few people seem to understand this simple truth. Forgiving debts to the AAC for money presently owed by the league, and probably already paid to all the other schools, doesn't exempt that money from being part of the 17m, just because UConn didn't physically write them a check. In accounting terms it's just as if we did write a check. 5m just disappeared from our "projected earnings". That's a virtual check to the AAC. That's a lot of money. How does it get covered?

Exactly.

 

[CL82]

The UConn budget is exactly the same as its revenue. It's a non-profit. It is breakeven within a couple million every single year. When the state told Herbst it was going to cut $30m from its taxpayer subsidy, I'm sure her hair was on fire. That's an almost unfathomable amount when you consider how little of the budget is fungible. But at the end of the year, the budget had to be breakeven.

Even if the cost of educating athletes in non-material intensive majors is considerably less (and yes, the schools break costs down by major, each department is responsible for its own budget based on the headcount of butts in seats, & majors), the cost is still considerable. Say the $45k number represents an average of engineering students and philosophy students. It costs $60k to educate the engineer (which is why 40% of every science research grant goes to the lab/project itself rather than the university) and $30k to educate the philosophy student. Even if you make this argument (essentially that athletics is subsidizing engineering) you end up forgetting that 60% of research grants offset tuition and subsidize the education of athletes. With research in the amount of $400m, that's 30% of the budget, and a 18% subsidy for philosophy students.

By the way, it shouldn't surprise that it costs $30k to educate a philosophy student when you consider that it costs $20k to educate a kindergartner in the state of Connecticut.

Fully understand that the schools budget is nominally stated as breakeven, but that doesn’t mean that the actual marginal cost to house and educate a student athlete is the undiscounted out of state tuition.

 

[upstater]

By the way, here's what is going on down in North Carolina: https://www.newsobserver.com/news/politics-government/article232791677.html

You can plainly see that the accounting move simply moves the costs from athletics to academics. Even the boosters, ahem, legislators, realize that.

 

[Chief00]

I cannot believe that many in this thread think it's somehow better that most of the $17m will come from AAC FB and BB payouts.

It's WORSE! That money was going to be paid to us. It was an account receivable. We just turned a huge account receivable into an automatic deficit. Where's the money going to come from to offset that huge loss? Yes a little will get saved from a $2m difference in travel (3 bus trips from 1 1/2 to 3 1/2 hours long - enjoy those kids!), but unless we start getting a ton of revenue from the SNY deal, and I'm talking 8-9m per year (won't happen) plus large numbers of payday FB games) (may happen), we're not going to EVER replace that money completely, and that money is going to improve most years, making for a widening gap. Writing a check from the UConn bank account is better than giving away money you're already entitled to.

You know what the only real solution is? Kill football. I'm afraid that's what the pinheads in the UConn administration are leaning toward.

Football, with bad accounting and all, runs a $8.5 million annual deficit. The dirty secret though is the $22 million deficit minor sports run is significantly rooted in football due to Title IX. If you eliminate football - you could cut these other women sports and save lots of money.
I hope this never happens, since I love football, but it would be the quickest way to close this deficit.
Please understand I don’t advocate this approach or say it will happen but it would be a quick fix. Again, I don’t believe a good fix long term.

 

[JMick]

Football, with bad accounting and all, runs a $8.5 million annual deficit. The dirty secret though is the $22 million deficit minor sports run is significantly rooted in football due to Title IX. If you eliminate football - you could cut these other women sports and save lots of money.
I hope this never happens, since I love football, but it would be the quickest way to close this deficit.
Please understand I don’t advocate this approach or say it will happen but it would be a quick fix. Again, I don’t believe a good fix long term.

Football for the vast majority of schools is just a loss leader.

 

[CL82]

Yes, only a few people seem to understand this simple truth. Forgiving debts to the AAC for money presently owed by the league, and probably already paid to all the other schools, doesn't exempt that money from being part of the 17m, just because UConn didn't physically write them a check. In accounting terms it's just as if we did write a check. 5m just disappeared from our "projected earnings". That's a virtual check to the AAC. That's a lot of money. How does it get covered?

Increased enthusiasm generates increased attendance which generates increased revenue. As has been stated amply, the American net revenue under the new contract is lower than the net revenue under the NBE contract. Our exit and entry fees get funded by the move and get funded in fairly short order.

In the meantime, it is fair to analyze this on a cash flow basis. That’s where applying existing and future AAC earnings helps us.

 

[Chief00]

No blind faith, just some intel/knowledge on the travel expense discovery process (which is what this discussion started out as when you stated the travel savings weren't real).

You also continue to dismiss the impact of less/closer/cheaper travel by the other 17/18? teams besides MBB, WBB and Football that will play in the Big East Conference. UConn Athletics spent $7.3m on team travel in 2018. Football spent $1.2m of that number.

>>Still, any difference in travel expense for UConn figures to be relatively slight. In the 2018 fiscal year, UMass (playing a schedule similar to what the Huskies might build) spent $1,193,649 on football travel, according to the school’s NCAA financial statement, almost identical to the $1,151,379 that UConn spent as a member of the AAC. That comparison suggests travel expenses won’t rise much when the Huskies become independent and certainly shouldn’t offset the savings UConn expects from its other sports programs. <<

Are the projections likely to have some deviation as actual expenses come in... sure. Show me a multi-year analysis that doesnt have some assumptions built into it that may fluctuate. That's not "inherently sloppy" - that's life.

But what does a dumb old ambulance driver know...

So call football a wash and they are projecting $2 million of savings on a $6 million expenditure or 33%. I wonder how many state budgets actually reduce costs 33% in a year? I hope it happens but call me skeptical. Keep in mind if MBB starts running deep into the tournament that adds travel costs and while the BE tournament is close, hotel and meal costs will be high, etc. So lots of cross currents and variables.

 

[Chief00]

Football for the vast majority of schools is just a loss leader.

Is there such a thing as a loss loser? LOL

 

[Jbirdp5]

People that are using the term fleeced to describe the transaction to get us out of the aac seem a bit off. Did we do what we had to do? Yes but it’s not like we got off cheap in the least. Surprised by that perception

 

[Dooooooomed]

People that are using the term fleeced to describe the transaction to get us out of the aac seem a bit off. Did we do what we had to do? Yes but it’s not like we got off cheap in the least. Surprised by that perception

Being reported that Aresco was seeking $30 million. We wanted to keep it under $15 million. 17 is closer to 15 than it is to 30.

Cincinnati.com mad. They think Aresco caved. Page: Why did the American Athletic Conference cave to UConn in exit fee negotiations?

 

[upstater]

People that are using the term fleeced to describe the transaction to get us out of the aac seem a bit off. Did we do what we had to do? Yes but it’s not like we got off cheap in the least. Surprised by that perception

Agree. The best thing to do is compare it to the only other team that ever left the AAC and they got off easy.
Louisville.

I imagine that this happened because of two things:

1. Louisville left for the P5 and so Aresco didn't want to anger a P5 team. He has disregard for UConn because we're not P5. Interesting.

2. UConn must have blasted him for pawning off our T3 rights so the rest of the conference could profit.

 

[Jbirdp5]

Being reported that Aresco was seeking $30 million. We wanted to keep it under $15 million. 17 is closer to 15 than it is to 30.

My point was people acted like we completely fooled him and used the term fleeced. Would you consider that an accurate depiction of the negotiation?