UConn athletic department deficit reached $42 million in 2019 with a decline in ticket sales and league revenue

[billybud]

That's a pricing convention. But it doesn't have anything to do with the cost of delivery. I'm not debating the merits of it - I'm just saying that it using in/out of state tuition numbers when calculating what it costs to deliver a scholarship doesn't make any sense. As a straw man - if the 2022 team is completely comprised of in-state players, does the cash flow of the school get any better? No. But the fake math that will spawn news articles in 2022 will say that the program is more profitable.

The issue being - we aren't getting money for the scholarships - so assigning different values to something that we are giving away for free is a notional concept - and pretty meaningless.

Turn it around...If the straw man 2022 team was completely out of state...and the university did not receive the state subsidy for these students and only received a partial education cost reimbursement (because the students are not state residents and not partially tax supported)...than the cost to the U go up.

You seem to miss the fact that state universities whose educational costs are, in part, subsidized by state tax money...all report in-state and out of state students to their oversight bodies...and the subsidized students in one column, and unsubsidized in the other (who pay the subsidy difference individually), must equal total costs.

The cost to the university is different for out of state students if the taxpayers of the state opt not to subsidize students who are residents in other states. The university must make up the difference by charging increased tuition.

I suppose that the state could waive out of state charges for athletic scholarships...but that opens more cans for the worms to wriggle out of.

 

[J187Money]

Honest question - is the state aid to UCONN based on the number of in-state students?

https://accountingoffice.uconn.edu/wp-content/uploads/sites/143/2019/12/Fiscal-Year-Ended-June-30-2019.pdf

If you look at the financial statements it doesn't go into how the state appropriation is decided. So I'm not certain that the state is deciding specifically subsidize individual student groups. It appears to me that the state sets funding where it wants to - and the school may alter its mix of in-state/out of state students in order to capture enough revenue to balance the budget.

But my overarching point - what we "say" we are charging to someone we aren't actually charging is a made up number. To the extent that enrollment is fixed and taking one OOS athlete precludes us from taking an OOS paying student - sure there is a cost. But I'm not sure it actually works like that.

If we decided we didn't really want people from Saudi Arabia to attend UCONN - and therefore wanted to charge them $1M a year for tuition - and then we recruited a Football player from there - it wouldn't cost us $1M just because that is the rate we decided to charge them. I know that's a silly straw man - but that's the point I'm trying to make.

 

[billybud]

The identification of in-state and out of state students for tuition purposes is set in state statute. My assumption is that there is a reason for the statute's differentiation between in-state and non-resident students for tuition purposes.

For the purpose of assessing the cost of tuition, each UConn applicant will be classified as a Connecticut resident or a non-resident. The Office of Undergraduate Admissions uses the information provided by the Connecticut General Statutes to determine an applicant’s residency classification.

Statute requirements...10a-29

The following shall determine the status of a student:

(1) Every person having his domicile in this state shall be entitled to classification as an in-state student for tuition purposes. Except as otherwise provided in this part, no person having his domicile outside of this state shall be eligible for classification as an in-state student for tuition purposes;

....

 

[J187Money]

The identification of in-state and out of state students for tuition purposes is set in state statute. My assumption is that there is a reason for the statute's differentiation between in-state and non-resident students for tuition purposes.

For the purpose of assessing the cost of tuition, each UConn applicant will be classified as a Connecticut resident or a non-resident. The Office of Undergraduate Admissions uses the information provided by the Connecticut General Statutes to determine an applicant’s residency classification.

Statute requirements...10a-29

The following shall determine the status of a student:

(1) Every person having his domicile in this state shall be entitled to classification as an in-state student for tuition purposes. Except as otherwise provided in this part, no person having his domicile outside of this state shall be eligible for classification as an in-state student for tuition purposes;

....

We are talking past each other. I'm not debating what is or is not an IS or OOS student, and why that is what it is.

I'm simply stating that when we are giving someone a scholarship - we are not charging them anything. So pretending that the guy that lives in Springfield "costs" more than the guy that lives in Enfield is a meaningless accounting convention.

 

[billybud]

Yet...the athlete IS charged to the University at a cost...and that cost is differentiated by OOS-IS tuition differences. In that respect, the athlete is treated as any student regarding the tuition charges assigned.

I understand that the athlete is not charged....I do not see what that has to do with the subject. It is the University's cost for that education which counts...in this case the University absorbs the tuition cost rather than the student.

And the school's cost to educate is charged... like a regular student. The legislature made provisions to have non residents pay the cost of education without the Connecticut resident subsidy. And that cost of education differentiation between OOS-IS does not except athletic scholarships.

I may be talking past you...but only because I do not see the relevance of your point of the athlete student not paying his tuition versus the school footing his bill. The source of payment, the individual or school on his behalf, does not affect the charge off of tuition costs.

 

[J187Money]

It makes all of the difference. When an OOS student pays tuition, UCONN gets $. When an IS student pays tuition, UCONN gets $. An athlete pays nothing.

UCONN will generate the same amount of tuition $ from its scholarship athletes whether the mix is 100% OOS students or 100% IS students. So if UCONN's cash position is the same - pretending they "lost" more money because some of the athletes came from OOS just doesn't make any sense.

At the time that the last scholarship is given out in any given year, the cost structure of the university has already been sorted, the state subsidy has already been decided, the P&L is fully baked, and whether the last scholarship is going to an OOS or IS student - doesn't really matter. They both will consume services from the university at the same rate, and bring the same income - $0.

Sure - the school will make some journal entries and possibly even move some money around from one account to another depending on the decision, but that's just cost accounting - which is 100% subject to how senior management wants to look at the numbers. Cost accounting is art, not science.

 

[kibblesnbits]

If you want to perform a real financial analysis then this is an opportunity cost issue. The university is capacity constrained so it is going to take the same number of students regardless of whether they are on scholarship or financial aid/paying. The opportunity cost to the university of having athletic scholarships is the lost revenue from those athletes replacing the paying kind. That would be the average revenue received for tuition, R&B, etc. from such students. If the student body is 2/3 in-state paying $20K after financial aid and 1/3 out of state paying $35K after aid then a reasonable estimate of the opportunity cost for a scholarship is $25K. The total cost for athletics is the total scholarship opportunity cost plus stipends (have those started?), athletic department operating costs, athletic department capital allocations, etc.

 

[Old blue]

Can't help but think this has little to no impact on UCONN basketball or athletics. Kinda like the national deficit, just used when convenient politically, and just big numbers with no real impact on the individual or institution. I attended UConn in the late 80's, and we had state budget issues then too, and I always thought thats why they're stuffing us into dorms 3 or 4 deep into rooms meant for 2 people, thats why we played basketball in a gym that was out of the 50's, and thats why i lifted weights in a backroom that looked like something in my grandfathers old basement in that gym. Then I Went to a uconn game last year for first time in 20 years at Gampbel, and couldn't believe how the place had grown, and the quality of the facilities and dorms. I'm pretty sure the money is flowing into Uconn for anything they need, and its not coming from State coffers, but from parents checkbooks...Just sayin.

 

[Irishfan]

It makes all of the difference. When an OOS student pays tuition, UCONN gets $. When an IS student pays tuition, UCONN gets $. An athlete pays nothing.

UCONN will generate the same amount of tuition $ from its scholarship athletes whether the mix is 100% OOS students or 100% IS students. So if UCONN's cash position is the same - pretending they "lost" more money because some of the athletes came from OOS just doesn't make any sense.

At the time that the last scholarship is given out in any given year, the cost structure of the university has already been sorted, the state subsidy has already been decided, the P&L is fully baked, and whether the last scholarship is going to an OOS or IS student - doesn't really matter. They both will consume services from the university at the same rate, and bring the same income - $0.

Sure - the school will make some journal entries and possibly even move some money around from one account to another depending on the decision, but that's just cost accounting - which is 100% subject to how senior management wants to look at the numbers. Cost accounting is art, not science.

there are obviously many ways that you can calculate the expenses allocated to the various sports programs. I think the more important thing is the revenues generated. None of this matters if the ticket sales,TV money and alumni contributions get to the point where the expenses are covered. I still find it hard to believe that a women’s basketball program can generate 35% more gross revenue than a FBS football program.

 

[Drew]

Says in the article in 2021 it will start getting better, which would make sense since that is when travel savings and increased TV revenue will be realized. I have updated the spreadsheet for the increase in donations and from an earlier critique changed it from an annualized calculation to a NPV analysis. UConn will come out ahead, it just won't be realized overnight.

It's very good reporting by HC and Putterman, but don't get too caught up in the headline.

Always open to comments and critiques on how to improve this.

Do you have a link to this spreadsheet I can post (perhaps protect it first so nobody can edit the data) in an article on The Athletic? A guy is pissing me off and I want to educate him on how wrong he is on UConn‘s football future

 

[Exit 4]

Listening to this podcast. What balloon knots.

 

[Storrs South]

Do you have a link to this spreadsheet I can post (perhaps protect it first so nobody can edit the data) in an article on The Athletic? A guy is pissing me off and I want to educate him on how wrong he is on UConn‘s football future

Could probably write a dissertation about this spreadsheet at this point by my biggest takeaway from this exercise: no one is catching up to the P5 cartel from a monetary standpoint looking at both outcomes. At least UConn has created a path to deficit reduction with upside.