UHart D3 Drama... $6.2 M Error

[gwhuskyfan]

Hi all,

Latest CT Scoreboard podcast is live. I'm talking with Andy Schwarz, he was hired to complete another study to review the initial Carr report findings. He found a $6.2 million error along with some other issues in the report. Looks like Jeff Hathaway continues to not know what he's doing.

Andy did the study that helped bring UAB football back so he's really knowledgeable in this area. Check it out:

 

[Chin Diesel]

Lies. Damn lies. And, statistics.

I'm willing to bet you could find accountants who agree with the initial analysis as well. All depends on who is paying them.

 

[WhereistheDove?]

Lies. Damn lies. And, statistics.

I'm willing to bet you could find accountants who agree with the initial analysis as well. All depends on who is paying them.

This. I'm sure this is all based on very fungible assumptions that can easily be argued many different ways.

 

[UCPharma11]

Andy Schwarz looks like an aged Dave Portnoy from Bar Stool Sports. Wonder what he would rate Blaze Pizza!!?? HAH

 

[huskiesouth]

Lies. Damn lies. And, statistics.

I'm willing to bet you could find accountants who agree with the initial analysis as well. All depends on who is paying them.

Tried many cases in Court where each side had expert witnesses addressing the same issues, almost always came down to a battle of whose expert was more impressive to the Court or jury, little to nothing to do with actual "facts". If you look long and hard enough you can find an expert to say almost anything.

 

[UCTitleTown]

I read it's more about UHart's survival as a university as a result of poor leadership, and dropping D1 sports is the university president's attempt to delay the inevitable and deflect from his incompetence.

 

[Waquoit]

It's almost as if the school would have been better served by their previous president sticking to the home front instead of spending years doing his Inspector Javert act.

 

[UConnJim]

Accounting for college athletic departments is an art, not a science. You can decide if you want your athletic department financials to look good as possible or as bad as possible by how you allocate costs and revenues. For example, should the college charge the athletic department the list cost of tuition, fees, room and board, when the average student may be charged 60% of those expenses? That said, I think its pretty obvious that UHart's athletic expenses are greater than the revenues they bring in, but the real savings from dropping down to D3 are probably not be as great as advertised.

 

[CL82]

It's almost as if the school would have been better served by their previous president sticking to the home front instead of spending years doing his Inspector Javert act.

 

[CL82]

Accounting for college athletic departments is an art, not a science. You can decide if you want your athletic department financials to look good as possible or as bad as possible by how you allocate costs and revenues. For example, should the college charge the athletic department the list cost of tuition, fees, room and board, when the average student may be charged 60% of those expenses? That said, I think its pretty obvious that UHart's athletic expenses are greater than the revenues they bring in, but the real savings from dropping down to D3 are probably not be as great as advertised.

And would it make the perception of the university less attractive to perspective students?

 

[UConnJim]

And would it make the perception of the university less attractive to perspective students?

I think the publicity of UHart potentially dropping athletics from D1 to D3 has opened up a can of worms for UHart by highlighting that the school is facing a tough financial future. If you were applying to colleges right now, would you apply to UHart knowing that the financial future is cloudy?

 

[UCTitleTown]

My kid is a D1 athlete and gets free sneakers, sweatshirts etc. When we visited a number of D3 schools on recruiting visits and were told players have to return their gear at the end of the season (sweatshirts, coats etc) or buy them themselves... Granted, there are some wealthy D3 schools that aren't cheap like that, but at the others, that's the norm.

 

[upstater]

Accounting for college athletic departments is an art, not a science. You can decide if you want your athletic department financials to look good as possible or as bad as possible by how you allocate costs and revenues. For example, should the college charge the athletic department the list cost of tuition, fees, room and board, when the average student may be charged 60% of those expenses? That said, I think its pretty obvious that UHart's athletic expenses are greater than the revenues they bring in, but the real savings from dropping down to D3 are probably not be as great as advertised.

I’ve yet to see a school purposely make their athletic finances looked bad. They want them to look as good as possible so the people paying won’t notice the 1k fee per student.

 

[CCSU97]

I think the publicity of UHart potentially dropping athletics from D1 to D3 has opened up a can of worms for UHart by highlighting that the school is facing a tough financial future. If you were applying to colleges right now, would you apply to UHart knowing that the financial future is cloudy?

Correct. With full disclosure of a sticker price closer to $60k a year, combined with the 75% acceptance rate and 12% yield, that is more damaging to its academic profile than this athletics debate.

If UHa hadn't just made their first NCAA tourney in MBB this year after 36 previous D-I seasons without one, how many local and national sportswriters would anyone really care about Hartford Hawks athletics?

I mean does everyone miss Centenary (La.) or Hardin-Simmons that much? Both small, private colleges each played more than 45 seasons in D-I and dropped to D-III in 2011 and 1990 respectively.

 

[UConnJim]

I’ve yet to see a school purposely make their athletic finances looked bad. They want them to look as good as possible so the people paying won’t notice the 1k fee per student.

UConn’s athletics financials make UConn look bad due to their accounting methods. And, if you want to cut a sport, you can make that sport look bad.

 

[Dream Jobbed 2.0]

So do they have $6mil less or $6mil more?

 

[JohnFSilver]

Not surprising. I do this kind of work. it wasn't an error. It is accounting and such.

 

[upstater]

UConn’s athletics financials make UConn look bad due to their accounting methods. And, if you want to cut a sport, you can make that sport look bad.

Last I saw the tuition/R&B reimbursement # was around $10m, so that can't account for the $40m loss. But even the idea that this number is somehow inflated is questionable when you consider that UConn's tuition is highly subsidized by both taxpayers and research funds, and a little bit by the endowment. So anything the AD pays back to the school is certainly far below the actual expenditures per student.

Also it would be a big surprise to me if UConn students are receiving 40% discount on tuition. That seems well beyond anything I've ever heard at a state school where tuition remission is typically limited for the vast majority of students.

 

[UConnJim]

Last I saw the tuition/R&B reimbursement # was around $10m, so that can't account for the $40m loss. But even the idea that this number is somehow inflated is questionable when you consider that UConn's tuition is highly subsidized by both taxpayers and research funds, and a little bit by the endowment. So anything the AD pays back to the school is certainly far below the actual expenditures per student.

Also it would be a big surprise to me if UConn students are receiving 40% discount on tuition. That seems well beyond anything I've ever heard at a state school where tuition remission is typically limited for the vast majority of students.

I think the tuition numbers for the athletic department by accounting is ~$18 million.

Here are the UConn cost of attendance numbers (these numbers vary depending on the source):

UConn full cost of in-state attendance = $34,284

UConn cost after aid = $21,588

Difference = 37%.

Most of the scholarship athletes are from out of state, so the athletic department gets "charged" full out of state tuition or about $57k.

Think about the math.

200 out of state athletes at $57k/year = $11.4 million.

200 instate students at the average net cost = $4.2 million.

If UConn charged the Athletic Department net instate tuition for athletic scholarships, the savings on 200 athletes is about $7.2 million/year. Remember, this is just accounting! (Note: the number of athletes on full scholarship is less than 200, but there are >200 athletes on partial scholarship so using 200 to calculate the savings is a good estimate.)

A couple of other areas that UConn accounts for things in a way that could be misleading. Many (most?) of the costs of intramural sports comes through the athletic department. And, the way UConn allocates revenues causes sports to look like they lose more money than they do. For example, Royalties, Licensing, Advertisements, and Sponsorship revenues are not allocated to any sport. In fact, about 25% to 30% of athletic department revenues (not including subsidies and fees) in 2014 did not get allocated to a sport. These revenues included some contributions, some NCAA distributions,... If you were running a business and making decisions on individual product lines, wouldn't you want to allocate revenues to each product line to better understand profitability before you decided to cut products?

 

[JohnFSilver]

Last I saw the tuition/R&B reimbursement # was around $10m, so that can't account for the $40m loss. But even the idea that this number is somehow inflated is questionable when you consider that UConn's tuition is highly subsidized by both taxpayers and research funds, and a little bit by the endowment. So anything the AD pays back to the school is certainly far below the actual expenditures per student.

Also it would be a big surprise to me if UConn students are receiving 40% discount on tuition. That seems well beyond anything I've ever heard at a state school where tuition remission is typically limited for the vast majority of students.

People need to understand hard and softs costs with SG&A.

Selling, General and Administrative expenses. Those are what UConn needs to look at, and also look at hard savings which means it is money cut from the budget and is not passed off somewhere else.

For example, if they close down the football program and don't have the $10m scholarship transfer to the General Fund, is the General Fund going to reduce its budget by $10 million? If the answer is no, then that is a soft cost savings. That is not what you want. It is meaningless. Cost avoidance is also meaningless in this scenario.

Soft savings, productivity gains, process gains are not what people are looking for. What are the hard gains of a move down to DIII?

Coach salaries
Travel
Marketing

That is where Hartford should look. By going down to D3 every single coach takes a paycut. The recruiting budgets are massively reduced. The marketing department and the ticket selling and game production are massively reduced. Operations massively reduced. Different fees and such are reduced. I am sure the savings are real, but anyone saying that eliminating scholarships helps the bottom line is a quack. The school won't be taking allocated scholarship money out of their budget at all.

 

[Fishy]

Lies. Damn lies. And, statistics.

I'm willing to bet you could find accountants who agree with the initial analysis as well. All depends on who is paying them.

Yeah, this guy doesn’t get any ink if he agrees with UHart.

It’s all crap.

 

[upstater]

People need to understand hard and softs costs with SG&A.

Selling, General and Administrative expenses. Those are what UConn needs to look at, and also look at hard savings which means it is money cut from the budget and is not passed off somewhere else.

For example, if they close down the football program and don't have the $10m scholarship transfer to the General Fund, is the General Fund going to reduce its budget by $10 million? If the answer is no, then that is a soft cost savings. That is not what you want. It is meaningless. Cost avoidance is also meaningless in this scenario.

Soft savings, productivity gains, process gains are not what people are looking for. What are the hard gains of a move down to DIII?

Coach salaries
Travel
Marketing

That is where Hartford should look. By going down to D3 every single coach takes a paycut. The recruiting budgets are massively reduced. The marketing department and the ticket selling and game production are massively reduced. Operations massively reduced. Different fees and such are reduced. I am sure the savings are real, but anyone saying that eliminating scholarships helps the bottom line is a quack. The school won't be taking allocated scholarship money out of their budget at all.

From what I know about the overall budget finances, the lack of a transfer should mean a reduction in the student fee. The school always saves when it doesn't have to spend more research funds and other funds subsidizing another student. Despite what everyone thinks, each school counts heads and bases its funding on the heads in the classroom. They count enrollment in each class as essentially customers: real dollars go to those departments.

One example: when NY state announced its Excelsior program (free tuition for those making under $120k) and then didn't fund it by half, it was a double calamity for the universities. Loss of revenue from students who would otherwise be taking those spots that went to Excelsior students, and then additional subsidies for those students from research grants, etc.

Schools don't really want parents to know that Johnny is leaving the U. with $4k in loans for a yearly student athletic fee.

 

[BigTenFan]

I think the tuition numbers for the athletic department by accounting is ~$18 million.

Here are the UConn cost of attendance numbers (these numbers vary depending on the source):

UConn full cost of in-state attendance = $34,284

UConn cost after aid = $21,588

Difference = 37%.

Most of the scholarship athletes are from out of state, so the athletic department gets "charged" full out of state tuition or about $57k.

Think about the math.

200 out of state athletes at $57k/year = $11.4 million.

200 instate students at the average net cost = $4.2 million.

If UConn charged the Athletic Department net instate tuition for athletic scholarships, the savings on 200 athletes is about $7.2 million/year. Remember, this is just accounting! (Note: the number of athletes on full scholarship is less than 200, but there are >200 athletes on partial scholarship so using 200 to calculate the savings is a good estimate.)

A couple of other areas that UConn accounts for things in a way that could be misleading. Many (most?) of the costs of intramural sports comes through the athletic department. And, the way UConn allocates revenues causes sports to look like they lose more money than they do. For example, Royalties, Licensing, Advertisements, and Sponsorship revenues are not allocated to any sport. In fact, about 25% to 30% of athletic department revenues (not including subsidies and fees) in 2014 did not get allocated to a sport. These revenues included some contributions, some NCAA distributions,... If you were running a business and making decisions on individual product lines, wouldn't you want to allocate revenues to each product line to better understand profitability before you decided to cut products?

Uconn in -state tuition is way out of whack compared to many other states. We pay high taxes in this state, yet our flagship state University continues to raise tuition year after year.

 

[upstater]

Uconn in -state tuition is way out of whack compared to many other states. We pay high taxes in this state, yet our flagship state University continues to raise tuition year after year.

Connecticut is bottom quintile for tax dollars going to the state university.

It's not as bad a PA where the state subsidizes less than 5% of Penn State's budget, but Connecticut is definitely in the bottom rung.