Pit suite sales not reaching revenue goals

Annual renovation bill is $2.4M; last year’s sales just over $800K

Fewer than half of the 40 luxury suites inside the Pit generated any income to the athletics department last season, and only 14½ brought in outside revenue to the University of New Mexico.

And, counting the suites occupied by other UNM entities that transferred university money to the athletics department for payment, the luxury sky boxes in the 51-year-old arena only generated about one third the money needed to cover the $2.4 million annual debt service payment athletics owes to main campus to cover the 2009 Pit renovation project.

UNM Associate Vice President Chris Vallejos told the Journal on Thursday that the athletics department reported generating $816,250 in suite revenue for the 2016-17 season.

The Pit renovation bill had been $3 million annually through last year, when UNM refinanced the bond tied to the $60 million renovation project before it dropped to the $2.4 million this year.

The original plan was for sales of the 40 luxury

boxes and new premium seating in the arena to pay for the renovation.

A closer look at who occupied those suites shows that only $671,250 of that revenue was brought in from individuals or companies outside the university.

“We don’t consider it inside or outside revenue, though,” Vallejos said. “It was still money that went to athletics. ... They paid for suites.”

A document obtained by the Journal through an Inspection of Public Records Act request shows that, at full capacity and without discounted contracts, the suites would have brought in about $1.7 million. But just 21½ of the 40 suites were occupied under season-long contracts ranging from $30,000-$45,000. At least 10 suites were sold on individual game agreements.

Of those 21½ suites occupied, two brought in no revenue: suite No. 1 assigned to former athletic director Paul Krebs and suite No. 15 assigned to the UNM basketball teams.

Another suite valued at $45,000 per year — suite No. 37 — was assigned to WisePies Pizza and also brought in no revenue specifically for the suite. It was assigned to WisePies as part of the company’s naming rights agreement for the arena, which UNM says brought in $800,000 total for three years.

So, while no money from WisePies was specifically added to the suites revenue budget line in the department’s budget, Vallejos was quick to point out that it was because of another, larger gift to the university.

Of the remaining 18½ occupied suites, four were occupied by non-athletics UNM entities. They paid athletics $145,000.

UNM’s Health Sciences Center transferred $70,000 of its discretionary funds for use of two suites — suite Nos. 23 ($40,000 for HSC) and 27 ($30,000 for UNM Orthopedics).

Health Sciences spokesman Billy Sparks said HSC’s suite expenditure “was approved by the university as a legitimate use of those funds for business purposes, primarily for donor and community relationship building and to support our UNM athletic teams.”

UNM transferred funds from its central reserve to the UNM Foundation to pay for the Board of Regents’ $30,000 contract for use of suite No. 10.

The Foundation tapped two different pots of money to cover the $45,000 bill for suite No. 4, which it shared with the Office of the President, according to foundation spokeswoman Jennifer Kemp. Half came from the foundation’s “President’s Fund,” which Kemp said includes private donations and Regents’ endowment distributions. The other half comes from the foundation’s operational budget.

Kemp said in an email that the Foundation and President’s office “utilize the basketball suite to steward and cultivate donors.”

The Foundation has also been paying for suites at the football stadium: $50,000 annually for a president’s suite and $25,000 for a regents’ suite.

Two suite holders — Lobo Sports Properties/Learfield Sports and Levy Restaurants — have existing multimillion contracts with the university for marketing, licensing and catering services. Nevertheless, both parties, according to Vallejos, paid in full for their suites ($42,5000 for LSP/Learfield for a full suite and $22,500 for Levy for a partial suite) in agreements not connected with their larger deals with UNM.

Attendance overall in the Pit has been dropping in recent years. For the 2016-17 season, UNM collected $3.94 million in men’s basketball ticket revenue, more than $800,000 below the budgeted projection of $4.8 million.

UNM last month reported a final athletics department deficit of $208,264 for the 2016-17 fiscal year.

In July, UNM announced that it had more than $432,000 in uncollected Pit suite revenue between 2010 and the end of the 2015-16 season. Vallejos told the Journal in an email Aug. 15 that amount was actually $385,141 after UNM discovered $47,500 of that original total was included in error. Of that, $273,027 was still outstanding as of the first week of August.

That does not include $19,500 still unpaid from last season, but arrangements have been made to cover that, Vallejos said.