Memphis football revenues soar, but profit eludes Tigers
As the University of Memphis football program rose to new heights under former coach Justin Fuente in 2015, the men’s basketball program sunk to unfamiliar depths in Josh Pastner’s last year in town.
And the ripple effects of both were clearly reflected in the athletic department’s finances.
For the first time in recent history, the Tigers’ football program brought in more revenue than the men’s basketball program during the 2016 fiscal year, according to documents filed with the NCAA and obtained by The Commercial Appeal in an open records request.
Though it is still operating at a deficit, the football program brought in approximately $6.521 million in revenues during the fiscal year, which ended June 30, 2016, and included the 2015 football season. A combination of enticing home games against Ole Miss and Navy, increased season ticket sales and a favorable bowl destination led to an increase
of 167 percent from the previous year, when football revenues totaled $2.433 million.
Revenues in the men’s basketball program, meanwhile, have been trending in the opposite direction for several years. The university’s flagship sports team brought in just $6.089 million in 2016, down from $6.179 million the year before and $7.614 million in 2014, according to data previously submitted to the NCAA.
Men’s basketball revenues were also down 30 percent from 2012, when they topped $8.67 million after the Tigers made their sixth NCAA tournament appearance in seven years.
With approximate annual payouts of only $3 million from the American Athletic Conference, athletic director Tom Bowen said Memphis relies heavily on ticket sales and donations — along with institutional support from the university — to balance its athletic budget and provide more resources when possible.
“We’re very costaware, I guess would be the best way to say it,” he said. “We’re very efficient about how we allocate, how we spend, making sure that it’s a priority, making sure that it gives our student-athletes and our coaches the best opportunity to succeed.”
Altogether, the Memphis athletic department reported a deficit of $87,910 in the 2016 fiscal year, with $50.027 million in revenues and $50.115 million in expenditures. The athletic department received $8.844 million in direct institutional support from the university.
Football’s flourish
With Fuente and quarterback Paxton Lynch leading the way, the Memphis football team ended the 2014 season with seven straight wins, including a thriller against BYU in the Miami Beach Bowl, and entered 2015 with a sense of excitement.
A record average attendance of 43,802 — and a huge spike in revenues — followed.
According to data submitted to the NCAA, Memphis brought in $4.620 million in football ticket sales during the 2016 fiscal year, more than double the $1.879 million it received in 2015.
Associate athletic director of finance Eric Sabin said home games against Ole Miss and Navy played a huge role in the increase, as an announced 115,453 fans attended those two games alone. But he added that season ticket sales increased “astronomically,” both in 2015 and last year after Mike Norvell took over as coach.
In a radio interview with Sports 56 last month, deputy athletic director Mark Alnutt said Memphis sold approximately 17,000 football season tickets last year after hovering around 9,000 in 2014.
Bowen added the university’s ability to sell three-game mini-packs has been equally critical to football’s revenue growth.
“Some people love to come to every game and they’re diehards and we love them,” Bowen said. “But some people can’t come to every game, so maybe they only buy three games. Those are also massively impactful for us.”
The Birmingham Bowl also had major financial ramifications for the football program and athletic department at large, even though the outcome on the field was disappointing for Memphis fans.
Because the game was within driving distance of Memphis, and featured a Southeastern Conference opponent in Auburn, the Tigers set new marks for bowl game ticket sales, according to Sabin. Travel costs were also cheaper and the game offered a higher payout than the Miami Beach Bowl the year before.
“All of those things combined created this scenario,” Sabin said, “where football saw the most revenues it’s seen in probably the last 10 years.”
A ‘perfect storm’ in hoops
Though football revenue is growing, expenses in the sport have also risen in each of the past three years, from $11.254 million in 2013 to $14.814 million in 2016, and the program is still operating at a deficit of $8.29 million.
Sabin explained that nearly every football program in the country is in the red.
“I think that’s just a common misconception about intercollegiate athletics, that football brings in all this revenue,” he said. “But there’s a lot of costs associated with football.”
Men’s basketball is also operating at a deficit after exceeding $11.54 million in expenses during the 2016 fiscal year, including listed severance payments of $2,028,188.
The Commercial Appeal reported in April that the university agreed to pay Pastner a $1.255 million over two years in a contract settlement. Memphis also had to release several of Pastner’s assistants and foot the bill for new coach Tubby Smith’s buyout at Texas Tech, which was reportedly $900,000.
“It’s never free when you let someone go,” Sabin said. “There’s always a cost associated with turnover in staff and change in staff.”
Severance payments do not explain the basketball program’s declining revenues, however.
After Pastner and the Tigers finished 18-14 in 2014-15 and limped to a 1915 record last spring, swaths of fans stopped attending games as a apparent means of protest. Ticket sales declined. And, perhaps most importantly, the Tigers received only a portion of their contractual payout from the Memphis Grizzlies because they did not hit certain attendance marks. In almost every previous year, Sabin said, they had hit every milestone and received the full $800,000 payment.
Sabin also pointed to the lack of away or tournament games with guaranteed payouts as a revenue hit.
“Unfortunately, last year was kind of the perfect storm of having a huge turnover in staffing with decreased ticket sales with no guarantee games,” he said. “All of that contributed.”
Donations and scheduling
So what, exactly, can Memphis do to increase revenues, short of joining a Power Five conference?
Sabin said the two main factors are ticket sales and donations from supporters, which also increased in the 2016 fiscal year from $6.682 million to $7.60 million.