UA submits its hopeful budget

FAYETTEVILLE — The University of Arkansas athletic department submitted a balanced

2020-21 fiscal budget with anticipated revenue of about $124.5 million on Friday that reflected a minor drop in revenue from the $125.6 million budget from the previous year.

The budget filed by athletic director Hunter Yurachek and compiled by Clayton Hamilton, the department’s deputy athletic director for finances, can be described as the “Back to Normal” financial plan.

If the coronavirus pandemic does not allow a return to football in the fall or forces a postponement or cancellation, the UA athletic department has contingency financial plans ready to implement, Yurachek said.

“This continues to be a very fluid situation and so, as you’ll see, we have a budget today of

$124 million and some change that balances revenues versus expenses,” Yurachek said. “But as this situation changes, and we anticipate it will change, we’re not married to spending $124 million if our revenues don’t help us balance that on the other side.”

As of now, the Southeastern Conference has instituted a suspension of athletic activities through May 31. No one knows when students will be allowed back in open classrooms. Coaches around the country are suggesting football teams would need between six and eight weeks to condition and prepare players for a season.

Football is the driving force for athletic department budgets across the country, often representing 85% of revenue for many schools.

“The most important thing for people to know is this is the budget … based on what we know today,” Yurachek said of the 2020-21 budget, which starts on July 1.

In a previous interview with the Arkansas Democrat-Gazette since the coronavirus outbreak suspended athletic activities throughout the country, Yurachek said the budget filed with the university would be like a budget A, and that there would be budgets B and C waiting in the wings.

In essence, the current budget is a best-case scenario for a Razorback athletic department that is bracing for further financial twists.

“What I mean by that is [in this budget] we’re still anticipating a Sept. 5 start to a full

12-game football schedule, a full men’s basketball schedule, and a full baseball schedule in

2021,” Yurachek said. “We’re still anticipating that 91% of the

Razorback fans who renewed their season tickets and their donations to the foundation are going to have the means to pay for their donations and ticket commitments.

“It’s if the commitment from Learfield IMG — who has the rights to sell sponsorships within our venues — continues in the manner in which our contract reads currently for them. It’s if the SEC distribution that has been estimated for next year stays the same.”

Learfield IMG College, the rights holder for selling sponsorships for many athletic departments across the country, began contacting member schools on Friday asking for a

60-day delay in payments due to issues related to the pandemic. Yurachek said the UA has granted that extension.

Hamilton said the UA’s contract with IMG calls for two payments per year, one in December and one on May 31.

“A deferral of the payment is what’s been discussed at this point,” Hamilton said. “That’s still revenue we’re able to have on our books. But the actual payment is being deferred for up to 60 days.”

Learfield IMG extended its sponsorship rights agreement with the UA in the summer of

2017 for $131 million over 10

years, with a one-time signing bonus of $6 million.

Hamilton said he worked up the budget within parameters set by Yurachek.

“Hunter really charged us with some priorities throughout the process as we were preparing the budget, keeping in mind to not impact the experience of our student-athletes,” Hamilton said. “That was certainly a priority. Not being in a position of having to cut staff, that was certainly a priority for the department.

“Not impacting the safety and experience at our events. And, at the end of the day, maintaining our status as a self-sustaining athletic program. It’s been a very collective process. A lot of work has gone into it.”

The UA budget reflects a revenue distribution from the SEC and the NCAA of more than $47.9 million, an increase over the previous year’s budget of about $45.4 million. Again, that would necessitate having an on-time football season and a men’s basketball tournament next year.

If there are further issues with college sports coming back on line, Yurachek said the department is prepared to reduce revenue by anywhere from 10% to 20%.

“When you reduce your revenues by 10 or 20%, correspondingly we’ve got to cut our expenses in the same percentages,” he said. “Maybe that means more of our teams have to fly commercially than would fly on charter flights, or that we would reduce the size of our traveling parties when we’re traveling. Someone like an athletic director maybe doesn’t travel with teams as much as he would like to because that’s an added expense.

“We’ll just continue to have to find cost efficiencies and be a more efficient operation than maybe we are today. I think this has been a really good exercise for us to go through as a department, because our revenues have grown significantly in the last 10 years.

“We have not had to say ‘no’ to many things that we wanted to do as a department to be successful. Sometimes it makes you inefficient. I think this exercise is making us become more efficient as a department.”

Hamilton said the department had already been anticipating flat or even mildly reduced revenue for the upcoming year.

“Quite candidly, we’ve had two of the worst football seasons in the history of Razorback football, and we have seen a decline, a steady decline in season tickets over the past three to four years,” Yurachek said. “And really over the past decade. I mean, we hit a peak of approximately 55,000 season tickets a little under a decade ago. And we were down to about 34,000 last year.

“And those tickets are all tied to donations within the foundation. That’s a big part of our budget. So while we have renewed 91% of our season tickets from last year — which is an unbelievable figure, there are major programs around the country that are not close to that right now — we’re still not where we need to be from a football season-ticket sales standpoint. We need to be north of 40,000 season tickets, is where I’d think we’d feel really comfortable about our budget.

“And then I think the SEC distribution is starting to level off a little bit as well. There’s still an increase plan for next year, but that’s starting to level off, and you’re not seeing as dramatic of increases in the revenue.”

The Razorbacks’ decline in overall ticket sales has been marked. The department budgeted for $41.6 million in ticket sales for the 2018-19 budget, $39.125 million in last year’s budget and $36.38 million in next year’s budget.