Benjamin Franklin once said, “Rather to go to bed with out dinner than to rise in debt.” Unfortunately, each day that passes sees the Texas Tech athletic program wake to find it is dancing in a dangerous sea of borrowed money, and the implications for all of the Red Raider sports could be significant.
Don Williams of the Lubbock Avalanche Journal published a June, 13th story detailing the athletic program’s $111 million debt. The recent updates to athletic facilities such as Jones AT&T Staidum, the John Walker Soccer Complex, Dan Law Field, Rocky Johnson Park, and the Fuller Track Complex combined with the fact that the United Supermarkets Arena is still not paid off, means that Tech will be making payments on this debt for another twenty years.
Athletic director Kirby Hocutt told Williams, “The Achilles heel of Texas Tech athletics is the amount of debt that we’ve accumulated as we’ve built our athletic facilities”
Williams notes that 15 percent of the Red Raider athletic budget will be devoted to debt to the tune of $12 million this year. Only the University of Texas will pay more in debt during the 2015-16 school year.
The problem is that Texas Tech still has a long way to go before its facilities are on par with conference rivals. And once the current projects are complete, there will almost assuredly be something else that needs to be updated as the modern world of the college athletics arms race continues to escalate like Cold War military spending.
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Many fans are eager to see ground broken on the planned renovations to the south end zone of Jones Stadium and the subsequent construction of an indoor football practice facility and indoor track complex. However, the $75 million project was announced right before the price of oil (a main source of income for many of the school’s most generous donors) dropped causing many in west Texas, including the university to tighten their belts.
The fundraising campaign for this project has been slower than expected, but the Red Raider leadership is wise to wait until the project has been fully financed, thus avoiding more debt.
This is a much wiser plan than a recent scheme by Oklahoma State which ultimately backfired costing the school millions. According to TheInsuranceJournal.com, the school attempted to raise funds by “purchasing $10 million life insurance policies on about two dozen boosters with the university as a beneficiary.”
This plan, proposed by OSU billionaire alum T. Boone Pickens, fell apart after the school had spent $33 million on premium payments only to back out of the deal after two years. In 2012, a judge ruled that the money could be kept by the financial institution due to processing mistakes on the part of OSU leadership.
Thankfully Hocutt and his staff have not tried any of their own risky plans to raise money. Instead, the Tech athletic director knows that the key to bringing in more money is simple: win football games.
Tech gets the largest share of the annual athletic budget ($25 million) from its cut of Big 12 revenues, but that number is set, meaning that the biggest variable in the athletic budget is football generated revenue. Williams notes that tech plans to earn $17.1 million in football revenue in 2015, of which 90 percent is ticket sales and seat licenses.
In other words, despite the fact that the Red Raiders are coming off of a 4-8 season in 2014, fans must show up to every game.
“That’s why it’s so critical that we sell out Jones AT&T Stadium,” Hocutt said in Williams’ article, “to help us generate that revenue to invest back into our 17 varsity sports programs.”
A 2013 piece by The Sporting News writer Michael Smith focused on the $200 million debt facing the University of Tennessee athletic program “after staggering to losing football seasons in four of the last five years and seeing attendance drop to levels last seen in the 1970s…”
In a similar situation to many college programs, including Tech’s, Tennessee has recently updated a large number of its athletic facilities adding to the athletic department’s debt. But what the school didn’t count on was the unprecedented football attendance drop that has actually caused the athletic program to lose money in recent years.
Fortunately, Red Raider fans bought every season ticket in 2014, a first in program history. However, can Kingsbury’s charisma and celebrity alone continue to bring fans through the gates?
Most certainly it will not, if the team does not become relevant in the Big 12 soon. With the recent struggles of both basketball programs leading to a half-empty USA on most nights, the pressure is on the football program to win now, not only for its own sake but also for the greater good of the entire athletic department.