CashMoneyCane
Mahoney 7
- Joined
- Mar 9, 2017
- Messages
- 4,477
Warning: Long, boring to most and not football related.
Been reading a bunch of uninformed opinions about how much money the University has and what they are able to do with it for way too long. By and large from people who don't know anything about non-profit finance, especially as it relates to universities. Most of the below was written a little while back in response to discussion about increased salary for football staff. I know those of you who are ignorant to how this actually works will balk at all of the below, because god forbid you're wrong about something you believe without doing any actual research. So consider this for those of you who are genuinely interested and care to understand things a little better.
Like most corporations, finances are split up by operating departments. At the department level, everyone has a budget and a balance sheet. So the University as a whole has an operating budget, which is a combination of tuition/fees, income generated by the general endowment, and scholarships, grants, revenue from the hospital, etc. In many cases, there are specific sources of funds allocated to specific expenses. Endowed chairs, living scholars, naming donations for schools, etc. A person could give a piece of land and stipulate that it not be sold for 50 years. The important thing to note is that when a donation is made for a specific purpose (say, naming a building), those funds can ONLY be used for that purpose as a contractual obligation.
Basically, there is a general pool of funds upon which to draw income (for example, a donation to the general fund), and then funding (mostly monetary donations, but really could be anything of value) often though not always with stipulations. A donor could endow the head coaching position, in theory. The donor pays $X and the HC becomes the "Rich Guy That Gave a Bunch of Money Head Coach at The U." The Living Scholars program is a good example of a stipulated donation, in which a booster supports the athletic scholarship of one student.
Back to operations. The University has a budget, then the Athletic Dept, and then each sport. At basically every school that plays sports, the only sport that makes money is football. I'd guess Duke makes money off basketball, if anyone. There are Title IX stipulations dictating fair allocation of resources, which is an encumbrance on the football budget. Point being, the University allocates money to the Athletic Dept as a pool of funds, and will likely have some say as to how said funds are allocated to individual sports. As far as sponsorship (in reference to the Adidas deal), I don't know how Title IX impacts how those funds are allocated. Regardless, it stands to reason an argument can be made to allocate a greater percentage of sponsorship money to football, as it attracts by far the greatest audience, which is what the sponsor pays for.
As a general principle:
1) Tuition directly supports the salaries of the faculty and administrators.
2) The general endowment supports non-staff operating expenses and some development of property (new buildings, better facilities).
3) Donations primarily support advancement.
Further, because a university, like a corporation, has an infinite life (in theory), budgets are developed years in advance on a rolling basis. They are tweaked as we approach the actual year that is being forecasted. So today the budget for 2025 will look one way. Next year it will be updated, and it will continue to be updated until it is put in stone in 2024 for the 2025 fiscal year.
When discussing "the University opening up its purse strings," there may be some impact as to the general allocation of funds to the Athletic Dept, as well as specifically to football, within the parameters of Title IX. But what we are likely seeing is the confluence (**** you Al Golden) of 1) a WAY better AD than we've had in a long time (I'm sticking by this, as he led the charge for more funds allocated to the coaching staff), 2) some increase in University funds to football, 3) increased donations, 4) the Adidas deal, 5) increased ACC revenue and 6) other factors. Basically, what we use "The Administration" as a catch-all to cover.
Nowadays, we're back to talking about "The Administration" being "too cheap," not forcing Richt out due to buyout issues, etc. Given all of the issues above, it's nowhere near as simple as "let's just take some money from the endowment and buy Nick Saban an island." Non-profit finance does not work that way.
So, how do I know this? Feel free to send me a message questioning my knowledge and I'll be happy to share my background. Questions? Post 'em!
Been reading a bunch of uninformed opinions about how much money the University has and what they are able to do with it for way too long. By and large from people who don't know anything about non-profit finance, especially as it relates to universities. Most of the below was written a little while back in response to discussion about increased salary for football staff. I know those of you who are ignorant to how this actually works will balk at all of the below, because god forbid you're wrong about something you believe without doing any actual research. So consider this for those of you who are genuinely interested and care to understand things a little better.
Like most corporations, finances are split up by operating departments. At the department level, everyone has a budget and a balance sheet. So the University as a whole has an operating budget, which is a combination of tuition/fees, income generated by the general endowment, and scholarships, grants, revenue from the hospital, etc. In many cases, there are specific sources of funds allocated to specific expenses. Endowed chairs, living scholars, naming donations for schools, etc. A person could give a piece of land and stipulate that it not be sold for 50 years. The important thing to note is that when a donation is made for a specific purpose (say, naming a building), those funds can ONLY be used for that purpose as a contractual obligation.
Basically, there is a general pool of funds upon which to draw income (for example, a donation to the general fund), and then funding (mostly monetary donations, but really could be anything of value) often though not always with stipulations. A donor could endow the head coaching position, in theory. The donor pays $X and the HC becomes the "Rich Guy That Gave a Bunch of Money Head Coach at The U." The Living Scholars program is a good example of a stipulated donation, in which a booster supports the athletic scholarship of one student.
Back to operations. The University has a budget, then the Athletic Dept, and then each sport. At basically every school that plays sports, the only sport that makes money is football. I'd guess Duke makes money off basketball, if anyone. There are Title IX stipulations dictating fair allocation of resources, which is an encumbrance on the football budget. Point being, the University allocates money to the Athletic Dept as a pool of funds, and will likely have some say as to how said funds are allocated to individual sports. As far as sponsorship (in reference to the Adidas deal), I don't know how Title IX impacts how those funds are allocated. Regardless, it stands to reason an argument can be made to allocate a greater percentage of sponsorship money to football, as it attracts by far the greatest audience, which is what the sponsor pays for.
As a general principle:
1) Tuition directly supports the salaries of the faculty and administrators.
2) The general endowment supports non-staff operating expenses and some development of property (new buildings, better facilities).
3) Donations primarily support advancement.
Further, because a university, like a corporation, has an infinite life (in theory), budgets are developed years in advance on a rolling basis. They are tweaked as we approach the actual year that is being forecasted. So today the budget for 2025 will look one way. Next year it will be updated, and it will continue to be updated until it is put in stone in 2024 for the 2025 fiscal year.
When discussing "the University opening up its purse strings," there may be some impact as to the general allocation of funds to the Athletic Dept, as well as specifically to football, within the parameters of Title IX. But what we are likely seeing is the confluence (**** you Al Golden) of 1) a WAY better AD than we've had in a long time (I'm sticking by this, as he led the charge for more funds allocated to the coaching staff), 2) some increase in University funds to football, 3) increased donations, 4) the Adidas deal, 5) increased ACC revenue and 6) other factors. Basically, what we use "The Administration" as a catch-all to cover.
Nowadays, we're back to talking about "The Administration" being "too cheap," not forcing Richt out due to buyout issues, etc. Given all of the issues above, it's nowhere near as simple as "let's just take some money from the endowment and buy Nick Saban an island." Non-profit finance does not work that way.
So, how do I know this? Feel free to send me a message questioning my knowledge and I'll be happy to share my background. Questions? Post 'em!
