An unexpected $600,000 from postseason football helped the Arizona State athletic department move closer to eliminating its deficit, business manager Amy Schramm said.
For the fiscal year 2002-03, the deficit was reduced from $2.3 million last year to $1.2 million to $1.3 million.
Athletic director Gene Smith inherited a deficit of nearly $4 million when he arrived in July 2000. ASU began running red ink when football revenue declined while the budget increased 62 1/2 percent to $26 million because the department grew by more than 50 people during the four years preceding Smith's arrival. Football season ticket sales have dropped from 47,810 in 1998 to 29,648 last year. Efforts to resolve the deficit are beginning to produce results.
"It's gone very well. Very positive," Schramm said. "I'm elated. We are looking to retire the debt."
ASU is moving closer to a balanced budget largely because of money generated by the football program.
The Sun Devils cleared $200,000 from their appearance in the Holiday Bowl and got an additional $400,000 from their share of bowl revenue generated by the Pac-10. All Pac-10 teams share in the revenue from bowl games that include Pac-10 teams. USC's strong season, which resulted in the Pac-10 getting an additional team in a Bowl Championship Series game, helped boost ASU's revenue from postseason football.
In addition, ASU's "preseason'' game in August at Nebraska netted $256,000 more than was budgeted.
Schramm said all the postseason money was used on the deficit as was the additional revenue from the Nebraska game.
The Holiday Bowl is the No. 2 bowl for the Pac-10. Its $2 million payout ranks behind only the Cotton and Florida Citrus bowls among second-tier games.
ASU was able to make money, Schramm said, because of a conservative travel budget and because Sun Devils fans purchased nearly all of ASU's allotment of 11,000 bowl tickets. Schools are responsible, by the bowl contract, to pay for all of the tickets in their allotment that they don't sell.
"We had a small travel party, and we tried to be as conservative as possible," she said. "We cut back where we could."
In ASU's other big revenue sport, men's basketball, season-ticket sales increased by 300 to approximately 5,800, Schramm said. The average number of tickets sold for a men's basketball game increased from 7,046 to 8,429 as the Sun Devils made their first NCAA tournament appearance since 1995.
Ticket sales generated revenue of $1,107,000. The Arizona game, though, was the lone sellout. ASU ranked seventh in the Pac-10 in percentage of seats sold. Wells Fargo Arena was filled to 59.8 percent of its capacity.
ASU budgeted based on last year's figures, but the gross revenue for men's basketball fell $22,000 short of budget because single-game sales fell below projections. An increase in donations offset the shortfall, Schramm said.
The $280,000 the men's team earned from playing two games in the NCAA tournament goes into the Pac-10 revenue bank. Each Pac-10 school receives an equal share from NCAA tournament earnings over a six-year period.
ASU will continue its frugality while hoping to generate more revenue. The budget for the next fiscal year is expected to increase to approximately $29.2 million from $27.8 million.
Earlier this year, in an effort to increase football ticket sales and interest, prices were cut for half the seats at Sun Devil Stadium not controlled by the Sun Angel Foundation, the athletic department's fund-raising organization. Smith said he hopes that increased sales will offset the price drop.
Schramm said ASU coaches are in the process of finalizing their budgets for the next season.
In addition to the unexpected revenue, cost-cutting measures contributed to decreasing the deficit. Citing two examples, Schramm noted football pared $50,000 from its budget and media relations cut $18,000 out of its budget.
"We talked to the coaches and department heads (and said that) if there's money available that they don't have to spend this year, give it back to the department on a one-time basis," Schramm said.
This fiscal year was also the first in which senior management personnel who had been laid off were no longer on the payroll.
A significant expense ASU has incurred recently is in security, following the Sept. 11, 2001, terrorist attacks.
Security costs increased $20,000 per home football game for an additional expense of $140,000.
With several programs enjoying exceptional seasons, there will be an outlay for performance bonuses. Schramm said all but football bonus money is in the general budget. Football coach Dirk Koetter's $25,000 bonus comes out of the bowl budget.
Fund-raising efforts have picked up in recent months to supplement the athletic department. A newsletter from the Sun Angel Foundation included a promotion for donations of $5 to $500 for the tutorial and student services program.
The state subsidizes athletics at the three universities — ASU, Arizona and Northern Arizona — and ASU receives $2 million for tuition waivers to help with 315 scholarships. As a self-supporting institution, ASU is responsible for paying the scholarships.
Establishing endowments has become a fund-raising priority to help pay the bills.
"It could help," Schramm said. "The earnings could, say, offset the operating expenses for golf. (Endowments) would help us to equal the total costs of what we pay for a scholarship."
Keeping expenses in tow and increasing revenue will get the athletic department out of red ink.
"We are still planning to retire the (deficit) next year," Schramm said. "We're going through the process of projecting revenue sources. We're waiting for some information from the conference (concerning possible TV dates). We'll be wrapping that up (in May)."
Several planned building projects have been on hold until the deficit is eliminated.
The 25,000-square-foot annex to Wells Fargo Arena, which will house the gymnastics, volleyball and wrestling teams, and provide practice courts for the basketball teams, was the most expensive project to be delayed.
When first proposed during the mid-1990s, the project's cost was estimated to be $9 million to $10 million.