Michigan finished FY21 in $47.6M deficit
Michigan finished with a $47.6M deficit in FY21, with $101,236,069 in revenues against $148,862,376 in expenses. Ticket revenue was $57,105,068 in FY20, but $54,168 last fiscal year and donations took a nearly $19.8M hit YOY. Roughly $10M less in media rights payouts, as well.
Of course this goes up to about $75M if Manual fires Harbaugh and his staff and hires an all new staff for the '21 season.
January 31st, 2022 at 8:36 AM ^
"Of course this goes up to about $75M if Manual fires Harbaugh and his staff and hires an all new staff for the '21 season."
Not necessarily inaccurate, but superfluous.
Also, I noticed that the Freep placed Michigan's number right next to Sparty's smaller number. As expected.
January 31st, 2022 at 10:18 AM ^
But the "blue wall"???
January 31st, 2022 at 10:22 AM ^
How is that unnecessary? You have almost $20M in buyouts...and you have to pay a new staff.
You have to consider the context of your current financial state and outlook when making $25M-$30M decisions.
That context is very important, IMO.
If we had a $47M surplus, it's an obvious connection that it would've been a lot easier to let go of Harbaugh and the staff after the 2-4 season.
January 31st, 2022 at 11:16 AM ^
I'm sure Ross will write a check to make up the difference in exchange for taking Harbaugh off our hands.
January 31st, 2022 at 8:36 AM ^
Just raise tuition again to cover the red.
/s
January 31st, 2022 at 10:20 AM ^
I like where your head is. Here's a legit option: All-inclusive packages where your ticket gets you a preferred view, as well as all-you-can-eat food options and an open bar. Mary Sue would, obviously, host this section each week and they would rotate famous former players to give you an opportunity to get autographs and photo ops. $500 per person, No one under 21. Brandy and Dierdorf would have an assigned table where they'd do PBP and Color for the section.
January 31st, 2022 at 11:46 AM ^
Your Brandstatter/Dierdorf proposal works if you put them in a box.
January 31st, 2022 at 11:06 AM ^
The one admirable thing Michigan has maintained in their finances is keeping the AD self-sufficient from the rest of the university. We can joke about it, but there are other schools that charge their students fees to fund their athletic programs. It is nonsense.
As you would expect, Rutgers is one of the worst offenders in the Big Ten. Each Rutgers student pays around $400 in fees that goes to athletics, and this is before selling students season tickets. Rutgers Athletics gets more than $40 million from student fees, state aid from taxpayers, and university support.
January 31st, 2022 at 8:43 AM ^
OP should have stated this is the AD, not the university.
Also, it would good to see the annual surplus/deficit numbers for several years running - not just the last two. Is this truly a concern or within statistical variance?
January 31st, 2022 at 9:19 AM ^
Fiscal year 2021 had no fans in the stands (ran from June 2020 to June 2021). It felt the full brunt of covid. Fiscal year 2022 runs from June 2021 to June 2022 which will include Michigans football season.
So yeah I'm gonna say it's not a concern and that the athletic department will be fine after a good 2021 football season.
January 31st, 2022 at 12:05 PM ^
I agree with you in the short term, but I am less optimistic in the long term. Ticket sales have been declining and it is unclear what broadcast changes and NIL will mean for programs like ours... seems like they could go in either direction.
January 31st, 2022 at 10:23 AM ^
Where did I say the University?
January 31st, 2022 at 12:24 PM ^
You said "Michigan" instead of "Michigan Athletic Department".
January 31st, 2022 at 11:03 AM ^
This chart is from an old 247 article which is a few years old but is usually my go-to whenever this comes up. I am surprised revenues have taken such a massive hit - I assume COVID is the main driver - but still, ouch. You're down almost 50% in revenue YOY. It shows the risks of athletic departments' hollywood movie studio accounting practices. You hide your profits by spending them, but then when revenue dips you're in a big hole. Whoopsie
Michigan basically forced a 2MM surplus every year from 2015-2019. The Freep said for 2020 it was $192MM revenue and $180 operating expenses
January 31st, 2022 at 8:44 AM ^
I don't understand those revenue figures. 5-10 years ago we were getting 100mil from football alone. Don't we get like $50mil annually from the BTN? 7 home football games at $100 a ticket (seat + PSD) is $70mil... Maybe this is ticket sales + BTN and doesn't include "compulsory charitable donations".
January 31st, 2022 at 9:12 AM ^
FY 2021 ended in June 2021 so this would be the year there was basically no football ticket revenue. FY 2022 will pick up the 2021 football season revenue.
January 31st, 2022 at 9:21 AM ^
Ah ok I got it. I was thrown off by the timing of the article.
January 31st, 2022 at 9:56 AM ^
It's the Free Press, what did you expect? Of course they will word it in a way that makes this current year seem like the University took a loss.
January 31st, 2022 at 10:02 AM ^
Yeah the timing is probably just due to there being no publicly available information before now. The university has their audit typically finalized around the end of October. I'm not sure if they make all their info public at that point or if there's any kind of delay.
I think the freep did the same article almost exactly a year ago as well, so they probably gather the info and then write it around now as it's a relatively dead period for sports typically.
January 31st, 2022 at 8:47 AM ^
A lot here depends on when the AD's fiscal year ends. It feels like the results we're seeing are actually including the 2020 football season - because I have a hard time believing that attendance in 2020 made more money than attendance in the this last 2021 season. I mean, fans weren't even allowed in the stadium last year! Maybe these numbers only include season tickets? But even then, weren't they (mostly) refunded, or just not sold?
I don't really buy into the perfect budgets these AD's always seem to have anyway. I believe they bring in more than they spend and just stuff it in places we can't see to avoid giving it back to the state gov't or the school's general fund. So I don't really feel bad for them running a deficit this last year, I've no doubt they have a slush fund somewhere to cover it.
January 31st, 2022 at 8:52 AM ^
I'm wondering if the people that decided to not get a refund in 2020 and elected to roll their tickets over to 2021 counted as revenue for 2020 and was a loss for 2021. Make 2020 look better than it was and 2021 look worse. I just cant wrap my head around only 100mil in revenue for a full year of ticket sales. Projected 2021 FY revenue was around $170 mil and there was nothing to cause that projection to be off by 30-40%...
January 31st, 2022 at 8:57 AM ^
I always laugh when our controller has his monthly spend reporting. He has his own little nest egg we like to call "funny money" to help with month end/year end reporting..a good accountant/controller is worth their weight in gold. Im sure the UM AD has a few on staff.
January 31st, 2022 at 9:34 AM ^
Controller here so definitely biased but the joke my CFO and I always make is a good accountant can make the numbers look however they need to look, as long as you know all the stupid picky accounting rules.
January 31st, 2022 at 8:56 AM ^
I don’t know the freep very well as I don’t live up North with y’all but I can’t imagine this reporter did more than scratch the surface on the facts. What is their history on financial reporting?
January 31st, 2022 at 10:10 AM ^
Freep knows nothing draws clicks like negative stories about Michigan athletics
January 31st, 2022 at 9:00 AM ^
Why is there always so much negativity around the Michigan program. The article could have stated the athletic budget was 32.4MM better then expected in a pandemic year coming off a 11.6MM surplus the year before with a huge surplus expected in fiscal 2022 due to the success of the football program.
January 31st, 2022 at 9:17 AM ^
Well its the Free Press....
January 31st, 2022 at 9:42 AM ^
It sure is. We should always remember history.
January 31st, 2022 at 10:24 AM ^
I told you why..."FREEP ALERT"
January 31st, 2022 at 9:16 AM ^
Just imagine how bad it would have been had JH not taken a pay cut?
January 31st, 2022 at 10:26 AM ^
I realize this is MGoSarcasm...but the buyout was the more important piece.
January 31st, 2022 at 9:18 AM ^
Reminder that Fiscal Year and Calendar Year rarely match - for the State it's October 1 through September 30, and for many schools it's July 1 through June 30 or June 1 through May 31.
So FY21 almost certainly includes the worst of the Covid season. I'd have been more surprised if there HADN'T been a deficit.
If FY22 has a similar deficit, then that may be an issue.
January 31st, 2022 at 10:07 AM ^
Yes, this article doesn't have a great headline. The author hit on most of the reasons behind this number: the FY21 year ran from July 2020 to June 2021, i.e. COVID. This number reflects an expected hit the AD was going to take from COVID and ended up being lower than the projected number. The projected number was probably overstated to begin with, but a better look at this would be to compare how other ADs did during this time. Considering Michigan had a surplus the year before and most likely in FY22, I don't think a deficit in FY21 is going to affect Michigan operationally much at all.
I think the Iowa version of this story does a better job in putting the number into context vs other Big Ten ADs. Michigan's number is on the high end with Iowa with many other Big Ten programs running a deficit around $10-20 million. My guess is part of the reason Michigan's deficit is higher is the reliance on the football program for revenue with high number of non-revenue sports Michigan offers compared to other FBS schools. One thing the Freep article did not cover is how much existing debt Michigan is already carrying (if any) which might be more important than the FY21 deficit.
Next year expect the article on the record-breaking one-year increase in profit Michigan made in FY22 compared to FY21 after the Football Big Ten Championship season with no regard for what actually happened in FY21.
January 31st, 2022 at 1:01 PM ^
Thanks for the comment. The Iowa article provides 10x the analysis of the Freep article (and your comment provides at least 5x the analysis of the Freep article)!
January 31st, 2022 at 9:18 AM ^
It's a numbers game and how it's played. Avg ticket price at Michigan per game, 7 home games not counting suites is easily 90 million. That doesn't touch suites, donations, btn/bt title game, cfp and all tv money.. Parking, Concessions, all of it. Going to guess there is some creative accounting in this. 2021 was full capacity for all games this year. Not sure what avg ticket price is when all games included but guessing it was over $125 for avg ticket, 110,000... 7 home games.. you get the idea.
January 31st, 2022 at 9:36 AM ^
I'm reminded of a joke I heard back in college. Told by an Accounting teacher and I'm an accountant of a sort. (Abbreviated version):
Several candidates interviewed for an open accounting position at a corporation. Each one was given all the data and resources needed to figure out how much money the company made or lost.
One candidate raised his hand and asked "What did YOU want the bottom line to be?".
The interviewer replied, "You're Hired".
January 31st, 2022 at 10:03 AM ^
Not one quote in the entire article. Author just looked at the raw numbers and drew his own conclusions.
January 31st, 2022 at 10:11 AM ^
not clicking it but interested how this compares to others in the Big Ten. For instance, what was the deficit for MSU?
January 31st, 2022 at 10:35 AM ^
There are a couple factors.
1. The Big Ten reportedly distributed $38 million to member schools for FY21 compared to the expected normal full share of $58 million.
2. Schools that sell more tickets for football games like Michigan or PSU are probably going to take a bigger hit in FY21 versus schools that don't generate as much football ticket revenue. The Freep article noted that Michigan's decrease in ticket sales alone would have pretty much covered the deficit.
The Iowa version of this article gave some deficit numbers for other Big Ten schools.
Rutgers: $73 million
Iowa: $42 million
Minnesota: $18.3 million
MSU: $15.4 million
Nebraska: $12.1 million
Purdue: $8 million
Illinois: $3.2 million
One problem looking at just this one number is that it is not totally straightforward because each school's accounting method is unique and can generate wildly different deficit numbers. Iowa cut sports this past year so you could be suspicious that they had a motive to make their deficit number look worse, but it is hard to tell without being able to do a deeper dive into each ADs numbers and standardizing the accounting.
January 31st, 2022 at 11:02 AM ^
This is the COVID impact year, not this most recent season. For some helpful context:
- The reported deficit was ~$47 Million for the 2021 fiscal year, which ended June 30, 2021 (e.g., in short this does not count the '21 football season).
- During this fiscal year/time period UM had ~ $54,000 in ticket sales. The year before (2020 fiscal year) it had $57 million. Yes, that's the a decrease from $57M to $54k and basically this is all about not having fans in the stands during the '20 season.
- Donations also dropped between 2020 fiscal and 2021 fiscal, from $32M to $13M. Again, that's a drop from year-ending June 30, 2020 (with a big pre-pandemic window) until June 30, 2021 year, which covered the pandemic. People were either worried about the economy tanking or buying stock on the cheap when the drop happened.
- For the fiscal year 2021, football only lost $330,000. Despite having a drop in ticket sales of about $57 million.
- Earlier statements/estimates in October 2020 put the project deficit at between $80M - $100M. So this came in under that.
TL; DR: This is the impact of COVID on the 2020 football season with no fans and less games. File it, move on.
January 31st, 2022 at 12:16 PM ^
Jesus. The football program only lost $330k despite having no ticket revenue??? That means in normal years they "make" +$50m. Pay Harbaugh.
January 31st, 2022 at 4:56 PM ^
Yeah basically they print money in a normal year that helps cover the rest of the AD. The fat tail got them (and basically everyone else).