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Redhawks programs fight red ink
The decline of the football and men's basketball programs have hurt the athletic department's revenue.
The lack of success for the football and men's basketball programs in the 2005-06 school year was beginning to have a profound financial impact on Southeast Missouri State's financial picture for the athletic department.
That point is driven home on a few occasions in the Independent Accountants Report that was discussed briefly and accepted by Southeast Missouri State's board of regents on Dec. 15.
In four areas, the report mentions that the state of the department's featured programs -- particularly men's basketball -- caused a notable decline in revenues from the previous year or budgeted figures, a Southeast Missourian examination found.
As part of the report on the university's finances, the audit of Southeast's athletic budget -- which showed $7.87 million in expenses and $7.76 million in revenues -- spotlighted differentials of 10 percent or more in actual revenues and expenses from the 2004-05 school year or the budgeted amount for 2005-06.
The decline in the football and men's basketball programs was noted in ticket sales, contributions to the department, program and concession sales, and summer camp revenues.
Both head coaches of those programs from 2005-06 -- Tim Billings for football and Gary Garner for men's basketball -- have been replaced. Billings resigned under pressure prior to the last game of a 2-9 season in 2005 and Garner's contract was not renewed after a 7-20 season in 2005-06.
Tony Samuel led Southeast to a 4-7 football season in 2006, and Scott Edgar's basketball team this year has surpassed the previous season's win total.
The report did reflect on the success of the women's basketball program, which showed increased contributions over the 2004-05 school year and nearly had a contributions revenue total equal to the men's program.
The university has had to make changes in women's basketball as well following the program's first OVC championship and NCAA Division I tournament berth. With the program under NCAA investigation, coach B.J. Smith was placed on leave in November and resigned in December. John Ishee currently is the acting coach.
Southeast athletic director Don Kaverman was not completely familiar with the report, but was not surprised by the measurable impact of the men's basketball and the football programs.
"It's clear our success in those sports is important to our financial viability," Kaverman said. "I think the thing people have to realize is that we have to generate a significant part of the revenue that supports the [athletic] program that isn't allocated by the institution."
The department does receive 65 to 70 percent of its revenue from the university -- a total of $4.79 million in 2005-06 -- but Kaverman said the department also has to generate revenue from ticket sales, fundraising, advertising and sponsorships.
"Our ability to do that is heavily impacted by our success, primarily in men's basketball and to a lesser extent football," Kaverman said.
That was noted in spots throughout the audit.
* Total ticket sales declined 12 percent from the previous year. Also, the ticket sales total following the removal of complimentary football and basketball tickets was $261,489, which was $74,661 less than the budgeted amount.
"This difference is attributable to a decline in the ticket sales revenue generated from men's basketball," the report said.
Southeast did play one fewer home game in 2005-06, which was noted in the report, but attendance dropped from 3,902 to 3,550, resulting in 8,478 fewer fans for the season.
* Total contributions for the year were up 11.6 percent over the previous year, but the contributions to men's basketball fell approximately $68,000 to $31,721. The university showed increases of $145,000 in contributions that were non-program specific and $18,000 in contributions to women's basketball, which had a total of $26,569 in restricted gifts.
The report noted that the overall total contributions of $748,921, which was a large increase over the budgeted total, included money from the university foundation for expenses that arose.
* Program sales and concessions fell 16.2 percent from 2004-05 to a total of $50,574. "Management explained that the variation is attributable to a decrease in the program sales and concessions for football and basketball, which directly correlates with a decline in the attendance for those sports."
* Sports camp revenue fell 10.8 percent from the previous year to $201,044. "Management explained that the variation is attributable to university teams not performing well, which has a direct correlation to the attendance" of camps.
The athletics department did see an increase of revenues from student athletic fees, which were increased 75 cents per credit hour for 2005-06. That generated about an additional $162,000. The department took in $446,660 from student athletic fees.
The university showed a 17.9 percent increase in royalties, licensing, advertisements and sponsorships over the previous year. The report said management attributed the increase "to additional signage revenue received from the Show Me Center." Another part of the report lists that signage revenue was $6,562 more than budgeted. The overall increase in royalties, licensing, advertisements and sponsorships went from $51,894 to $61,167.
The 2005-06 school year also was the first full year for the school's Redhawks logo, which replaced Indians in January of 2005.
Kaverman said the university saw a spike from that change back in 2005, with another increase as people purchased goods before the 2005 football season. He said the sales on such items now is probably $30,000 a year, which he estimated at $10,000 to $12,000 more than before the change.
"What we're working on now is trying to get more stores to carry our licensed merchandise," Kaverman said. "The more points of sale, the easier it is for fans to have access."
Also of note:
* The department did see a decrease in guaranteed money from the previous year as the number of "guarantee" football games dropped from two to one. The university was paid $245,000 in 2004 for games at Central Michigan and Bowling Green, and it took in $115,000 in 2005 for the game at Kent State. Southeast lost all those games.
* The amount of money spent in recruiting in 2005-06 was increased 19.1 percent over the previous year. The total of $194,888 included increases of $12,000 for men's basketball and $7,000 for women's basketball, which made up more than half of the $31,187 difference over the 2004-05 amount.
* Coaches salaries increased 15 percent from 2004-05 to $1.69 million. The university cited a $53,000 increase in men's basketball salaries, a $95,000 increase in football salaries as well as a $64,000 increase for all other sports. Kaverman notes those salaries have increased again for the current year.
"These programs are expensive, and they're only getting more expensive," Kaverman said. "We really need the community support by attending games and also joining the booster club."
And the university took steps to reinvigorate that community support for its struggling high-profile programs with coaching changes last year.