Tennessee athletics expects $28M operating loss. Here's how UT will cover that deficit.
Tennessee athletics expects to incur an operating loss of more than $28 million during the 2021 fiscal year, and it will rely on financial support from the university and the SEC to cover the deficit.
The projected loss is primarily tied to a steep reduction in ticket revenue because of the COVID-19 pandemic.
UT Chancellor Donde Plowman detailed the financials during a Board of Trustees meeting on Thursday.
The university has committed $12.5 million in institutional support from financial reserves to help cover the deficit, Plowman said. That support is not funded by tuition dollars, she said. Additionally, the SEC will provide financial relief, Plowman said.
"I can’t go into all the details about what that conference package is going to look like, but what I can tell you is, that (operating deficit) will be covered," Plowman said. "It will be close, but we’re going to make it."
"We’re really fortunate to be part of the SEC, let me just say that," Plowman added.
The latest financial projection outlines an expectation for Tennessee athletics to generate $90.32 million in revenue for this fiscal year, which ends June 30, and $118.58 million in expenses, for a $28.26 million operating loss.
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This year's financial loss will come after Tennessee reported an operating loss of $488,857 for the 2020 fiscal year on its annual expenses-and-revenues report submitted to the NCAA. Because of internal accounting procedures, UT considers its athletics operating loss to be $566,856 for the 2020 fiscal year.
Tennessee is projecting $7.7 million in ticket revenue for the 2020-21 athletic year, which marks a decline of 77.1%.
Tennessee originally was scheduled to play seven home games at Neyland Stadium last fall, but pandemic-induced schedule changes led to the Vols playing five home games. Additionally, attendance was limited to about 25% of the stadium's capacity.
Revenue-altering attendance restrictions also are in place at other home sporting events, including men's and women's basketball games, where attendance is limited to about 4,000 fans.
In response to the revenue reductions, Tennessee trimmed expenses throughout the athletic department, including a projected year-over-year savings of about $3 million from employee compensation and benefits. That savings was achieved, in part, by instituting eight months of tiered pay cuts for employees earning more than $50,000 annually. Those cuts went into effect Nov. 1 and will continue through June 30.
UT System President Randy Boyd said after Thursday's trustees meeting that the university hasn't determined whether the athletics pay cuts will continue beyond June 30.
"I think there are just too many variables to make that prediction," he said.
Tennessee's expense reductions did not include cuts to scholarships or athlete welfare.
"We’ve kept the student-athlete first and their experience," then-athletics director Phillip Fulmer told Knox News in June.
Board Chair John Compton said Thursday that university officials should evaluate whether the athletics department can expect revenues to return to normal levels in the next fiscal year and plan accordingly.
“How much of those (revenues) come back in the fall or even into next year?" Compton said. "All those things, I think, are questions the campus should be thinking about and then brought back to the Board in terms of, ‘What does the future of athletics look like?’ in terms of the future revenue streams and the expenses that can go with that.”
Blake Toppmeyer covers University of Tennessee football. Email him at email@example.com and follow him on Twitter @btoppmeyer. If you enjoy Blake’s coverage, consider a digital subscription that will allow you access to all of it. Current subscribers can click here to join Blake's subscriber-only text group offering updates and analysis on Vols football.