UO could save $3M a year by shutting down basketball, mothballing Knight Arena

7/11/2015 update: Matt Prehm has an interview with Duck spokesperson Craig Pintens on basketball tickets, here:

The Ducks averaged just 6,209 fans per home game during the 2014-15 season, ranking seventh in the Pac-12. It was the lowest figure since 1992 when an average of 5,819 fans attended games at McArthur Court.

… The Athletic Department operates on zero funding from the University of Oregon [Yeah, sure it does], and so every penny can sometimes count. That’s why when Oregon decided to slash prices across the board – a 34-percent slash on average – was such a difficult decision.

The Athletic Department is reporting a near 90-percent season ticket renewal rate from last season, and while that’s well above the 80-percent renewal norm for the basketball team, it’s still a huge financial hit with the slashed prices.

… With a better marketing plan of the program, ticket costs slashed, and a better non-conference schedule Oregon is seeing early returns pay off.

No, actually this isn’t paying off. I’m no economist, but if you cut prices 34% and sales only increase by 10 points on a base of 80 – lets call that 13% – total revenue will drop. As it did. And as explained below the basketball program is now losing millions – even if you ignore the sunk costs of the $13.5M Knight Arena bond payments.

And it seems that they are prepared to lose more millions to avoid the embarrassment of having the country’s most expensive college arena sit half empty. Meanwhile, the millions in hidden subsidies from the academic continue – including the $450K we pay athletics each year for the Knight Arena land.

Meanwhile Coach Altman has also succeeded in driving away the UO student fans:

… Based on numbers given to me by [Duck PR flack Craig Pintens], the average student attendance for this season was 989 per game. Last season, they were 1,539. In 2012, it was 1,541. In 2011, it was 1,574.

5/15/2015:  UO could save $3M a year by shutting down basketball, mothballing Knight Arena

Duck AAD Eric Roedl is predicting that basketball ticket sales this year will be just half of what they were in 2007. Under Ernie Kent, UO actually made money off basketball:

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Under Dana Altman, operating expenses have increased by $2.3M, while ticket sales have decreased $2.3M. Instead of operating income of $1.7M, Altman’s got an operating loss of $3M. This ignores the cost of repaying the $235M in bonds for Knight Arena – about $16.5M a year. But those are sunk costs. UO would save $3M a year by shutting down its basketball program and mothballing Knight Arena. Of course we’d have to find another team to buy out Altman’s contract, which might be tough given the rape allegations. And the NCAA and PAC-12 would probably be upset.

So, will cutting season ticket prices help? AAD for Finance Eric Roedl is going to find out, cutting some prices by 40%:

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Probably not, but it might make the half empty Matt Court slightly less embarrassing for the boosters.

When Pat Kilkenny was trying to get the State Legislature to authorize $200M in tax-exempt bonds for Knight Arena, he predicted basketball ticket revenue would increase between 100% and 333%. Whoops, but then it’s easy to make mistakes when you are playing with other people’s money.

Interestingly, in comparison to the secret deal UO has made for the 2021 Track and Field Championship, back in 2007 UO President Dave Frohnmayer (and apparently the Legislature) insisted that the UO Senate Budget Committee and the Intercollegiate Athletics Committee be given information about the financial projections and make a public report on the Knight Arena project.

What are the chances Kim Sheehan (Advertising) and her secret PAGIA is going to report anything about the Track and Field deal? And what are the chances the Track and Field deal will turn into an albatross like Knight Arena?

The 2008 report from the Senate Budget Subcommittee is here. It was pretty prescient – read it all.

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Among the many interesting recommendations:

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Of course once Frohnmayer and Kilkenny realized the Senate was not going to roll over for them they not only ignored the report, they rubbed our noses in it. Instead of athletics paying for remediation for Mac Court (which was actually built with student fees on UO land, not with athletics funds) the academic budget is paying the jocks $467,538 a year for the Knight Arena land bonds  – thanks to this secret deal between Kilkenny and Frohnmayer, which I had to go to the Oregon DOJ to get UO to make public: https://dl.dropboxusercontent.com/u/971644/uomatters/IAC/Frohnmayer_Kilkenny_secret_200906.pdf

5/10/2015: Ducks give faculty and staff $10 baseball tickets to offset millions in athletic subsidies

With PK Park capacity of 4,000, and average attendance running around 1,700, this generous offer is costing the Ducks $0. Check “Around the 0” to get yours. Meanwhile the academic side is paying the Ducks millions in real cash for Matt Court, the Jock Box, the lawyers, etc.

For 2014-15 year Roedl budgeted a generous $2,314,399 for baseball expenses, while projecting only $360,000 for ticket revenue. That’s ~$2M in operating losses. Any questions about why the athletic department still needs those subsidies from the academic side?

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And the new rumor is that Rob Mullens wants to add two more money losing sports. I’d know more but Pres Coltrane and PAGIA Chair Kim Sheehan (Advertising) are keeping the meetings secret from public records requests:

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5/17/2015: Desperate Dana Altman has players call season ticket holdouts – paid with NCAA student assistance funds?

Dana Altman’s contract is for $1.8M a year and a plethora of bonuses including 15% of the gate over $4M:

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With AAD Eric Roedl predicting $2.9M for 15-16, that’s way out of the money. Last year Altman was trolling the frat parties, trying to get the brothers to go to some games. Didn’t work. And after the alleged basketball gang rape, well, as Duck PR flack Craig Pintens says, this year will be “uphill sledding”:

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A lot of Duck fans have no stomach for Altman, and have been canceling season tickets. So the Ducks have hit on a new scheme – have the basketball players call up season ticket holders and try and get them to renew. Duck flack Rob Moseley is so excited by this idea he tweeted it:

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Hmm, you gotta think maybe these student-athletes should be studying, instead? Or enjoying the sunshine? After all, while Altman’s getting $1.8M and a chance at 15% of the ticket gross, this is the NCAA. The players get nothing from ticket sales. So maybe the time on the phone banks comes out of their 20 hours of mandatory team time?

Or maybe Altman is giving them brownie points to get a bit of that limited NCAA Student Assistance Fund money? Get 10 ticket renewals and we’ll bring your parents out for a game?

I don’t know. Mullens and Roedl really don’t want to share that SAF data:

Subject: Public Records Request 2015-PRR-233

The University of Oregon has received your public records request for “all documents, including correspondence, related to the use of the NCAA’s Division I Student Assistance Fund during the 2012-13 and 2013-14 academic years. This request encompasses all correspondence with the Pac-12 related to the Student Assistance Fund” on 03/31/2015, attached. The office has at least some documents responsive to your request. By this email, the office is providing you with an estimate to respond to your requests.

The office estimates the actual cost of responding to your request to be $351.25.

Interestingly, Rob Moseley isn’t denying it:

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17 Responses to UO could save $3M a year by shutting down basketball, mothballing Knight Arena

  1. score keeper says:

    Well, it’s part of the “build it and they will come” nonsense that has become the heart of UO. Pretty sure you are supposed to memorialize the visage of one George Horton, brought to Oregon to re-establish a dead program. The one who perennially finds himself with a great pre-season ranking only to see it all tank at season’s end while holding down an absurdly high income.

    Oh, Mighty Oregon … sigh.

    • duckduckgo says:

      Yes, in bizarro coaching world, it makes sense to pay someone nearly twice the revenue. Maybe the baseball team is crucial to bringing in out of state students or something?

  2. SaveUofO says:

    I am curious as to how much revenue the Eugene Emeralds are handing over to athletics. Way to squander $2,000,000.00 but then again this is the institution that should have its own doctoral program in wasting money.

  3. Ben says:

    It would not save 3M…. closing the basketball team would get UO kicked out of the Pac-12 as having a MBB team is a requirement for membership. Having to choose between going independent or a second-tier conference (or another Power 5 conference, which would result in unrealistic travel schedules and costs), UO’s athletic revenue’s loss would far surpass the 3M saved.

    I know, it is a tongue-in-cheek suggestion, but it is far-fetched on the basis that it would achieve the opposite result of your wishful thinking.

    • uomatters says:

      You’re right. Maybe I’ve been watching too many of UO’s new 160over90 “What the If” ads. A man can dream though.

    • charlie says:

      So, y’all have gotten into quite a predicament, haven’t ya? Continue wasting money on a product fewer people want or need, continue payments on a venue that was almost guaranteed to lose money, have no alternative to such a situation because contractually, you have created a Samson Option if the proper alternative is used.

      All that Ben said is true, but what is amazing is that U of Owe can fall out of the AAU, flounder academically, but what would create mass mayhem would be dropping a sport. Amazing, and not in a good way….

  4. hnoest Uncle Bernie says:

    I guess this is another great success of the branding campaign!

  5. Sports Fan says:

    “We’re not really going to worry about what the hell (the fans) think about us,” Oregon forward Elgin Cook said. “They really don’t matter to us. They can boo us everyday, but they’re still going to ask for our autographs if they see us on the street. That’s why they’re fans, and we’re college basketball players.”

  6. Pinto says:

    Resembles a cottage industry, this Dana Altman fiefdom within the university’s sports-industrial complex. No matter what you call it, the effort using “student-athletes” to hustle ticket buyers is very entrepreneurial and consistent with the evolution of the neoliberal university.

  7. Licensed in Oregon says:

    The law school is cheaper.