There are eight months to work on it.
And it is only a soft, preliminary projection, multiple officials emphasized.
But the “athletics estimated shortfall” for the current fiscal year ending June 30, 2018, presented Friday at the University of New Mexico’s Board of Regents Finance and Facilities Committee meeting made clear the financial woes of Lobo athletics haven’t gone away.
UNM is forecasting a $1.3 million deficit for an athletic department with a roughly $33 million operating budget this year. The projection comes amid intense scrutiny of the department, which currently has three state agencies looking over its shoulder.
The $1.3 million figure was an “estimated shortfall due to increased fixed costs and lower game attendance,” according to a PowerPoint presentation made for the meeting.
“We’ve been studying very carefully the ticket sales in athletics both for football and men’s basketball,” Executive Vice President for Administration David Harris said.
Harris also noted after the meeting that “cost of attendance” expenses – money given to student athletes to help with basic living expenses not otherwise covered by their scholarships – are charting higher than budgeted.
The Journal asked just two weeks ago if the university would be adjusting optimistic ticket revenue projections for football as attendance continues to decline – a trend seen nationally, not only in Albuquerque.
UNM said it had no plans to do so until after the football season. This year’s projected ticket sales were budgeted higher than actual revenue collected in every season since 2008.
With season tickets already accounted for, UNM would need about $400,000 in new ticket sales for its final two football games to reach its revenue projection of $1.9 million. And, one week away from the Lobo men’s basketball season opener, season ticket sales have not yet approached last season’s 8,805, which was the lowest in at least 12 years and was a contributing factor in the firing of former head coach Craig Neal.
The projected deficit figure presented Friday would mark a ninth shortfall for athletics in 11 years and grow its current accumulated debt that has been covered by the university’s central reserves to $6 million.
But Harris and new athletic director Eddie Nuñez, who has been on the job officially less than a month, made clear the task at hand is now analyzing how they can narrow the gap by cutting costs and finding new revenue. They are expected to have a detailed plan to regents next month.
“There are a number of things we’re looking at,” Harris said. “We’re looking at the debt service load that they’re carrying on the Pit remodeling that took place seven or eight years ago. We’re also looking at reducing the cumulative deficit, but more than that I think we’re also looking at their current year, both revenue and spending opportunities.”
Nuñez was hired from LSU to replace embattled former AD Paul Krebs, who retired in June amid a pair of state investigations into financial practices of the department. Nuñez said he’s still trying to get up to speed on the budgeting practices in the department, including why revenue projections have been structured they way they have been in the past.
At one point in the meeting, Regent President Rob Doughty thanked Nuñez for his hard work after “being thrown into the fire” in his first few weeks on the job and having to inherit so many significant financial concerns.
“I’m just glad he didn’t do much research before he accepted the job,” Harris joked, getting a large laugh from the room.
Doughty said the need for drastic cost-cutting measures in athletics means another look at eliminating some varsity sports is in order.
“As much as it pains me to say this, I think in order for us to really go forward and keep this a balanced budget we must have a thorough analysis on the number of athletic programs we do have and is it time to consider looking at reducing the number of programs,” Doughty said. “It’s my understanding that we have the most number of athletic programs in the Mountain West (Conference), and I think this is something now we really should look at, but with (everyone) involved. No surprises. Get a very in-depth look at whether it is time for the university to, unfortunately, have to cut some sports in order that we can have a balanced budget.”
After telling the Journal in August 2016 that cutting sports wasn’t an option for the department then, multiple regents starting floating the idea in meetings throughout the 2016-17 academic year.
Then, in April, Krebs announced skiing would be eliminated. The decision was harshly criticized, and Krebs took the brunt of the heat until the local ski community eventually stepped up with enough private funding commitments to reinstate the program, at least for another year.
Interim President Chaouki Abdallah said in May he hoped such private funding models for sports would become the norm for a department, and entire university, still very much in need of making cuts to handle enrollment drops and other budgetary concerns that aren’t going away anytime soon.
Regent Marron Lee said that while she understood cutting sports might be necessary, “that can’t be the only panacea. We have to look at other budget containment costs.”
Harris said Friday that he, Nuñez and others in athletics will be working on a plan to present to the regents as early as December that will address what is being done for the current fiscal year and also what is being done to address the accumulated debt of the department.
New Mexico Higher Education Secretary Barbara Damron asked for updates on UNM’s deficit reimbursement plan for athletics last month when placing the university on an “enhanced fiscal oversight program” due to the growing, and seemingly unaddressed, debt. Harris and Abdallah met with NMHED on Tuesday.
Journal Staff Writer Jessica Dyer contributed to this report.