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Editorial: UNM Athletics taking steps to get out of fiscal mess

Time will tell whether the UNM Athletics Department has turned its fiscal ship around sufficiently to stay off the auditor radar and head toward calmer seas.

But it certainly appears it is steering in a better direction than two years ago when it was bleeding red ink year after year and was targeted in a devastating report from then-N.M. Auditor Tim Keller that cited “tangled” financial and operational relationships among UNM, the UNM Foundation and the Lobo Club. The arrangement allowed improper mixing of public and private money and permitted violations of the state’s anti-donation clause.

The audit also led to an investigation by Attorney General Hector Balderas, whose office charged former AD Paul Krebs with five felony counts related to the now infamous Scotland golfing trip and the alleged subsequent coverup in which Krebs allegedly tried to conceal a $25,000 donation he made in an apparent attempt to quiet criticism. The criminal case against Krebs, who has denied wrongdoing, is pending, and no preliminary hearing date has been set.

Eddie Nuñez, who was named AD in August 2017, said at the time the final audit was released three months later that UNM already was in the process of addressing the audit findings. He said last week the audit findings in the 58-page report have been addressed.

Meanwhile, Nuñez reported to a regents’ committee last week that the department had met its $32 million operational budget number for the most recent fiscal year and had a $115,000 positive net balance. Granted, that took the transfer of $1 million from the rest of the university and the transfer of a $789,000 land proceed.

Nuñez calls it a “victory.” It’s certainly a change for a department that had missed budget in eight of the past 10 years and racked up $5 million in debt to the university via money from the Instruction and General Fund.

Meanwhile, the department trimmed staff and cut men’s soccer, skiing and beach volleyball, which should reflect savings going forward. It also has implemented controls to avoid overspending in each sports program. And, while Athletics now gets institutional support for tuition and fees from scholarships to close the gap between revenue and expenses, the amount is budgeted ahead of time. Previously, the standard seemed to be the department overspent its budget and expected a bailout to cover the extra expenses.

Media contract promising

And, the regents committee gave preliminary approval to a new contract for UNM’s multimedia rights to Outfront Media Sports Inc. – which grew out of CBS Sports – hopefully resolving a financial aberration so bizarre that it stood out even in the chaos of UNM Athletics finances.

In short, the prior media rights partner, Learfield Sports, and athletics officials several years ago signed what essentially was a new contract that did away with some guarantees Learfield had to pay UNM. In return, for less guaranteed money, UNM athletics was allowed to sell some media rights and keep the money. Inexplicably no final version was ever signed. And it was never posted on the school’s website, where other contracts can be found.

Auditors rightly questioned what was going on.

Eventually, the new UNM administration and Learfield worked out how much UNM was owed and both sides agreed to end the contract early. The new contract focuses on profit sharing and not on guarantees.

Is the department out of the fiscal forest? Hardly. That will depend in large part on how many people Lobo football and basketball can put in the stands, what kind of TV contracts the Mountain West can land and whether the Outfront media rights contract will be a financial winner for UNM.

Still, the school appears to be requiring more accountability and better planning as Athletics works to right its fiscal ship.

This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.

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