Copyright © 2020 Albuquerque Journal
The full impact of COVID-19 on all walks of life won’t be known for many years.
But a bleak picture is developing for the University of New Mexico athletics department. It has already lost a spring and fall season, and it’s uncertain how much revenue the traditional cash cow of Lobo basketball might bring in if fans aren’t allowed in the Pit during the coming season.
The athletic department on June 30 closed the books on fiscal year 2019-2020 with a $3.6 million shortfall in what was originally a projected $32 million budget. The shortfall was almost entirely caused by COVID-19 problems that led to reduced NCAA revenue sharing, canceled events in and around the Pit, and lost parking revenue from the cancellation of Albuquerque Isotopes baseball and New Mexico United soccer games.
That $3.6 million shortfall reflected drastically lower expenses since March as the pandemic brought college sports to a halt. Revenue was actually down nearly $5.3 million from UNM’s projection for the FY20 budget a year ago.
And while help from more than $2 million in CARES Act relief will officially show the final deficit for the year as roughly $1.6 million, the reality is the department, which had been trying to dig itself out of years of well-publicized financial struggles, was hit hard last year. And matters might only get worse.
According to a memo being presented to UNM’s Board of Regents on Thursday, there is a “worst-case scenario” of revenue falling more than $10 million for this coming fiscal year. Athletic director Eddie Nuñez says the revenue drop is almost impossible to predict now.
It’s also unknown how last year’s athletics deficit, or upcoming ones for that matter, will show up on the books.
Sometime in the spring, regents approved moving the department’s past accumulated deficit – in the range of $4.4 million – the Journal has learned. The deficit has been moved to main campus and now will be “funded from central plant discretionary/unrestricted funding” that “is derived from interest income and is usually used for small capital projects and building and grounds infrastructure,” according to an email from Barbara Damron, UNM’s chief government relations officer.
Damron, who was the state’s higher education secretary who placed UNM athletics on the fiscal oversight program in October 2017, noted the move was necessary when, in this past legislative session, language in the state budget bill limited how revenue in athletics that included state appropriations could be used to repay past debts.
“The original payment plan had the deficit being paid by athletics but after the (House Bill) 2 was signed into law, UNM felt it had no option but to use institutional funds to eliminate the deficit,” Damron wrote the Journal on Wednesday.
New Mexico State University has not interpreted that provision the same way. It is still requiring its athletics program to repay the deficit it has accumulated.
Meanwhile, even with that burden off the books for UNM athletics, the Mountain West Conference has already pushed football back to the spring. Not only is football tied into the bulk of the television revenue the conference distributes, but UNM had also planned to collect $1.95 million for playing two “money games” this fall at USC and at Mississippi State.
Another worry on the revenue side of this year’s budget is the uncertainty surrounding college basketball, which doesn’t yet know when the season will begin or if fans would be allowed to attend when play begins, meaning the roughly $3.5 million annual ticket revenue from men’s basketball alone in the Pit is in jeopardy.
“I’m still looking at everything we can do to cut and manage expenses,” Nuñez said. “But right now what makes things really hard is there remains a lot of unknown factors and uncertainties about what this year will end up looking like that it’s hard even now to really be able to do much more than plan for a variety of different scenarios.”
Asked about some universities recently announcing furloughs to cut salary expenses, Nuñez again said he is “looking at everything,” but he emphasized layoffs are not on the table for now.
Part of Thursday’s regents meeting will include presentation for approval of the $51.5 million UNM will ask the state for this in coming legislative session, including an increase for athletics of $1 million.
Athletics in the past two fiscal years (2020 and the current 2020-21 fiscal year) received $3.8 million from the state.
The request for next year, to help combat the projected lost revenue, is $4.8 million.
The increased request is “due to the Athletic Department’s ability to self-generate revenues being severely threatened by COVID-19,” says the memo from UNM’s Office of Government and Community Relations. “… Now more than ever, state and institutional support are vital to the success and sustainability of UNM Athletics. Historically, UNM Athletics has self-generated over 60% of its total revenues on an annual basis. As a result of COVID-19, these self-generated revenues such as ticket sales, sponsorship, fundraising, and NCAA/Mountain West distributions have become incredibly volatile.”
The memo adds that, among other issues, UNM Athletics is unlikely this fiscal year to be able to match historical ticket revenue, which will trickle down into losses in concessions, merchandising and parking revenues, and it is “unrealistic to assume that UNM Athletics can fundraise its annual $2.2 million from donors.”
When she asked that UNM and New Mexico State University each push fall contact sports back to the spring, Gov. Michelle Lujan Grisham did acknowledge publicly she would be open to helping as best she can the departments that lost revenue due to COVID-19 safety measures.
UNM’s state, institutional and student fee support has ranked eighth out of 10 full members of the Mountain West Conference. The U.S. Air Force Academy is not included in the count. It has a very different budgeting structure as a service academy. Student fee revenue for UNM Athletics continues to drop. In fiscal year 2017, Lobo Athletics received $3.94 million in student fees. Just three years later, it is set to receive $2.7 million, about a 31% decrease.