Growing pains

Rising costs have forced PSU to tighten athletic budget

By Jeff Rice

- jrice@centredaily.com

They sell more than 100,000 tickets for a week's worth of Saturdays each year. They belong to a conference that boasts the most lucrative revenue-sharing system in the country. In recent years, they've found additional income from Big Ten Network contracts, football fantasy camps, even selling game-worn cleats and jerseys.

CDT file photo/Nabil K. Mark

Despite the economical downturn that has casted a cloud over the country, Penn State’s athletic department reported $91 million in revenue last year — more than $53 million was generated by the football program.

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All of which is important, because Penn State’s 29 varsity teams have plenty of ways to spend that money. Especially this year.

The university’s athletic department reported more than $91 million in revenue, the largest amount ever compiled on one fiscal year by more than $15 million, to the federal Department of Education’s Office of Postsecondary Education for the 2007-08 year, the most recent available data.

Reported expenses for 2007-08, though, were more than $79.2 million, up nearly $8 million from the previous year and a 69 percent increase from the 2002-03 fiscal year. That was before the nation entered what is now its longest recession since the Great Depression. Penn State’s teams and the athletic office are, like the rest of the country, watching expenses creep up across the board and taking the necessary steps to ensure the athletic department maintains its financial independence from the university.

“Everybody’s got an assigned budget that’s predetermined,” Penn State athletic director Tim Curley said in a recent interview. “Everybody’s required to manage that budget and not exceed it.”

Many of the growing costs, including medical insurance, utilities, event management and security, are unavoidable. So are tuition hikes, which cost the athletic department more scholarship dollars. Costs associated with travel are some of the biggest drains on the budgets and several Nittany Lion teams are coming up with creative ways to alleviate them.

For Penn State men’s basketball coach Ed DeChellis, sometimes that means spending some more time in the car during recruiting trips.

“I’ve flown more out of Harrisburg and Baltimore this year than ever in my life,” DeChellis said. “I can’t tell you last time I flew out of State College.”

When airlines started charging extra for checking baggage, Penn State field hockey coach Char Morett said her players began to double up, putting two sticks in one bag.

There are a few things Morett wouldn’t mind having some more money to spend on — additional bleachers at AstroTurf Field, for example — but knows it could be a lot worse.

“Penn State, I think, has made an effort to give us a realistic budget to work with,” said Morett, who will enter her 23rd season this fall. “This year we’re coming in with our budget means. I think we have what we need as far as to be able to run our competitive program.”

DeChellis, who moved into renovated offices in the Bryce Jordan Center last year, said the men’s basketball program tries to save money in small ways, such as sending out more e-mail than paper mail to save on postage or simply booking flights earlier. He also tries to ensure the Nittany Lions aren’t “held hostage” by opponents seeking up to $400,000 for a guarantee game.

“There’s nothing we don’t have that I go yelling to (Curley) that we have to have,” DeChellis said. “He’s always been good at trying to give us the tools necessary to do what we need to do.”

Curley and the administration have also been able to maintain a succ essful overall p rogram (the Nittany Lions wer e ranked 13th in the most recent Directors Cup standings and fifth at the end of the winter season) at relatively bargain prices.

In 2007-08, the most recent data available, Penn State’s 13 head coaches of men’s varsity sports earned an average salary of $123,327, the lowest figure in the Big Ten. The Nittany Lions’ 12 head coaches of women’s sports earned an average salary of $90,585, good for third-lowest in the conference. The coaches, like the rest of Penn State’s employees, will have their salaries frozen in 2009-10.

Last year, for example, DeChellis made $642,366, a figure that ranks him 11th among Big Ten coaches. Joe Paterno, the all-time winningest football coach in Division I-A, made $1,037,322 during the 2007- 08 year, which put him in the bottom third of his conference peers.

That figure seems like even more of a bargain when you consider how much revenue his program generates. Penn State football reported more than $53.7 million in revenue for 2007-08, and the increase in ticket prices for the 2008 season was enough to offset the slight drop (108,254 from 108,917 in 2007) in average home attendance.

The Nittany Lions will play eight home games this fall, and the average season ticket price went up again this spring, from $52 to $55. That increase and extra home game alone will likely provide more than $7 million.

Paterno and Curley have come under fire during the past few years for a non-conference schedule that has lacked big-name teams. But it makes more sense from a financial standpoint for the Nittany Lions to schedule as many home games as possible each season.

“It’s a fine line between putting together the competitive schedule that fans would like to see versus putting yourself in a good position financially,” Curley said. “That additional home football game pays a lot of bills. Moving forward, that will be something that we have to take a close look at all the time.”

No matter who the opponent is, Penn State fans will still come. The economy has hurt season ticket renewal rates, but only slightly, according to Penn State ticket manager Bud Meredith. The Nittany Lions had a renewal rate of 97 percent this spring, just down from their average rate of 98.5 percent.

“We’re very comfortable that the number of new applicants in the fold will fill the hole,” said Meredith, adding that schools like Michigan and Ohio State experienced similar small drops this spring.

Though they root hard against the Wolverines and Buckeyes when they come to town, athletic officials want Penn State’s Big Ten rivals to do as well as possible during the rest of the season. In each of the last four seasons, the conference has sent two teams to BCS bowl games, which maximizes the pool of revenue that’s shared by all 11 conference teams — whether they play in a bowl or not — and the Big Ten office.

The league reported $154.2 million in 2007-08. Penn State’s share is a big part of the athletic department’s annual budget.

“One of the positives is that it provides financial stability and the ability to project your budgets over an extended period of time,” Curley said. “Today, we know four years from now how much we’ll be able to project.”

The recession has had some long-term effects on the budget. New construction projects, including new indoor tennis and swimming pool facilities, a new soccer facility and a new ice rink, have been put on hold. Penn State will move forward with a new clubhouse for the men’s and women’s golf teams and a new softball stadium, Curley said.

Penn State’s teams will continue to search for ways to make their budgets work. What they won’t have to worry about, said their athletic director, is the university dropping programs altogether, as several schools have done during the past few years.

“Right now we’re proud of all 29 sports,” Curley said. “Eliminating any of them would be the last option we would consider.”