OT - Mason Annual Fundraising Spikes

[Five Two]

The JMU AD sent out an email to donors last week that was very interesting. A friend sent it to me. Here are few nuggets:

Reviewing the fiscal year that closed on June 30, 2015, our overall operating budget was $44,825,701. I frequently hear comments regarding our budget’s scale compared to conference or regional schools, or questioning the ease of adding “just one more thing” given the size of our budget. These are complicated questions and the areas below will explain some of the contributing factors.
The subject of the size of our budget begins with the transparent approach of JMU. As an institution, we report all activities and services related to athletics as part of our athletics operational costs. Many of our peers in Virginia and in the CAA do not report financial data in this way. For example, greater than $6 million of our budget is facility debt services, nearly $1 million is dedicated to spirit groups and nearly $3 million covers indirect costs paid by athletics to the institution for certain university services. That’s $10 million of expenses included in the athletics budget at JMU that you will not find in the ledgers of many of our peers. For instance, at some conference institutions, operational costs of their facilities (lighting, heating, utilities, etc.) are designated to a different line within the university’s facilities management budget even though the significant majority of the building’s use is dedicated to athletics. Thus, that figure never appears in the athletics budget of those schools. The Commonwealth of Virginia has formed a task force that is currently working to bring uniformity to athletics budget reporting so that a more accurate comparison can be made among all state institutions.

 

[Five Two]

More:
Fully Funding Sport Programs
The topic of peer analysis also relates to how we have elected to fund our programs. One outcome of our Title IX-driven decision in 2006 to cut 10 sports was the ability to better steer resources to the 18 programs that remained and to be compliant with Title IX guidelines for our sport programs. As a result, we have fully funded all of our programs to meet the participation requirements for male and female student-athletes.
What does that mean? JMU offers the NCAA-maximum number of scholarships in every sport. Each of our programs have been given the scholarship support that they need to field the most competitive team possible. Additionally, we have committed to fully-funded coaching staffs for our programs. Each of our sports have assistant coaches with full-time, 12-month appointments that do not require teaching loads or other duties within the department outside of their coaching duties. Many of our peers cannot make that claim across all of their sport programs. For example, softball at JMU can be successful because we have the full limit of scholarships, we fully fund our coaching staff and we’ve made a commitment to first-class facilities. We work diligently to ensure that each of our 18 programs are treated equally and fairly. We are not a school where a football or basketball program is central to all decisions by the department. Much of the reason for that circles back to the emphasis on the student-athlete experience.

 

[Five Two]

Still more:
Cox Bill/Student Fee Reliance
Several recent or upcoming developments will cause further impact on our budget. As of July 1, new legislation in Virginia, known as the Cox Bill, will regulate the usage of student activity fees to fund intercollegiate athletics programs. The bill measures income generated from fees compared to the overall income generated by athletics.
For the fiscal year ending June 30, 2015, JMU generated over $35 million of its revenue from these student fees. The Cox Bill states that FCS programs such as JMU and William and Mary must rely on student fees for no more than 70% of its expenses. However, for purposes of these calculations, the legislation also provides for excluding certain expenses that I discussed above that JMU includes in its athletics budget – namely spirit groups, debt services (that were approved by the Commonwealth prior to June 30, 2015) and institutional service charges. After that consideration, JMU sits at 58 percent of its budget stemming from student fees, which is well below the Cox Bill requirement at the FCS level. Should the university have an invitation to an FBS conference to consider in the future, the Cox Bill requirement is 55 percent. In order to hit that mark, JMU would need to increase its athletics-generated revenue by $8.5 million by 2021-22. It is also worth noting that Virginia is one of just two states in the country that currently places this student fee limitation on its college athletics programs. Additionally, it is important to note that the new Convocation Center project was approved by the state prior to the Cox Bill and therefore is exempt from consideration.

 

[Five Two]

Cost of Attendance
We recently announced that we will begin offering cost of attendance (COA) stipends for our basketball programs beginning with the 2017-18 academic year, an initiative that will allow Coach Rowe and Coach O’Regan to begin recruiting with COA this summer. I have already written in this article that we pride ourselves on treating all of our sport programs equally and want to give all 18 programs the tools needed to excel. So why are we implementing cost of attendance only for basketball at this time?
JMU took a careful and thoughtful approach to our implementation of cost of attendance. At this time, basketball is the primary sport in which our peers are offering cost of attendance. Few football programs at the FCS level are providing it, while few schools outside of the power five conferences are offering it for all sports. There is a bottom line impact for JMU as it will cost $125,000 annually to fund cost of attendance for basketball compared to the price tag for all sports of just over $1 million. Should the university elect to further implement cost of attendance in the future, we will need to find other revenue sources to fund it without impacting student fees.
Additionally, cost of attendance is sometimes misunderstood among the casual athletics supporter. The number is a university-reported figure determined by the University Office of Financial Aid per federal guidelines, and is intended to inform families of the reasonable cost to attend the university beyond tuition and fee expenses. That figure includes estimates for travel to and from the university and other costs routinely assumed by a student. The Cost of Attendance calculation will be different from one institution to another and is an amount that impacts other scholarship students at the university outside of athletics. It is also an amount that is recalculated every year, which means it is likely to increase over time. Under the new autonomy structure of the NCAA, Division I programs were allowed to start providing this additional cost of college to its student-athletes in 2015.

 

[Five Two]

Conference Distributions
Several of the topics above point to increased expenses, but it is also important to consider areas of decreased revenue. One such area is anticipated decreases in conference revenue distribution. In simple terms, the NCAA earns the vast majority of its revenue from the men’s basketball tournament television contract. That money then gets distributed to the conferences and in turn the member schools. That distribution is based upon the number of teams and the number of wins for each conference in March Madness over a rolling six-year period. In 2011, the CAA earned its largest share of that money in its history when three teams qualified for the tournament and vcu advanced to the Final Four. Given the six-year payout structure, in 2018 the CAA will no longer benefit from the revenue distribution of that 2011 season. In real terms, we anticipate that JMU’s payout from the conference will be reduced from $400,000 per year to $28,000 in 2018. That revenue distribution and the conference men’s basketball championship account for a major portion of the league’s revenue streams. That’s why we root for multiple bids and wins for our conference members each March.
As we’re seeing across the country, Athletics Conferences are taking an aggressive approach to identifying and expanding their revenue opportunities. In addition to the NCAA payouts, many leagues are facing uncertain futures in terms of television and digital broadcasting and the associated revenue distributions from those contracts. The CAA, under the direction of new commissioner Joe D’Antonio is currently engaging in strategic planning that includes a careful look at potential revenue streams.

 

[Five Two]

FBS
While this article will not analyze the positives and negatives of any future invitations that might arise for the university, it is important to understand the financial impact with which we would be faced given such a decision. As already stated, the Cox Bill will require JMU to decrease its percentage of revenue generation from student fees from 58 percent currently to 55 percent. At the same time, a commitment to FBS means an increase in expenses in areas such as additional football scholarships, cost of attendance for additional sports, travel increases for all of our sport programs, increases to facility infrastructure and personnel cost increases. Additionally, we would face exit fees from the Colonial Athletic Association of $1,250,000 and entrance fees for the new league conservatively set between $2,000,000 - $2,500,000. As I just alluded to, further adding complexity to the financial issue, we have recently witnessed some FBS leagues outside of the power five have their television revenues decrease significantly under new agreements with their terms significantly reduced in length. That means JMU would need to find other internal sources to combat the increased costs associated with a move to FBS without a dependence on revenue generated from a new conference television package.

 

[Five Two]

Revenue Generation
Even without a move to FBS, we know that some of our current operating costs will continue to increase. The cost of a college education will continue to rise, which will in turn increase our scholarship bill, a number that already sits at nearly $8 million. Unlike some institutions, JMU does not offer tuition waivers whereby the cost of an athletic scholarship is forgiven or an out-of-state scholarship is charged at the in-state rate. Athletics pays the university the full scholarship costs associated with each athletic scholarship. In addition, salaries and related benefit costs will continue to rise as mandated by the state legislature. Other routine operating costs, namely travel and equipment, will continue to increase over time. Outside of student fees and conference distributions, our opportunities for generating revenue are somewhat limited. Looking back at the 2014-15 fiscal year, we pulled in $2.5 million in ticket sales, $430,000 in game guarantees, $2.5 million in athletics donations and $1.4 million from corporate partnerships. Given our goal of making postseason play each year, we are only able to schedule one FBS opponent annually. The dialog that some FBS leagues are electing to not play FCS opponents in the future gives us pause as we contemplate anticipated future revenues. That means that our ticket sales, annual donor giving and corporate sponsorships will need to continue to increase to keep pace with these associated cost increases. To a large degree this puts the onus back on our constituents if we are going to continue to operate at the high level we’ve all come to expect from JMU Athletics.

 

[MasonFanatic]

Thanks for posting, Five Two! That was very informative.

I would love to hear a similar analysis from our own AD.

 

[Five Two]

The Mason golf team is auctioning off some pretty cool golf experiences for those interested:
https://www.nmnathletics.com/sellnew/SellHome.dbml?_IN_STORE_=YES&_MODE_=AUCTION&DB_OEM_ID=25200

Personally, I would stay away from Old Hickory. I played there a few weeks ago and it was in terrible condition. There was no staff available for food at the turn and there was no cart girl/person to be seen. I can't believe they ask for $100 on the weekends as that is stealing money.

 

[G M U]

Not sure if this has been posted but Masons endowment which was in the $60-70 million range has jumped to $198 million.

http://fasterfarther.gmu.edu/wp-content/uploads/2015/08/GMUF-FS-2016-Final-Report.pdf

 

[GreenLantern]

Yowsa! That is a big increase!

 

[MasonSAE4]

Not sure if this has been posted but Masons endowment which was in the $60-70 million range has jumped to $198 million.

http://fasterfarther.gmu.edu/wp-content/uploads/2015/08/GMUF-FS-2016-Final-Report.pdf

Where do you see that number? I'm in overload looking through this.

Also, what is unearned rent?

 

[Pikapppatri8]

Where do you see that number? I'm in overload looking through this.

Also, what is unearned rent?

Look at the 909s on the Mason Foundation website.

Unearned rent is rent received in advance of the due date


Sent from my iPhone using Tapatalk

 

[MasonSAE4]

Look at the 909s on the Mason Foundation website.

Unearned rent is rent received in advance of the due date


Sent from my iPhone using Tapatalk

Care to give me good explanation of endowment? I get the basics (used to invest and x percentage of the returns every year can be used for operating costs) and specifically how Mason uses it's endowment?

 

[Herndon]

Not sure if this has been posted but Masons endowment which was in the $60-70 million range has jumped to $198 million.

http://fasterfarther.gmu.edu/wp-content/uploads/2015/08/GMUF-FS-2016-Final-Report.pdf

Mmm, I'm not sure I agree with what you're reading. I'm to the endowment itself ~page 20, and it seems like the endowment is right about where it was last year, something in the 71 million range.

 

[Pikapppatri8]

Mmm, I'm not sure I agree with what you're reading. I'm to the endowment itself ~page 20, and it seems like the endowment is right about where it was last year, something in the 71 million range.

Its actually $73.5 million and that refers to the permanently restricted assets (i.e. they are specified by donors). That is a portion of foundation assets.

 

[Herndon]

Its actually $73.5 million and that refers to the permanently restricted assets (i.e. they are specified by donors). That is a portion of foundation assets.

Right, I saw that, however I still think OP is comparing apples to oranges. If he's talking about total foundation assets to get the 198 number he needs to be comparing agaisnt last years 178M, which would be a nice 11% gain, but not the 300% gain he's implying.

 

[couchcoach]

lay off the cough syrup bro

 

[MasonSAE4]

Wikipedia (which I doubt anyone goes onto to screw with GMU's endowment figure) had us at 78 mil when I last checked like two months ago when curious how we stacked up. I checked today and it was at this 198 mil number. So if they're comparing the same part of the endowment it has grown at 300 percent.

 

[MasonFanatic]

The only source cited on Wikipedia is the report that's linked above. Pikapp has the correct number.

Refer to page 20 of the report for the actual accounting of the endowment.