UT athletics may pay $1.39M loan in 3 installments

Whether it will be three easy payments isn't clear.

Last year, UT's sports programs made $67 million and ended up with $10,310 after expenses.

The Athletic Department's draft budget projects that UT's men's and women's programs will take in $63.4 million in revenues in fiscal year 2006 - which starts July 1 - and pay out the entire amount in expenses.

That document does not appear to include the $400,000 loan payment the Athletics Department would pay next year under the proposed agreement.

It calls for three annual loan payments including the $400,000 payment for FY 2006, a $500,000 payment in FY 2007 and a roughly $500,000 payment on the remaining balance in FY 2008.

The proposed agreement, however, is flexible according to Sylvia Davis, UT's vice president for administration and finance.

"It will be more of a memo-type document" than a traditional loan repayment schedule, Davis said Thursday.

"If they wanted to move up their payments, they can do that," she said.

In the meantime, the Athletics Department will begin paying interest on the loan amount even though it hasn't actually taken possession of the $1.39 million yet.

The interest rate will match whatever UT normally makes on its reserve funds, which is where the loan came from.

The Athletics Department asked the university for money when it paid a $1,391,197 million buyout to former UT basketball coach Buzz Peterson after firing him earlier this year.

The department had $540,000 in reserve, but it did not have enough money to pay off Peterson and still end the fiscal year in the black.

It may mark the first time UT's Athletics Department - one of a handful of major college athletic programs believed to pay their own way - has had to go to the UT system for money.

The department, however, does receive $1 million a year in student fees for its women's athletic programs.

Even though UT sports generates enormous amounts of cash, it also racks up impressive operating expenditures.

Those include several million dollars in benefits to the university including $1.4 million annually for scholarships for non-athletes, $2.5 million in debt service on UT's parking garages and Thompson-Boling Arena, which are all used year round, and roughly $4 million in free tickets and licensing money annually.

The football program, which cost $12.9 million to operate in 2003 and brought in an estimated $46.7 million last season, is by far the biggest moneymaker.

But even with that, UT's margins remain extremely thin.

UT Athletics Director Mike Hamilton said earlier this month, "Typically it's a break even or a small profit" at the end of the year.

Exacerbating UT's budget next year is one fewer home football game than in the last two years, which will cost it at least $3.4 million in ticket revenue.

The draft budget for the next fiscal year projects the men's athletics programs will make $56,632,000 in total revenue, while the women's programs are projected to bring in $5.3 million in revenue.

The men's program transferred $6.86 million to the women's program in FY 2005 and will transfer $6.1 million to it next year.

Men's football and both women's and men's basketball are the only teams that produce significant revenues for UT.

The school fields 16 teams in 11 different sports.

The biggest revenue stream is football ticket sales, which brought in $21.9 million in FY 2005 followed by more than $15 million in gifts from donors. UT's cut from the Southeastern Conference was $9.56 million, and concessions and souvenirs brought in $4.1 million.

The UT Board of Trustees has to approve the entire university budget, which includes athletics, at its summer meeting.

UT athletics had enough cash on hand to pay Peterson's buyout on April 1, but much of that cash was earmarked for expenses to be paid by the end of the fiscal year in June, which prompted the department to seek the loan.

Randy Kenner may be reached at 865-342-6305.

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