Last year, the University of Tennessee's Athletics Department brought in $69.2 million in revenue.

It spent $50,131 more than it made, had to borrow $1.4 million from the University of Tennessee System to buy out former basketball coach Buzz Peterson's contract and used $1 million in student fees to help support women's athletics.

Does that mean that UT subsidized its high-profile athletics department?

"Last year, yes, through the loan," Bill Myers, the chief financial officer for UT Athletics, said in an interview in late January.

Last year, however, the athletics department gave roughly 16,000 season football tickets to UT's Alumni and Development Office to help its fund-raising efforts; gave $1.4 million in scholarships to nonathletes; paid $1.1 million in debt service on UT's parking garages; and covered more than $500,000 in travel expenses for UT's Pride of the Southland Marching Band — among other things.

Does UT subsidize its athletics department?

"Subsidize to me is a strong word, and it basically means we come looking for help," Myers said. "In terms of the loan, yeah, we had to borrow that money.

"But if you look at the areas where we give back, if we didn't (do that), would we have had to borrow the money?" he asked.

Does UT subsidize its athletics department?

"Sure," said Louis J. Gross, a UT ecology and mathematics professor and president-elect of the Faculty Senate who wrote in the News Sentinel last month: "UT President John Petersen should be well aware of the fact that UT already is subsidizing athletics."

Gross points out that athletics gets certain services free from the UT System that the academic divisions of UT-Knoxville have to pay for.

But at a time when UT is struggling to serve more students without additional state funding, are athletics a drain on resources or a benefit to UT and its students?

The answer is about to become a lot clearer.

Myers said the athletics department plans a study to determine the dollar amount of the benefits it gets from the UT System and the ultimate net between what it gives UT and what UT gives it.

And, in a meeting in Nashville last week, the executive and compensation committee of UT's Board of Trustees decided to include a discussion of the athletics department's finances on the agenda at the board's spring meeting in Memphis.

Winning and losing

On the field big-time college athletics is a swirl of sight and sound, particularly when the football and basketball teams of major universities clash before huge crowds in big stadiums and arenas from Clemson to California.

But the schools generally have one thing in common: They are almost all losers financially.

No one can say exactly how many NCAA Division I athletic programs operate in the black.

Some are private universities and are not required reveal their finances. Others pawn off some of their expenses to other units of their schools to make it appear that they aren't in the red.

The few schools that make more than they spend are generally acknowledged to be places such as Ohio State University and Stanford and a few others, including UT.

But:

• In November UT-Knoxville Chancellor Loren Crabtree told the Faculty Senate that athletics was experiencing financial difficulties and had asked to back out on its $1.5 million commitment for scholarships for non-athletes. UT President John Petersen later said that money was never on the table.

• In December UT Athletics Director Mike Hamilton said athletics is approaching the point where it can't continue to give millions of dollars back to the university and still support Top 20 programs in 16 different sports.

The following day Petersen said he doesn't believe that UT's athletic program has to be self-supporting.

Last month, Gross wrote his piece stating UT athletics is subsidized.

Is UT's Athletics Department subsidized?

The answer isn't as simple as the dollars on budget documents.

The golden child

It's a sunny Wednesday morning and in a small cluster of offices on the Cumberland Avenue side of the Hoskins Library that houses a part of The Institute for Environmental Modeling, Lou Gross is talking about athletics.

Gross is the institute's director and it is supported with research grants he and other professors have obtained.

But it's not the only thing their research efforts fund.

A percentage of research money that UT faculty and researchers obtain to fund their projects are kept by the university to pay for its overhead costs.

In addition to his teaching and research, Gross has been a longtime critic of the operations of athletics department, contending it's treated differently than other units at UT to the detriment of the university.

"I am continually surprised by how the administration of this university has essentially given the athletics department essentially given them carte blanche to do almost whatever they want," he said.

He said athletics has basically been a golden child at UT with near absolute control over its budget process when it should be governed like other departments.

If it was, Gross said, it might have to give back roughly 20 percent of its external stream of dollars to support the campus.

"I think if nothing else comes out of this process of looking at athletics funding it's the fact that I think there should be a level playing field," he said, "that athletics should not be treated as a separate entity from the other parts of this institution."

He said the department claims it gives more than $20 million in benefits back to UT but notes that figure includes things such as debt service on Thompson-Boling Arena.

The arena is used year-round, but as Gross points out, "The university would have never built that arena (except) for the basketball program.

"They (athletics) are not paying, as far as I know, a penny for the general counsel's office. They are not paying a penny, as far as I know, to cover the costs of keeping people in the payroll office to cut checks every month. So there are things like that."

But even though he's written that the athletics department is subsidized, Gross really can't tell you if the department takes more than it gives.

"Well I know there are certain things that they don't pay for yes, they may be giving back benefits more than (it would if treated like other UT departments) but I can't tell and they haven't proved it. That's the point."

Keeping score

It's the last day in January and in a small office tucked beneath one of Thompson-Boling's ramps Bill Myers is explaining how the athletics department is playing in a new kind of financial game.

"For a long time, athletics has given back to the university," Myers said. "We're proud of that. I've been here since 1998, and I know we've been doing it, and we were doing it many years before that, and we never really kept score."

Giving money back to the university was like "being part of the family, you're just glad to do it."

"Well now it's kind of like (some people) are keeping score, but on their own terms."

When you add in capital expenses — the operating and capital budgets are separate — athletics is spending about $90 million this year.

Millions of dollars flow between athletics and the university.

"There are a lot of deals out there," Myers said. "There are some things on the university side that units pay for that we do not and, as (Gross') article mentions, maybe we should pay for those.

"But we think there are a lot of things we pay for and provide as a benefit back to the campus for which we get no credit."

UT is different from other universities.

It gives students more than 13,000 football tickets for home games and up to 7,000 tickets to basketball games.

Most Southeastern Conference schools charge students for game tickets.

UT is also one of the few universities, and maybe the only one, that annually gives back more than $1 million in scholarships for non-athletes.

Petersen, who has been at Kansas State, Clemson and Connecticut, said, "One area that is different, and I don't know another school that does this, is that donations to academic programs," can get those donors season tickets.

In other words, someone could make a significant donation to the chemistry department and get season football tickets.

"That's unique," Petersen said. "That, in essence, is the athletics department really subsidizing the university," because it's giving a reward to someone who isn't supporting it.

"You talk about being a team player, that's being a team player."

Petersen told trustees at last week's meeting in Nashville that it's hard to determine exactly how much money is flowing "one way or another" between athletics and the university.

He pointed out "there are very few athletic departments in the country that aren't subsidized substantially" by their universities.

UT appears to be one of the few that isn't.

"Since we are in that position, we work very hard to stay in that position," Petersen said.

The athletics department employees more than 250 people, pays it own payroll, utilities, debt service and maintenance on all of its facilities. It also pays the construction costs of its stadiums and other facilities.

But Myers agreed athletics does not pay any "systems charges" back to the UT System for services from information technology, the general counsel's office, the treasurer's office and others.

"Now I think the deal historically was we pay gifts for academics and parking garages and things like that and it was a wash," Myers said. "And no one said it was an issue until now."

No one knows what the dollar value of those services is.

Sylvia Davis, vice president for administration and finance, said the UT System charged UT-Knoxville $25.3 million last year.

If athletics were charged based on its portion of UT-Knoxville's total budget, it would be in for about $2.2 million, according to Myers.

Myers said the athletics department is proud of what it's done for UT.

"I think a lot of our value is what they call goodwill," Myers said. "We contribute back financially, and we are proud to do it. But I think we are also a source of pride for a lot of people, especially when we are winning."

***

Helping Hands

Contributions made by the University of Tennessee Athletics Department in fiscal year 2005:

• Academic scholarships $1.375 million
  
  
• Debt service (garages) $1.15 million
  
  
• Travel/UT Band $500,000-plus
  
  
• Faculty/staff half-price tickets $882,000
  
  
• Faculty/staff free skyboxes $456,000
  
  
• Alumni/development season tickets $4 million*
  
  
• Alumni/development student tickets $3.4 million
  
  
• Licensing income $750,000

*Estimated value of donations for tickets. Average donation was $476 per season ticket but that would decline if 16,000 tickets became available.

SOURCE: University of Tennessee Athletics Department

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