A story in a national sports magazine describing the financial struggles of Tennessee's athletic department spread quickly across the Internet this week, but former athletic director Mike Hamilton and some sports business analysts say UT's debt load isn't as dire — or unusual — as it might appear.
Headlined "At Tennessee, Big Orange battles red ink," the story published Monday in the SportsBusiness Journal summarized the financial hurdles that Tennessee athletic director Dave Hart has spoken about during the last year — a low reserve fund, onerous taxes and an annual payment to the university that was recently waived for three years.
But the article also spotlighted Tennessee's league-high debt of roughly $200 million, and much of the subsequent online commentary has focused on that jarring figure.
At least one sports business expert said that may miss the point, as Tennessee's debt load isn't dramatically out of synch with peers like LSU and Alabama. The difference is that UT's reserve is a paltry $2 million, last in the league, while Alabama's rainy-day fund has roughly $80 million.
Hamilton, UT's AD from 2003-11, responded to online criticism by using Twitter and publishing a series of tweets that defended the department's financial practices under his administration.
Hamilton, who is in Africa working with his charity and did not respond to a request for further comment, said long-term debt payments never exceeded 15 percent of total revenue during his tenure and were frequently lower. All projects that required issuing bonds were tied to a specific revenue stream and approved by the university's trustees, he said.
Hart has vowed to grow the reserve fund while slimming the debt load. He negotiated a three-year freeze on the annual gifts the athletics department has traditionally sent the university, saving $6 million annually. He's also lobbied to end the costly amusement tax on tickets.
Hamilton said the gifts put athletics at a "competitive disadvantage" and he was glad they had been suspended.
UT's athletic department posted a $3.98 million deficit in the 2011-12 fiscal year, but is on pace for balanced books in 2012-13.
As for annual debt payments, UT spokesperson Jimmy Stanton said the department spent $7.7 million in 2009-10, $9 million in 2010-11 and $10.5 million in 2011-12. In the current fiscal year, UT is slated to pay $20.4 million, but that includes $6.95 million in restricted donations that can't be used for general operating expenses and will be used to pay down facilities debt.
"Typically speaking, debt is reduced by direct capital gifts and associated payments, premium seat revenue, operating income and donor cash flow," Hamilton wrote.
As recently as two years ago, four other SEC teams had higher annual debt payments than UT, according to the BusinessofCollegeSports.com, which said the numbers can fluctuate annually based on a number of factors.
"The real issue," the website wrote, "is the limited reserves Tennessee athletics currently has on hand. That is one area not in line with other SEC schools."
Stanton said the reserve fund hit a high-water mark of $7 million in 2008. Hart would eventually like it to be closer to SEC peers who have $50 million-$100 million on hand.
Hamilton said he supports Hart, a "great AD," and predicted UT would have "much success ahead."
Evan Woodbery covers Tennessee football. Follow him at www.Twitter.com/TennesseeBeat.