Archive for Sunday, May 6, 2018

KU football ticket sales down about $6 million per year; some question whether $300 million in new facilities will help

The University of Kansas' Memorial Stadium is pictured on Monday, Aug. 7, 2017.

The University of Kansas' Memorial Stadium is pictured on Monday, Aug. 7, 2017.

May 6, 2018

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Part of Kansas football and its falling fortunes involves a math problem. The key number in the equation is about $6 million.

A Journal-World review of Kansas Athletics Inc. finances found that KU needs to sell about $6 million in additional tickets per year just to get the program back to the brief glory days it had nearly a decade ago in the Mark Mangino era.

KU football ticket sales hit a recent peak of $9.5 million in 2009. In 2017, football ticket sales hit a new recent low of $3.4 million, according to NCAA reports filed by the university.

What to do? There is always the approach of hoping that Coach David Beaty’s system clicks in his fourth season, the wins come and so do fans in seats. KU athletic officials are banking on that strategy. There is certainly a segment of fans, though, who are not buying it.

What else to do? You could recruit The Six Million Dollar Man and redeem him for cash value. No? Well, then, you could undertake about $300 million in football stadium improvements — most of them fan amenities — in an attempt to lure people back into the stands. Maybe. KU officials have started the fundraising campaign.

About this series

When KU announced in September plans to build $350 million in new facilities, primarily for football, it marked the beginning of one of the biggest financial bets the program has ever made. The Journal-World decided to study the financial books, talk to leaders, and give readers a better understanding of the money game that is constantly a part of big-time college athletics. To see more articles go to: ljworld.com/kuath

To some, The Six Million Dollar Man strategy sounds more plausible.

Murray Sperber, a longtime critic of college athletic spending, doesn’t think a fancier stadium is going to draw more fans. He does think it is a heck of a financial risk.

Sperber — who became one of the first critics of college athletic spending with his 1990 book "College Sports Inc." — is now a professor emeritus at the University of California-Berkeley. That school has become the poster child of the dangers of such big bets. It renovated its Memorial Stadium — granted, costs were extremely high because the stadium is on a fault line — but now the Cal athletic department is swimming in red ink, despite football crowds that still top 40,000.

“They admit they lost $14 million last year,” Sperber said of the Cal athletic department. “But that is the low number. Really, it is probably $20 million to $25 million.”

The situation has become so dire at Cal that the university recently agreed to take over about $400 million in athletic department debt. The prospect of cutting some of Cal’s 30 sports programs, however, still remains.

The situations at Cal and KU aren’t entirely analogous. Even if KU debt-financed all of the $300 million in stadium improvements — which it won’t — KU’s debt totals still would be below Cal’s. But Cal also is a much larger university in terms of students and alumni base. While KU’s dollar figures may be less than Cal’s, the risks to KU are still great. Sperber urges KU officials to really think through making such a big bet.

“Nothing we have talked about points to $350 million in improvements,” Sperber said, citing the full fundraising goal that also involves improvements for volleyball and other sports.

KU Athletic Director Sheahon Zenger counters that he’s been thinking about it since his first day on the job. To people in the college athletic industry, it is clear that KU has a big bill looming.

“This day has been coming for decades, and we have kicked the can down the road as a collective group over the years,” Zenger told the Journal-World. “We had a beautiful stadium. It is still a beautiful stadium and setting, but it is getting older and we have to address it. There is no scenario where you can choose to not address it. I don’t think that is a feasible option.”

West Virginia linebacker Al-Rasheed Benton (3) runs back an interception late in the fourth quarter against Kansas to set up a WVU touchdown for a final of 56-34 on Saturday, Sept. 23, 2017 at Memorial Stadium.

West Virginia linebacker Al-Rasheed Benton (3) runs back an interception late in the fourth quarter against Kansas to set up a WVU touchdown for a final of 56-34 on Saturday, Sept. 23, 2017 at Memorial Stadium. by Nick Krug

The Numbers

KU, though, finds itself in a situation where its bill is coming due at a time that fan interest in the football program is hitting new lows.

The Journal-World recently asked the athletic department to provide numbers showing how many tickets actually have been purchased for KU football each year over the last 10 years. KU officials, though, said those numbers were not readily available.

However, the school is required to report its total dollar value of football ticket sales to the NCAA each year. As expected, those numbers show ticket sales spiked in the aftermath of KU’s dramatic 2007 season that culminated with a 2008 Orange Bowl victory. It also shows that KU fans were still spending big in the seasons right after Mangino — the Orange Bowl-winning coach — was ousted. But gradually, the patience of KU fans has eroded, and the bottom has fallen out of ticket sales the last three years.

Here’s a look at the numbers:

— 2006: $6.47 million

— 2007: $5.88 million

— 2008: $6.81 million

— 2009: $9.50 million

— 2010: $9.28 million

— 2011: $9.25 million

— 2012: $6.56 million

— 2013: $5.51 million

— 2014: $5.24 million

— 2015: $3.99 million

— 2016: $4.09 million

— 2017: $3.41 million

From their peak in 2009, KU football ticket sales are down by $6.09 million or almost 65 percent.

A Kansas fan looks through the game program from the top of the stands during the fourth quarter of KU's football game against Texas Tech, Saturday, Oct. 7, 2017 at Memorial Stadium. The Jayhawks lost, 65-19.

A Kansas fan looks through the game program from the top of the stands during the fourth quarter of KU's football game against Texas Tech, Saturday, Oct. 7, 2017 at Memorial Stadium. The Jayhawks lost, 65-19. by Nick Krug

The $6 million figure, though, is just one to consider. A larger number is to look at how much revenue has been lost cumulatively. If KU had been able to sustain fan enthusiasm near 2009 levels — say, $9 million a year in ticket sales — KU Athletics would be ahead by about $25 million. That is the difference between $9 million a year in football ticket sales versus what KU actually sold in tickets, according to NCAA reports.

Basketball picks up slack

A 65 percent decline in football ticket sales would create a financial crisis for many athletic departments. KU's athletic department, though, has been successful in getting more money out of KU basketball fans. In 2006, KU was generating about $474 in ticket revenue per seat at 16,300-seat Allen Fieldhouse. That amount doesn't include any required contributions in order to have the opportunity to buy tickets. By 2017, the per seat revenue had grown to $926. Here's a look at the total dollar value of basketball tickets sold over the years:

— 2006: $7.72 million

— 2007: $9.47 million

— 2008: $10.85 million

— 2009: $10.91 million

— 2010: $11.79 million

— 2011: $11.34 million

— 2012: $11.93 million

— 2013: $12.86 million

— 2014: $14.52 million

— 2015: $15.63 million

— 2016: $14.91 million

— 2017: $15.10 million

NCAA numbers also show that KU’s three worst financial years of the last decade have coincided with the downturn in football ticket sales. The worst year was 2012, when expenses exceeded revenues by $8.7 million, largely due to a contract buyout for fired head coach Turner Gill. The second worst year was in 2015, when expenses exceeded revenues by about $347,000. The third worst year was 2017, when the NCAA report showed revenues exceeded expenses by about $540,000. As reported in last week’s article, KU’s audited financial statements — which are different from the NCAA report — showed a worse performance for 2017.

Zenger is mindful of the financial numbers, but they give him no pause in pushing ahead on the $300 million in football improvements. He knows KU’s fan base expects to compete in the top tier of college football, and, in some ways, these pending improvements are just a price of admission.

“Do you think Kansas ought to compete at the Division 1 level?” Zenger says, relaying past conversations he has heard. “The answer is always yes. If so, do you think we should compete in a Power 5 conference? The answer is yes. Then it is kind of a moot point.”

Others, though, wonder whether Kansas ought to rethink what the price of admission ought to be. David Ridpath is an associate professor of sports business at Ohio University and is board president of the Drake Group, an organization that advocates for more financial responsibility in college athletics.

He argues that Kansas ought to think about how much it needs to spend to remain a big-time player in college athletics. As long as it maintains its men’s basketball tradition, Ridpath contends, KU doesn’t have to spend as much as many other schools. Kansas can be a decent football program without a $300 million investment, and there are certainly no guarantees that KU will be a good one even with such an investment.

But being decent doesn’t do much to stir the passions of the alumni or donors. It would take a change in mindset, but perhaps not a radical one. The label “basketball school” has long been attached to KU.

“I think Kansas, because of who they are in basketball, is always going to be in a big conference,” Ridpath said. “They just may never be that good in football. But, then, they have to ask themselves how much do we want to spend trying to be good in football? It is going to be very tough.”

Comments

Chris Condren 2 weeks, 1 day ago

Facts are facts. It is no secret that attendance has suffered in the last decade due to the poor performance of teams on the field. I have been very critical of the KUAD and the way it has done business in the past. That said just look at the picture featured in this article. What a drab uninviting place the stadium has become. Few other building on campus have such a poor appearance. And on the inside the place is really lacking amenities seen in nearly any other major college venue. Really there is no other choice but to overhaul the stadium. The university needs to support the football program.

Aaron McGrogor 2 weeks, 1 day ago

To be fair, that picture was taken on a cloudy day.

It's hard to make anything look warm and inviting when the weather is drab.

Armen Kurdian 2 weeks, 1 day ago

That's $3.4M actual this year...unadjusted for inflation. Wow, that is just awful.

Steve Jacob 2 weeks, 1 day ago

And keeping a coach who is 3-33 will sure help those numbers.

Calvin Anders 2 weeks, 1 day ago

I don't buy the premise that attendance is only tied to winning. I think part of what causes attendance to suffer is the entitlement of the program. This sprawling of facilities and attempts to push out other sports from using facilities is a big part of the problem. The lack of community accommodation and cultivation of the idea that football is the most important activity on campus just turns people off. Some alumni might come to town to see games, but if the whole community has an unpleasant impression of the team and the transformation of the campus into a giant football practice facility, ticket sales will go down. If the program really wants to turn things around, they could start with sharing facilities. They could convert the stadium back to a multi-use venue and let other sports use it. They could stop building field after field and destroying the beautiful campus. Maybe a little humility would be good for the program's record as well. The money and the entitlement certainly haven't resulted in a great program by anyone's yardstick. I'm sure I'm not the only one who feels this way.

Richard Heckler 2 weeks, 1 day ago

"If the program really wants to turn things around, they could start with sharing facilities. They could convert the stadium back to a multi-use venue and let other sports use it.

They could stop building field after field and destroying the beautiful campus. Maybe a little humility would be good for the program's record as well.

The money and the entitlement certainly haven't resulted in a great program by anyone's yardstick."

I can subscribe to the above.

Face it winning teams are more popular. New high dollar stadiums won't bring a winning team. It only provides another opening for special interest money.

$300 million in a profit bearing account would provide some dough for a ton of scholarships that which students need wayyyyyyyyy more than a new football stadium. As of now too many students are subjected to the ponzi scheme aka the rip off student loan program backed by Wall Street banks.

Carol Bowen 2 weeks, 1 day ago

And, what does any of this have to do with a college education?

Mike Riner 2 weeks, 1 day ago

KU Football.........You can put lipstick on a pig........

Bob Smith 2 weeks ago

Football bears the same relationship to education that bullfighting does to agriculture.

Daniel Kennamore 1 week, 6 days ago

They are not getting another dime from me until Beaty is fired or he proves he's capable of being competitive in the Big 12...no matter how pretty new facilities turn out to be.

Chris Warman 1 week, 6 days ago

You can't make chicken salad out of chicken... poop

Bill Turner 1 week, 5 days ago

"...some question whether $300 million in new facilities will help." That really depends on what you mean by "help". If you intend to take $300,000,000 in $1 bills and burn it to keep warm in the winter, it will probably help for a while. If you intend to use it to improve KU football facilities in the hope that people will start buying football tickets gain, it probably isn't going to help much at all. So, the lesson for today: burning $300 to keep warm will help more than using it to build KU football facilities.

Bill Turner 1 week, 5 days ago

As a follow up, I would like to point out that if KU football took in the maximum amount that it has ever grossed from ticket sales to date ($9.5M, 2009) every year from now on and that number grows at the historical rate of inflation (3.22%), it will still take 23 years just to break even on a $300 million dollar investment if there are no other expenses (there are). That sounds like a crap investment to me.

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