Should Rutgers outsource athletic ticket sales?

The Star-Ledger had a good story yesterday about a proposal from the last school Board of Governors meeting a few weeks back that hadn't yet been reported publicly. The university and/or athletic department (this point is not made entirely clear, nor is whether Aspire will take over all ticket sales or merely complement traditional efforts, nor is the total scope) are considering bringing in an outside sales firm to push season ticket packages. The only big quibble is that their ticket revenue graphs may confuse readers that don't read the fine print and/or aren't familiar with last year's deal with the Meadowlands.

From looking at fan reaction on the various message boards yesterday, the general consensus seems to be that ticket sales have more to do with producing a winning product and scheduling marquee games than anything else. There's certainly a good deal of truth there, especially when taking account factors like price increases and weeknight games. The Rutgers football team has drawn increased crowds in the past two post-expansion seasons, but there haven't been many sellouts, which has left some revenue on the table. At the same time, some fans have been clamoring to market tickets more-aggressively to the broader local market for a while.

Attendance stayed reasonably good last year until the Louisville game, after the team had clearly appeared to be out of gas the week before. Does that mean Rutgers has a core of loyal customers, or that they need to be won back? Could attendance be higher independent of schedule and team performance? Under the proposed arrangement Rutgers could potentially sell more tickets and have that revenue on hand sooner, but would have to forfeit a certain percentage (at Georgia Tech it's 35%) as commission. The idea being forgoing a larger payday for security (with the side effect of annoying a lot of people with telemarketers).

Last year's volatility makes evaluating this deal difficult based off the assumption that ticket sales should track the results on the field for the most part. It almost makes you wonder whether the university should (could?) enter into a credit default swap for the purposes of further hedging their bets. Another interesting aspect to consider here are the specific financial numbers involved. It used to be (sigh) that Rick Malwitz from the Gannett papers or Matt Futterman (who's now at the WSJ) had a good grasp on athletic department finances. Let's revisit one piece that this blog has repeatedly over the past year, possibly more than any other article.

During the first season played in the expanded Rutgers Stadium – which grew over the summer to include 52,454 seats as part of a controversial $102 million expansion project – ticket revenue is projected to be $10.7 million, a fivefold increase since 2005.

Combined with $2.5 million in fees required to purchase club seats, located on the eastern side of the stadium between the two decks, spectators paid $13.2 million to see Rutgers at seven home games.

Ticket revenue alone will be more than enough to pay the $6.9 million in annual payments to finance the stadium expansion.

That squares with the Ledger's numbers. Although, it is worth noting that Malwitz's article looks too positive in retrospect with the SL's additional context. Ticket revenue increased, and expansion had other direct financial benefits (concessions, parking, leverage for home games with PSU/Miami, leverage for bigger guarantee from the Meadowlands). However, the paragraph does read as misleading to an extent with the other numbers public. Expansion increased ticket revenue by $2.95 million, but the expansion bond is paid off in $6.9 million annual increments. This should in no way be misconstrued to imply that stadium expansion wasn't needed for future program growth (it would be hard to find a stronger advocate on that point than this site), but rather solely as quibbling with the quoted text.

Theoretically, this should allow for some further extrapolation. Thanks to USA Today starting a project last year filing open records requests for NCAA revenue and expense reports with every D1 athletic department at a public institution (i.e., not private or PA's "state-related" schools), that data is publicly available going back to 2008 (2009 should be released in April if last year was any guide). The Rutgers athletic department reported making $9,780,816 off ticket sales in 2008. If $7,756,720 of that came from football, and men's basketball generated $1,363,715. Which means that other university sports generated $660,381 in ticket sales. These numbers should not be considered in a vacuum without respect to other revenue (tv, booster donations, licensing, etc..) and expenses.

Rutgers certainly should certainly be exhausting all avenues towards decreasing the athletic department's dependence on institutional support from the university general fund. I'll need to see the 2009 numbers if/when USA Today releases them for a somewhat better grasp of the context surrounding this deal. There are hints from the above quote/discussion, similar occasions for chest pounding, various other public sources, etc... that can shed some light, but you would be hard-pressed to definitively fall on one side or the other on this deal based on the available evidence. Heck, the university and/or athletic department are still doing their due diligence and have yet to give any public indications of where they are leaning, which could reflect similar levels of uncertainty and hesitation.

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