Bloomberg looks at Rutgers athletics financials

Clearly, Rutgers must be New York City's football team, because Curtis Eichelberger from Bloomberg sure does spend a lot of time writing about the RU athletic department's finances.

Eichelberger's latest story has a lot of good information, but is also highly, highly flawed in parts.

Football revenue at Rutgers totaled $24 million in fiscal 2010, according to the data compiled by Bloomberg. The team had an operating loss of $2.9 million, excluding university subsidies and student fees.

The deficit was the widest in the 53-school Bloomberg survey. Connecticut reported the only other football red ink. The average football team had an operating gain of $17.2 million, the data show.

Restated:

1. Football, by the large, is wildly profitable. This is already widely established. Anyone blaming football for widespread athletic deficits at a FBS program is being wholly disingenuous. They make money, in spite of the fact that most athletic departments lose money. The same goes for men's basketball, which is why they are called "revenue sports" after all.

2. Rutgers loses more on football than the 52 other schools Bloomberg surveyed. Part of this is revenue. The Big East has an awful television contract.

Pernetti estimates Rutgers’s television revenue and postseason bowl payouts may triple from fiscal 2010’s $9.2 million, based on other leagues’ recent deals.

For a time now, I've wanted to recalculate USA Today's team revenue numbers, minus conference payouts to get a better measure of athletic department management. Big Ten/SEC afterthoughts aren't exactly lighting the world on fire, but that doesn't matter if you can get twenty million dollars a year just for showing up. This, of course, is exactly why Tim Pernetti is athletic director: to tell Big East commissioner John Marinatto to go to hell when he desperately tries to jump on ESPN's first offer. You can't judge TP's performance until the new contract is signed.

3. Part of it is spending. Rutgers is trying to compete on a national level, while UConn (not to pick on UConn per se, but Bloomberg cited them) is busy counting every nickel and hiring retread football coaches who'll work for peanuts. That deficit certainly isn't explained by revenue; Rutgers football sells more tickets than UConn while charging a higher price. Pernetti is correct though in stating that this is a revenue problem, not a spending problem. UConn-style austerity wouldn't fly in Piscataway.

4. The revenue gap is largely attributable to the twenty-plus odd sports at the school that bring little in the way of fan interest of revenue. That is not to say that such and such sport should be cut, but they are the reason that the athletic department runs a deficit. Rutgers isn't Texas. Football isn't profitable enough to subsidize everyone else. Things will get better. That's been the plan for a decade now, and Tim Pernetti is making progress with finding and developing new revenue streams. It's not going to happen overnight, and contrary to Prof. Lugg, no one ever promised it would.

Critics of athletic subsidies at Rutgers need to bite the bullet instead of going after an undeserved scapegoat. If they want Rutgers to stop subsidizing its athletic department, then Rutgers will have to cut additional sports, instead of four more than Texas at a fraction of the budget. There's no way around that at the moment.

There's....quite a bit of over the top criticism interspersed throughout the article.

"I am dumbfounded," said New Jersey Assemblyman David Wolfe, a Republican who is a professor of psychology at Ocean County College in Toms River. "Rutgers officials appear before the Legislature every year and claim they are underfunded and need more money. Now we find out we have the No. 1-subsidized athletics program in the country."

Dear Mr. Wolfe,

New Jersey only pays 20.8% of RU's budget, a figure that has been steadily dropping over time. RU's athletic subsidy amounts to less than 1% of the university's estimated $2 billion yearly budget. You are a disingenuous, dishonest fraud that cares more about publicity and headlines than facts.

"I don’t know where that money went," says Knox, 35. "Did it go to the stadium? Did it go to the coach? They get paid, no matter what."

The stadium was funded by a bond tied to future ticket revenues (in the form of $6.9 million annual payments.) Rutgers is on the hook for that debt if the (conservative) attendance projections don't come to pass, although that bond revenue diversion slightly increased the athletics deficit. The amount of lingering ignorance on this issue is remarkable.