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Georgia Tech Football: Show Me the Money

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You’ve got the brawn debt / I’ve we’ve got the brain analysis and suggestions / let’s make lots of money.

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As Opinion Week rolls on today, let’s start with a simple question: do you like money?

You might be asking yourself, “well, what is my favorite sports blog doing this morning asking me about my finances?” — bear with me. Do you like money?

I know the answer: of course you do — given that, let’s talk about the Georgia Tech Athletic Association and its money. You might be thinking, “Hey, haven’t I seen an article about this before?” You’d be correct; Stephen did a great job of covering the overall financial vacuity of the GTAA last spring. But in this year’s edition of SHOW ME THE MONEY/FUNdraising/<insert your fiscal pun here>, let’s do two things:

  1. Dig into some of the data inside Tech’s FY2019 submission to the NCAA Financial Reporting System, AND:
  2. Workshop some ideas on how to raise additional revenues for the Georgia Tech athletic program (and specifically its football program)

Ready? Let’s go.


Financial Woes

If you’re interested, here’s the entire report (h/t Matt Brown’s FOIA Directory). Let’s dive in.

Expenses

Debt Service

From Georgia Tech FY2019 FRS report. h/t Matt Brown (@MattBrownEP)

Stephen has previously discussed GTAA’s impending jumbo-sized payments on debt accumulated from early 00s construction projects. But even as those larger bulk payments loom, the annual budget space dedicated to debt service continues to stand out as a major factor inhibiting the growth of the athletic department. That’s almost $14M allocated to paying for now-aging real estate that could be spent on any variety of things: scholarships, coaching salary pools, marketing, etc. $13.6M is a sizable amount on its own, but the narrative around that number gets worse when you put it in the context of the rest of Tech’s expenses.

Data from Georgia Tech FY2019 FRS report. Category titles paraphrased from report for brevity. h/t Matt Brown (@MattBrownEP)

This is arguably the most damning figure from this report: in FY2019, Georgia Tech spent more on debt service payments than on scholarships (listed under Athletic Student Aid). I rest my ca—[buzzes in ear] Hm, I’m getting word from Atlanta that there’s one more figure I must show you:

From Georgia Tech FY2019 FRS report. h/t Matt brown (@MattBrownEP)

I’ll be entirely honest: I don’t know how the NCAA is defining the terms you see here and I can’t find a definition guide in the document, so take any analysis or extrapolation here with a grain of salt (maybe a couple of grains to a pile, just to be safe). However, if our favorite usually-obtuse college athletic authority is being uncharacteristically clear with its terminology, I am simply awestruck by the fact that athletics makes up a whopping 48.5% of the Institute’s total debt and 27.9% of its annual debt service expenses.

I’m no financial planner or economist, so here’s how this makes sense in my head: as of FY2019, almost 50% of the Institute’s total debt, including construction costs for various campus buildings (if memory serves, active projects at the time would have included Crosland Tower, CODA, and the Kendada Living Building) and other loans, is dedicated to athletics facilities. Now, before we panic more, it’s important to note that the Institute itself is not footing the bill for athletics facility debt — we’ve already discussed GTAA’s annual debt service situation — but the proportion of the total Institute debt at play here is staggering. A cursory look at reports from a random sample of local schools from Matt Brown’s FOIA Directory reveals that it is exceedingly rare for an athletic program’s debt to make up this much of an institution's total debt. This is not good.

Honorable Mention: Severance Payments

From Georgia Tech FY2019 FRS report. h/t Matt Brown (@MattBrownEP)

This isn’t really a point of criticism, but one more of curiosity: while FY2019 included more than $2M in contract buyouts for football (which I believe to be Nate Woody’s when he was hired from Appalachian State), it apparently also featured much smaller severance payments for women’s basketball ($9.8k) and, most puzzlingly, volleyball ($16.1k). It is entirely unclear why these payments were made: at the time, Machelle Joseph had been fired for cause and Michelle Collier was (and continues to be) under contract. If anyone has more information on who/what/where these payments went to, please send it our way.

Revenues

Let’s look at the whole pizza pie here first, shall we?

Data from Georgia Tech FY2019 FRS report. h/t Matt Brown (@MattBrownEP)

Contributions

Before we get into this point in detail, let’s start with the NCAA definition for this category:

From Georgia Tech FY2019 FRS report. h/t Matt Brown (@MattBrownEP)

To summarize, this total includes the value of any individual or corporate donation made to the athletic program in this fiscal year, and if a pledge is made over a number of years, only the value of that donation in the current fiscal year is eligible to be included (no clarification on how that value is calculated beyond the base assumption of a recurring donation of $X).

This is where AI2020 is supposed to help: more of those checks need to clear every year to cut into Tech’s operating expenses (especially the debt service) and improve program infrastructure. There’s no mention of the number of individual contributions, but here’s the breakdown of donations across Tech’s teams:

From Georgia Tech FY2019 FRS report. h/t Matt Brown (@MattBrownEP)

This is probably where the “[a]mounts received over face value for tickets” comes into play: note that despite softball, volleyball, and women’s basketball all offering season ticket memberships and single game tickets, no contribution revenue is listed for those teams, most likely because the Tech-managed resale market (and therefore the potential inflation of ticket value) for those sports is small.

On an semi-related note, it has always been unclear to me where the line between donation and ticket value is for season ticket memberships for our major sports programs (especially for the football program, where part of student ticket purchases is considered a donation to the Alexander-Tharpe Fund), so it’s possible that there is some creative accounting at play for those programs.

Student Fees

From Georgia Tech FY2019 FRS report. h/t Matt Brown (@MattBrownEP)

Let’s state it for the record here: institutional revenue from student athletic fees made up 6% of Georgia Tech athletics’ total earnings in FY2019. Therefore, Georgia Tech athletics is not entirely financially independent of the Institute. Once more for emphasis:

Georgia Tech athletics is not entirely financially independent of the Institute.

However, before you go to Reddit to post this article to cite this figure as a reason that athletics is a financial plague on the institution (yes, this is really a thing I saw online), please do note a few things:

  1. It is not an incredibly large sum.
  2. Other schools in this area receive similar amounts from student athletic fee revenue — some examples: Auburn ($5.9M; 3% of revenues), NC State ($6.8M; 7%), UNC ($7.5M; 7%).
  3. There are not many schools that do not partake in student athletic fee revenues; personally, Clemson and Oklahoma are the only two I know of.

While this sum may seem like a necessary evil given the financial issues in other areas of the program, I’d argue the converse is true: better budget management in the past would have prevented the need for a student-funded institutional subsidy.

Quick note: Concessions

From Georgia Tech FY2019 FRS report. h/t Matt Brown (@MattBrownEP)

Concession revenue is one of the hidden wedges in this chart, making up a paltry 1.77% of Tech’s total revenue. However, it is important to note that this report is from the fiscal year before alcohol sales came online at football, basketball, and baseball games in 2020. Look for this category to grow exponentially in the 2020 and 2021 reports.


Solutions for a Modern Age

Above, we laid out some of the weaknesses of the Georgia Tech athletics program’s finances. So, how does Tech fill the coffers and pay its bills in the future? Well, here are some ideas the writers’ room came up with. Some are strictly applicable to the football program, while others are more general themes.

Lower the price of tickets

Counter-intuitive, but bear with us.

Here’s the situation: on a per-game basis and including the game at Mercedes-Benz Stadium, the cheapest football season ticket package available for the 2021 season costs $42.86. On paper, this doesn’t seem bad, especially compared to neighboring SEC schools, right? Well, let’s put these prices in Atlanta-area context with Tech’s biggest competitors in the 18-35 demographic:

What’s the bottom line? Both competitors have Tech beat on price, and consumer entertainment is a zero-sum game: money spent on those franchises’ tickets is money not spent at Tech, which means fewer butts in seats at Bobby Dodd Stadium (obviously someone can buy single-game tickets to all three franchises, but bear with me on this line of thinking, alright?). On top of this, Tech also runs into the issue of non-fans buying up season ticket packages just to guarantee access to one game every two years and dumping the remaining tickets at a loss on the secondary market.

What is the solution here? To me, it seems like bringing down the price of season tickets would be a good first step. There’s even progress already being made in this department: if you opt for the cheapest Stinger Mobile Pass (the links to which are currently broken on RamblinWreck.com, but I digress), you don’t get the MBS game included nor do you have full season ticket privileges, but your cost per game drops to $24.17. That’s good, but I would argue that the optimal price point is somewhere between $15 and $20 per game. It’s not just casual fans or Atlanta citizens that balk at the current face value of tickets; young alumni may also be dissuaded from paying such high premiums for tickets (even if they do get a tidy discount for the first five years). Making the secondary market the best place to buy tickets on the cheap does not seem like the most effective way to get people in the door long-term, especially since the program doesn’t get added revenue if those tickets sell for less than face value (remember our discussion on Contributions above?).

Speaking of ways to get people in the door...

Create and Promote Ticket Bundles

This could be done a number of ways:

  • Work with Atlanta-area businesses to build special ticket offers with purchases. Could this be botched in a meme-able way like Dave Brandon’s Coke promo at Michigan? Yes. Could it be done properly in such a way that builds important relationships with local businesses and creates fans in local neighborhoods? Yes. I think it’s worth the risk.
  • Similar to working with businesses, why not work with other franchises or events to cross-promote games? If you want to get alumni in town, why not encourage them to make a weekend out of it by teaming up with Atlanta United to create a ticket package that includes three tickets to a Saturday Georgia Tech game and then three tickets to a Sunday United match? You also could take advantage of alumni or alumni’s friends being in town for DragonCon on Labor Day Weekend by working with the convention to create a ticket bundle that includes an event ticket and a ticket to a football game. The options are there, and the seats are there: in 2019, Tech averaged 83% capacity utilization (45,666 seats), leaving a minimum of 9334 seats to work with for these promos.

Ticket Giveaways

In the vein of working with businesses and other events, why not work with elementary and middle schools to promote good learning habits amongst their students with competitions backed with the prize of a ticket package? In the past, local marching bands have been invited to perform at Bobby Dodd Stadium — continue programs like that. Get kids hooked on the Georgia Tech experience early on.

If you want to get real exotic, why not do what Nevada’s done recently and work with realtors to offer free football tickets to new metro Atlanta residents and companies? Nevada AD Doug Knuth emphasizes that the goal with this initiative is to “convert “likes” into “loves””, and the best way to do that is to get in the door early — any way, anyhow.

AI2030: Raise the Bar

This is most likely the most realistic of the options here: another capital campaign with well-defined targets, but with a much higher goal amount. Despite a global pandemic, Tech was able to exceed its initial goal of $125M for AI2020, racking up $175M in pledges. Now, what if the next fundraising drive doubled that goal and extended the amount of time to complete it? Clearly, the base is there to support increased fundraising, and if further in-roads are made in the community via other programs, who’s to say how much Tech can raise?

Play into the Tech Diaspora

Tech’s alumni base is more spread widely throughout the country than many others — how do you convince those fans to have long-term relationships with the program? You could invest in the Alumni Association’s network of alumni groups in various locales and provide exclusive athletics apparel or ticket package giveaways. On top of that, you could work with local partners to create a homecoming football ticket + city events + airfare package so that alumni can see how the city and campus has changed since they left. Future iterations of media rights deals could also include better options for streaming to make games accessible to cord-cutting fans outside of the metro area.

Sell more gear

I’m (mostly) not kidding when I say this might the lynchpin here: put one way, there’s just not enough Georgia Tech t-shirts available for Tech to have t-shirt fans. Put more bluntly, Adidas simply does not treat Georgia Tech as a Tier 1 school, and from a fan perspective, that is unacceptable. Do you see any Georgia Tech logos on the offerings here? I sure don’t. Take a look at the official Fanatics shop for Tech: there are only 42 Adidas clothing items available, featuring a grand total of two options for women. For comparison, Mississippi State has 85 Adidas clothing items available on their store (with only five options for women, but still — more than just two). I’ll save the analysis of the Adidas contract (h/t Matt Brown yet again) for another day and multi-thousand-word novella, but this is one relationship where Tech can and should make immediate improvements in order to better the fan experience.


Read the full FY2019 FRS report here (via Matt Brown’s FOIA Directory). Find something else interesting in the report you want to discuss? Let us know in the comments below!

96 days to kickoff.