UGA: Don’t be fooled by $40 million surplus on NCAA financial report

Georgia Athletic Director Josh Brooks, here sharing UGA's COVID-19 plan for football attendance last fall at Sanford Stadium, is currently overseeing one of the most profitable athletic department's in the country, according to its latest NCAA Financial Report. (Photo by Tony Walsh/UGA Athletics)
Georgia Athletic Director Josh Brooks, here sharing UGA's COVID-19 plan for football attendance last fall at Sanford Stadium, is currently overseeing one of the most profitable athletic department's in the country, according to its latest NCAA Financial Report. (Photo by Tony Walsh/UGA Athletics)

Credit: Tony Walsh

Credit: Tony Walsh

ATHENS – Don’t pay attention to the big number.

Essentially, that was the message from UGA on Friday upon release of the 2020 financial report to the NCAA. That report showed the Georgia Athletic Association with a surplus of more than $40 million in the fiscal year that ended June 30.

While the Bulldogs indeed came home with money, as usual, that figure doesn’t reflect considerable expenses that came out during the same period, UGA officials said.

Georgia reported $179,295,904 in operating revenue and $138,757,891 in operating expenses. The difference is a surplus of $40,538,013.

Asked for clarification of the figures, UGA said the NCAA’s balance sheet does not reflect more than $21 million paid toward completed and ongoing construction projects. It also does not include the athletic association’s annual payment of $4.5 million to the university. That, UGA said, puts the surplus figure closer to $13 million.

“Despite reduced revenue last year, the unwavering support of our fans and donors, coupled with the disciplined financial practices of our coaches and staff, has put the UGAAA in the black, which is detailed in this report,” Stephanie Ransom, UGA’s deputy athletic director for finance, said in a statement. “While the NCAA Membership Financial Report is straightforward, it is important to understand that the NCAA distinctly defines both revenues and expenditures, so our positive balance is not a simple net amount.”

Why those legitimate expenses aren’t reflected in the report is “an accounting function” of the NCAA questionnaire form, The Atlanta Journal-Constitution was told. All Division I institutions are required to submit one by Jan. 15 of each year. The release of its contents is controlled by the respective schools.

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The NCAA has a 44-page document on its website that explains its “agreed-upon procedures” for membership to report their respective finances. In a nutshell, it requires a comprehensive list of total revenue less expenses, such as tuition, recruiting, travel and salaries. It does not include line items for construction or gifts given back to the university.

Many Division I schools have not yet released their 2020 reports. However, of those that have, Georgia’s looks to be among the more favorable.

Alabama, which reported $189.3 million in revenue (an increase of $25.2 million over the previous year), showed a $16.1 million surplus, according to a report by AL.com. Auburn had a $17.9 million balance from $153.7 million in revenue. Ohio State reported $233.9 million in revenue – the second-highest total in NCAA history – and a surplus of $23.3 million.

But the picture was considerably less glowing for many other Division I athletic departments across the country. Those reporting deficits include Virginia ($1.5 million), Arizona State ($10.9M), UCLA ($21.7M) and Connecticut ($43.5M).

Georgia’s 2020 surplus number is expected to be one of the highest in the country. It represents a $9 million increase over 2019, when the Bulldogs showed a $31 million profit off $174 million in revenue.

But UGA bristles at the use of the terms “surplus” or “profit.” The athletic department contends that much of the overages being reported are spoken for in construction expenses.

“We are extraordinarily fortunate to have been able to operate this year without some of the drastic cost-cutting measures our peers had to employ,” Ransom said. “Our leadership team, coaches and staff did a tremendous job adhering to our mission-critical spending strategy to limit financial pitfalls during the onset of the global pandemic. We will continue to be fiscally prudent to ensure we maintain a healthy financial outlook.”

Since 2016, Georgia has either undertaken or completed $182.5 million in new construction. That includes the Payne Indoor Athletic Facility ($30.5 million), the West End addition at Sanford Stadium ($63M), the grandstands at the Dan Magill Tennis Complex ($8M) and the ongoing construction of the football-operations addition at the Butts-Mehre complex ($80M).

Georgia said all of those projects eventually will be paid off through fundraising efforts of the Magill Society donor group. Where UGA’s report gets skewed is that it has to report those donations as revenue, but it’s not able to report the corresponding construction costs as expenses.

The Magill Society is a subset of donors – football ticket-priority is determined by Hartman Fund donations – who contribute money to the athletic association for designated usage, usually toward facility construction. It requires a minimum donation of $25,000, which can be paid back over the span of five years. With a current membership of more than 1,200, the minimum contribution alone accounts for more than $30 million raised in the past five years. However, many donors have chosen to contribute more than the minimum, and UGA provides incentives for doing so.

The indoor building and stadium renovation projects have been 100% compensated for through pledges, according to people familiar with UGA athletic operation. But construction costs had to be paid off by the time the projects were completed, which UGA has been able to do from its reserve.

Meanwhile, donations for the football facility construction also are coming in strong. At last report, more than 70 percent of the projected cost has been accounted for via pledges. UGA officials claim a 99% collection rate on pledges, so far.

Like everybody else in the country, Georgia’s picture is expected to be less rosy next year. Lost revenue and higher expenses because of the effects of the coronavirus pandemic are expected to produce operating deficits for every athletic department in the country.

Former UGA Athletic Director Greg McGarity last year projected that Georgia’s deficit would approach $55 million. However, more recent estimates predict it to be considerably smaller than that. Georgia athletics’ board of directors is expected to receive a full report from treasurer Ryan Nesbitt, UGA’s vice president for finance, at its regularly scheduled winter meeting Tuesday.

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