UNIVERSITY PARK, Pa.-- Sandy Barbour, director of Intercollegiate Athletics (ICA), and Rick Kaluza, senior associate athletic director for finance and business operations, provided a status report today (Sept. 17), which included a review of the new ICA organizational structure, various measures of institutional control and five-year historical and five-year prospective financials.
According to a report to the Board of Trustees Committee on Finance, Business and Capital Planning, Barbour indicated that ICA currently supports approximately 800 student-athletes across 31 varsity sports (16 men’s and 15 women’s), with more than 65 percent of these student-athletes receiving some type of grant-in-aid/scholarship support (367 full grant-in-aid equivalencies).
Kaluza reported a gross operating surplus of approximately $4.8 million for the year ended June 30, 2015, and an ending cash reserve of $6.6 million after including the second in a series of three separate $10 million external loans.
Barbour said that since the last five-year financial projections to the board in September 2014, there has been an approximate increase of $28 million in ICA’s projected reserve balance when using fiscal year 2018-19 as the comparison between the two presentations.
In the planning and preparation for ICA’s 2015-16 budget and future years, Kaluza discussed modifications that included the implementation of a budget justification process for the current fiscal year and a full zero-based budgeting approach for FY 2016-17.
In addition to the 31 varsity programs and ICA operations, Barbour also said that a portion of recreational services budgets remain under the ICA umbrella, including: men’s and women’s rugby, sports camps, ability athletics, non-varsity operations at Pegula Ice Arena and the Penn State University Athletic Conference (PSUAC).
Kaluza presented a number of potential revenue enhancement and expense reduction initiatives that are not included in the five-year plan. Those initiatives include:
- ICA venue revenue-generating opportunities;
- Potential enhanced benefits model to the existing Levi Lamb Fund/Nittany Lion Club format;
- Improving football attendance beyond the current 91 percent of capacity;
- Additional vendor cost savings anticipated with a new agreement with Hershey Medical Center;
- Examination of internal operations to identify efficiencies and cost savings.
This past March, Barbour announced a re-organization of the ICA structure that introduced a more vertical structure to encourage communication and collaboration across functional units and sports. Four administrative divisions were formed, aligned with how Penn State will best serve its student-athletes and key stakeholders, in addition to leadership and management teams.
Barbour concluded the presentation by acknowledging that although the five-year budget projections are vastly improved over those presented at last year’s meeting, resources will remain tight for the 31-sport, 800 student-athlete program. The ability of ICA’s programs to remain competitive, or in some cases, achieve greater competitive levels, will be dependent on the department’s ability to identify and execute new revenue streams while growing current revenues. In addition, although investment in many areas will be required for competitive improvement and revenue growth, it also will be important for the department to be critically cost conscious and efficient with spending.
Finally, Barbour noted that anticipated revenue enhancements (i.e. event revenue, conference media rights, strengthened partnership agreements, increased philanthropy) will continue to improve ICA’s operating budget picture. However, given ICA’s significant capital/facilities needs, the financial challenge will be to sufficiently fund the priorities in the forthcoming facilities master plan.
The full presentation is available online.