Trustees hear financial update on Intercollegiate Athletics

September 13, 2018

UNIVERSITY PARK, Pa. -- Penn State Intercollegiate Athletics continues to experience revenue growth, with a stabilized budget and increased reserve balance, according to Director of Athletics Sandy Barbour, who presented today (Sept. 13) to the Board of Trustees Committee on Finance, Business and Capital Planning. 

Barbour provided Penn State Athletics’ organization, strategic plan, various measures of institutional control, peer institution benchmarking and reviewed five-year historical and five-year prospective financials to the board committee. The five-year projections include predictable revenue and reserve fund growth, and expense forecasts. 

At the conclusion of fiscal year 2013, the impact of the sanctions against Penn State and loss of Big Ten bowl revenues drove the reserve balance down to approximately $150,000. Through a combination of investment strategies, expense reduction initiatives and a steady climb in both overall traditional and new revenues, ICA had built a reserve balance to approximately $13.1 million as fiscal year 2018 concluded.  

The above factors enabled ICA to earmark $4 million of the FY 2018 reserve balance to the facilities master plan, which was announced in 2017. Barbour referenced that in the ICA budget projections over the next five years, $4 million will be held and designated for the priority projects outlined in the facilities master plan. 

Barbour reported that a healthy reserve balance is essential in maintaining Penn State Athletics’ self-supporting financial position. This reserve balance can both guard against unexpected fluctuations in the market and allow for investment in strategic initiatives, such as the facilities master plan, while sustaining a healthy operating budget. 

As in previous years, the presentation noted that ICA supports approximately 800 student-athletes across 31 varsity sports (16 men’s and 15 women’s), with more than 73 percent of these student-athletes receiving some type of grant-in-aid/ scholarship support (370 full grant-in-aid equivalencies). Penn State’s 31 programs rank in the five highest totals among all 130 Football Bowl Subdivision institutions.  

Record Academics and Competitive Success Driving Comprehensive Excellence 

Barbour also presented ICA’s comprehensive excellence, including several of the academic, competitive and community engagement records and accomplishments by Nittany Lion students, who have a school record-tying 90 percent NCAA Graduation Success Rate. During the 2018 spring semester, Penn State student-athletes posted a record 3.15 grade-point average, with a record-tying 26 teams earning a 3.0 GPA or higher.  

Since January 2007, Penn State has won 20 NCAA championships, tied for No. 3 nationally and doubled the next highest total among Big Ten Conference institutions. 

Intercollegiate Athletics has engaged in peer institution benchmarking with its Big Ten Conference colleagues and several other schools nationally, all of whom annually compete for multiple NCAA championships, similar to Penn State. Data from the institutions’ Equity in Athletics Disclosures Act (EADA) for fiscal year 2016-17 showed that Penn State ranks near the middle in spending per student-athlete in comparison among Big Ten schools and 12 national public/private institutions – Alabama, California, Clemson, Florida, Florida State, North Carolina, Notre Dame, Oklahoma, Pittsburgh, Southern California, Texas and Washington. Penn State benefits from economies of scale based on its large number of programs. 

Philanthropy Plays Critical Role in Implementing Facilities Master Plan 

Barbour concluded the presentation by acknowledging that although the five-year budget projections are much improved over those presented in the immediate post-sanctions timeframe, 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 traditional revenues, such as ticket sales and philanthropy. Philanthropy, in particular, will play a critical role in the ability of the department to execute on the facilities upgrades outlined in the master plan, Barbour said. 

In addition, although investment in many areas will be required for competitive improvement and continued revenue growth, it also will be important for the department to be critically cost conscious and efficient with spending.  

 

Last Updated September 13, 2018