2016-17 Purdue Sports Financials

First off, I have to credit the Lafayette Journal & Courier for getting the raw numbers used for this piece. They submitted an open records request for Purdue’s athletic financials for the 2016-17 financial year and they are… interesting, in a word:

· Purdue is expecting to get $77.1 million in revenue. This includes about $38 million from the Big Ten in the final year of the current TV rights deal. This comes in a year when football attendance is at a record low.

· Last season Purdue averaged 37,508 fans per game, which was last in the Big Ten. Every week I get a media release full of stats from the Big Ten. Among those stats are attendance figures. Purdue has had 106,749 fans for three home games, which is 35,583 fans per game. Now I know we can’t compete with Penn State, Ohio State, and Michigan when they might get that for one game, let alone three, but the average is still bad. Northwestern is at 34,032 fans per game in four games, while Indiana is at 43,621. Our numbers may suffer slightly because we have not had a Big Ten home game yet, but we only get four of those this year.

· By comparison, Purdue averaged 56,000 fans as recently as the 2008-09 fiscal year according to the J&C. That’s a loss of roughly 20,500 fans per game.

· Remember when Morgan Burke said football was a $5 million opportunity? Well, Purdue is pulling in low attendance even selling tickets as low as $5 per game. I am pretty sure that is the lowest price for a seat in the Big Ten. Shoot, some high school games in Indiana are $6. Now, should the program improve that ticket price floor can raise significantly. The face value on the seats I had at Maryland were $55 apiece (that I got on Seatgeek for $13). Say Purdue gets back to 56,000 fans per game and can get away with charging $40 for its lowest ticket (a conservative estimate). At 7 home games x $40 per ticket x 20,500 more fans = $5,740,000 a year. Oh, and that is only the ADDITIONAL seats sold, not the higher rates that some of the $5 seats currently purchased go for. Also, the current capacity of Ross-Ade is 57,236, so there would still be some room to grow, especially if the planned improvements end up increasing capacity. That’s a lot more potential than the $5 million Morgan projected.

· In 2014-15 Purdue football brought in only $17.1 million in revenue before the Big Ten money came in. That was a dismal $1.5 million profit after expenses were covered. And this was two years ago! I shudder at what this year’s numbers could be. We touched on this earlier in the summer, but it is bad, bad, BAD! Everyone else in the Big Ten made significantly more, as Rutgers, in 13^th place, still had a $6.8 million profit. Burke’s $5 million fever dream would STILL have Purdue making the least amount in the conference.

· Purdue projects ticket sales this year of $11.1 million in all sports, which would be up from $9.8 million reported in 2014-15. Are they all coming to men’s basketball games at Mackey Arena? With many games at or near capacity at Mackey the only other significant boost would be from football, and I am not seeing it.

· Purdue is projected to have $72.4 million in expenses. Of that, $34.4 million goes to salaries, $11.1 million to scholarships, and cost of attendance stipends would be $853,360 for roughly 500 athletes. Also, $1.5 million goes back to the University for "administrative and overhead" charges. You also have to factor in guarantees for schools to come play us in football and basketball. Cinicinnati and Nevada got return games, but we had to pay six figures Eastern Kentucky to come. Next year Ohio gets a similar payout. The same is true for much of the non-conference basketball schedule.

· Those "administrative and overhead" charges go through the end of this year as part of the TV deal. It will be re-visited when the new deal kicks in next season, so it could actually go up.

· When the new TV deal kicks in the additional revenue per year, per year school would be in the $10-15 million range. That’s a HUGE chunk of money for a school as thrifty as Purdue, but only if it is spent right.

· As you know, Purdue receives no fees from the University itself, one of just 12 departments in the country. This is a noble goal and absolutely can be done in the Big Ten, but Purdue might be the only one of the 12 which, in turn, still gives money back to the school as an expense, and it had better not go up when Mitch Daniels in the middle of a $2 billion fundraising campaign.

· Here is a critical point: The net operating income is before the athletic department makes debt service payments, which is expected to cost between $8-9 million. That figure will rise in 2017-18 after the Football Performance Facility is completed. Right now, Purdue has a projected net operating income of $4.7 million. That means Purdue is actually at a debt because of these payments.

· In 2014-15 Each of the 11 "full cut" schools in the Big Ten (Nebraska, Maryland, and Rutgers are not there yet) received an additional $1 million from BTN profits, while Maryland got an $11 million loan. These profits were not shared in 2015-16, and it is not known if they will be in 2016-17.

To make things a little easier I took these numbers and put them into a simple excel sheet. I did not include the debt service in the sheet because Purdue didn’t, and you can see why.

Purdue hides that debt service so it can say it still runs at a profit, but since it is done every year it really means Purdue is dipping into its reserves, as Burke has mentioned in the past. In that link Purdue has a cash reserve of $17 million, while it wants it in the $35-50 million range. We’re still paying off debt on the Ross-Ade renovations from 2001-03, the Mackey Complex, and the new baseball and softball stadiums.

That debt service, especially with the construction of the $65 million football performance facility, makes things more complicated in terms of the needed Ross-Ade improvements, but tough decisions will need to be made. If the debt service of $8-9 million is only going to go up then anything Purdue gets on the new TV deal is going to be eaten away pretty quickly with that debt service payment.

The good news is that debt payment is going down. It was $10.5 million in 2015-16 according to GBI, and is down in the $8-9 million for this year. The Ross-Ade Renovation in 2011-03 cost $70 million and has got to be getting close to being paid off. The Mackey renovations were $99.5 million and were completed 5 years ago. Alexander Field was $10.3 million and opened in 2013, while the softball Stadium was $13 million and opened in 2015. Eventually, those have to be paid off soon.Still, they need to be paid and the needed Ross-Ade improvements would only add to this.

I have seen some projections of the new TV deal being at $60 million per school, which seems really high. If it goes to $50 million, which is much more realistic, it would still be a huge boost to Purdue. It will go a very long way toward the Ross-Ade Improvements. As far as a price tag for that, We can look somewhere in the neighborhood of $50-100 million. Enclosing the South End zone at Indiana will cost the Hoosiers $53 million, and is probably closer to what Purdue wants to do. The higher number is based on the recently announced renovations at Illinois, which are $132 million. That’s understandable because many of the features Purdue already has from the 2001-03 renovations aren’t there at Illinois (example: Illinois still has pee troughs in the men’s rooms). They are also adding team facilities that are already being taken care of in our performance facility.

That’s really the biggest question going forward. We have the pretty renderings, but no price tag and no timeline, which Illinois and Indiana now have. And we’re not talking about Ohio State and Michigan here. We’re talking about Illinois and Indiana, schools that there is no valid reason, aside from administrative apathy, for Purdue to be so far behind them.

So how does it happen? Well, the TV deal will help, but the biggest solution is more buts in the seats from a successful program. That is what Mike Bobinski needs to figure out: How to get at least 10,000 more people every Saturday at Ross-Ade Stadium. It is more than a $5 million opportunity. It is the future of all Purdue athletics at stake since that additional revenue finances so much more, and with the upcoming debt service rising the additional Big Ten revenue is not going to be the savior some think it is.