The University of Utah athletic department is going to finish this fiscal year with an eight-figure budget deficit, but at least the final damage is not going to be as bad as once feared.
As part of a wide-ranging interview Tuesday afternoon with The Salt Lake Tribune, Utah athletic director Mark Harlan estimated that his fiscal budget shortfall will ultimately be around $35 million. That figure is less than his worst-case estimation from August of between $50-60 million.
“We now have the data,” Harlan said, referencing the fact that the Pac-12 played a football season, and the basketball season has not seen a significant interruption to date. “We’re sorting through that with our financial team and the conference’s financial team, but the number should be in that $35 million range. It may be a little more or less than that as we calculate it.”
On Aug. 12, less than 24 hours after the Pac-12 postponed all sports, including football, until at least Jan. 1, Harlan offered his $50-60 million deficit estimation on a fiscal 2021 operating budget of $91 million if no football were played.
Including the Pac-12 championship game and two teams going to bowl games, the league collectively played 35 football games between Nov. 7 and Jan. 2. Those 35 contests equate to millions of dollars in TV revenue for the 12 league members, so it stood to reason that Harlan’s $50-60 million estimate was going to come down, it was just a matter of how much.
The $35 million figure is also based on the fact that, facing the prospect of no football, Harlan instituted a department-wide furlough, in addition to budget cuts, a hiring freeze and layoffs. The fact that game travel has been lessened, and travel for recruiting is at a stand-still across college athletics have also been money-savers.
With football complete, basketball rolling on, and spring sports coming into focus, Harlan believes his athletic department is in a strong, if not advantageous position given the circumstances. He has said publicly on a number of occasions since the pandemic began that acquiring a loan from central campus is one option to make up the rest of the fiscal deficit.
Another option is acquiring a loan from the Pac-12. Speaking ahead of the Pac-12 championship game last month, league commissioner Larry Scott indicated that athletic departments will have the option to borrow against future earnings.
According to an early-August report from Jon Wilner of The Mercury News, one loan option would be to provide a maximum of $83 million for each university at a rate of 3.75% over 10 years.
There is no timeline to decide which loan road to go down, but Harlan believes he and his senior staff are close to deciding. It should be noted that as budgeting begins for fiscal 2022, any sort of loan obligation would be intertwined with that.
The “commissioner did a great job with his team of providing those options for the various university CFOs,” Harlan said. “We’re still analyzing, up until we make that decision, what’s the best path, but it’s just great to have choices, both locally and through the league.
“We haven’t made that determination yet as we look at the overall picture, but very appreciative of the conference for coming up with those options.”