Kent State athletic department struggles to break even financially

Like hundreds of other college athletic departments across the country, Kent State struggles on a yearly basis to break even financially.

In fact, the Kent State athletic department often needs a bailout from university administration to turn a profit.

Essentially, Kent State spends more money on athletics than it makes, creating a yearly deficit the university has to pay to fix.

The problem

The Chronicle of Higher Education reported that between 2004 and 2006, just 17 of the 320 Division I athletic programs had a net profit.

The Chronicle article also reported that most athletic departments receive direct allocations from their universities in order to cover their total losses.

That has been the case for Kent State – and for other schools in the Mid-American Conference. The athletic department’s 2007 Equity in Athletics Disclosure Act Report, which has a listing of Kent State’s revenue and expenses, shows the university had to contribute about $3.75 million to help the athletic department break even in the 2006-07 athletic season. The figure was the second-highest of any Ohio MAC school, behind Miami.

On top of that figure, full-time undergraduate students contribute $253 per semester through their tuition to support the athletic department. Part-time undergraduates contribute $23 per credit hour.

In 2006-07, student fees brought in nearly $9.8 million for the athletic department. Altogether, student fees and direct university support accounted for 77.5 percent of the athletic department’s total revenue.

President Lester Lefton said in a September meeting with Daily Kent Stater editors that the university contribution had grown to more than $4 million for the current year’s budget. Lefton added, however, that he doesn’t mind allocating money to the athletic department.

“Is it worth all of this money?” Lefton asked. “We are a university. Universities are made up of a whole prestige of a lot of different things that is hard to put a dollar value on.”

Director of Athletics Laing Kennedy echoed Lefton’s idea that the allocation is worth it because of what the athletic department does. He called the athletic department “the face of the university in the community” and said athletic events bring more than $20 million to the greater Kent community.

“You’re not going to have 18,000 (people) come and watch chemistry class,” Kennedy said. “But you will get 18,000 that will come and watch an intercollegiate athletic event.”

Kennedy added that he doesn’t want the university allocation to continue to grow. He prefers to keep the allocation in the $3-million to $4-million range and wants the athletic department to increase its other revenue, such as ticket and merchandise sales.

The solution

Kennedy said the greatest potential to make more money is in ticket sales. He is projecting ticket sales at about $500,000 for the current budget year, but he said that number should be closer to $1.5 million.

Pete Mahoney, the associate athletic director for external affairs, who oversees the marketing department, said the athletic department emphasizes group ticket sales, offering reduced ticket prices for single games to local businesses.

“During these times, you’ve got to get more aggressive,” Mahoney said. “We’ve got to get in front of people. We’ve got to do grassroots marketing.”

Heather Lutz, the athletic marketing director at the University of Toledo, said aggressive tactics such as phone calls and e-mails work better than more traditional marketing tactics such as advertisements.

“Billboards (and) commercials help build awareness, but they’re not going to sell tickets,” she said. “So you personally as a department have to be out in the community and on the phone being aggressive, talking it up, convincing people this is the place to be on game day.”

The aggressive tactics seem to be working for Toledo. In the 2006-07 athletic season, Toledo brought in more than $1.35 million for ticket sales and $733,947 for advertising and sponsorships.

At Kent State, however, the athletic department made $559,558 on ticket sales and $434,227 on advertising in 2006-07. The ticket sale number was lowest of Ohio MAC schools, and the advertising total was second lowest.

The problem with the solution

Kennedy believes football has the best chance of raising athletic department revenue, particularly through ticket sales.

“Our biggest potential is football,” Kennedy said. “If we could average (18,000) to 20,000 (people) . rain or shine, that would be tremendous potential.”

At many schools around the country, football programs draw in the most money for athletic departments.

However, of the 11 athletic programs at Kent State, none bleeds money quite like football, which recently finished the 2008 season with a 4-8 record. In the 2006-07 athletic season, Kent State football had a deficit of more than $3.4 million, racking up more than $4.2 million in expenses compared to $817,016 in revenue.

The 2006 football revenue was by far the lowest of any MAC school in Ohio. Akron recorded the second-lowest total, raising more than $1.3 million – 64 percent higher than Kent State’s figure. Ohio University had the highest football with more than $6.2 million.

Mahoney said a major problem with raising attendance – and money – with football is that many people in the community see Kent State as a losing program. He said the team must turn its success around in order to turn its finances around.

“Just as losing creates problems, winning solves problems,” he said.

However, the football program did find success in 2006. The Flashes finished in second place in the MAC East with a 6-6 record and had a five-game mid-season winning streak. An average of 17,004 fans – close to Kennedy’s magic number – attended the team’s five home games.

Yet the program still lost $3.4 million.

Kennedy said football fundraising has increased, and the program still has the potential to make more money at Kent State if the team becomes more successful. He said attendance and revenue won’t increase until the football team breaks its losing tradition.

Also, he said that while he would prefer not to raise ticket prices, they might have to increase in the future.

“We’re trying to keep our ticket prices low because we want to make an attractive venue for families to be able to afford, but at some point, we’re going to have to raise ticket prices.”

The future

Gov. Ted Strickland announced Tuesday the state budget currently has a $640 million deficit, and that could increase to $7.3 billion by 2010 and 2011.

That deficit is likely to affect Kent State and other universities in Ohio – and what is bad for the university is bad for the athletic department.

“What I do see is in the university having to cut budgets, that (the direct university contribution) would be the part of our athletic budget that would be subjected to a cut,” Kennedy said. ” … I hope that would not happen.”

Contact assistant sports editor Douglas Gulasy at [email protected].