Michigan athletics projects $62.9M budget deficit for 2021 fiscal year, $1.4M surplus in 2022
Michigan’s athletic department has projected an operating deficit of approximately $62.9 million for fiscal year 2021, athletic director Warde Manuel presented Thursday during the University of Michigan Board of Regents meeting. But with a return to normal sports activities and fan attendance this fall, the department projects an operating surplus of $1.4 million for fiscal year 2022.
The deficit comes from operating revenues totaling $88.8 million and expenses of $151.7 million, according to the documentation Manuel provided to the board. The department took a significant financial hit because the COVID-19 pandemic did not allow for fan attendance to football games, the major money generator.
There was a budget operating deficit of $26.1 million projected last year at this time.
Revenue lost from attendance and preferred seat license contributions decreased $42.5 million from what had been projected. The payout from the Big Ten Conference was $44.8 million for 2020, a decrease of $5 million from what was budgeted ($49.8 million). The Big Ten payout was $54.3 million the previous year.
"You will see from our projections last year, we thought we would have about 50% — boy, was I wrong — attendance when we presented a budget last year in June," Manuel said Thursday to the regents during the Zoom meeting.
"It turned out to be zero and so that deficit that was projected to be 26 (million), we had actually said we thought it would be somewhere around 80 million and, again, through the hard work of everyone, we are presenting a $62.9 million deficit this year. We have a plan with the CFO’s office to work through a payment plan from athletics back to the university to cover that loan for that debt."
Michigan’s athletic department projects revenues of $180.4 million and operating expenses of $179 million for fiscal year 2022 in projecting the $1.4 million surplus. Here’s what some of the projections are:
► Admissions revenue is projected to increase by $49.2 million because of the return of spectators to all sports.
► Big Ten distribution is expected to increase by $9.7 million ($54.5 million) because of an increase in television revenues.
► Preferred seat contributions should increase by $30.3 million.
► Team and game expenses are anticipated to increase by $11 million because of the return of normal team schedules.
"This year we’re projecting a budget operating surplus of $1.4 million, (and) spectator admissions hopefully, knock on wood, will continue to be allowed at 100% throughout the year and we can get back to normal attendance," Manuel said. "While we are not sure, we’ve heard back from some fans that they’re still not comfortable. In looking at basketball, baseball games that are occurring nationally now, I think fans are, because of vaccinations, getting more comfortable returning to these venues for competition."
Manuel praised the student-athletes for what they went through the last year, particularly the frequent COVID-19 testing and shifts in their seasons and schedules.
"(They) endured long bus rides, long times on the road, longer than normal, to play a series of games as opposed to playing one game and returning home as we were accustomed to in some sports," he said. "Really going into a bubble when you look at what happened with some of the tournaments, both conference tournaments and postseason.
"They deserve so much credit for their tremendous effort, not to mention enduring all the testing and everything that we had."
A year ago at this meeting before the regents when department budgets are presented, Manuel then projected a $26.1 million deficit. A fiscal year begins in July and runs through the end of June the next year. At the time, there was nothing concrete regarding fan attendance for football or any on-campus athletics.
Three months later, Manuel said he anticipated the athletic department deficit could reach $100 million. Once the Big Ten decided to play a conference-only football schedule, he reduced the projected budget loss to $80 million. Manuel laid off 21 individuals last year and did not fill 15 positions, but he said cutting sports was never an option, saying having all 29 sports was a priority.
Manuel was asked in March during a Zoom conference with reporters how long it will take the athletic department to recoup the losses from the COVID year.
“It takes a few years, like taking out a mortgage,” Manuel said at the time. “I don’t know, five to 10 years? It won’t be 20. It’ll be sooner than that. We’re gonna have some cuts and we’ll spend less because we have to pay back a loan.”
Fans did not attend any of the three home football games last season, although family members were permitted before an order from Gov. Gretchen Whitmer’s office. Michigan went 2-4 and canceled the final three games because of a COVID-19 outbreak.