BOT Revenue Review

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FAYETTEVILLE — A consultant’s review presented Wednesday to the University of Arkansas Board of Trustees outlined multiple ways the Arkansas athletics department could increase revenue, including changes to its ticketing model, additional sponsorship opportunities and a reevaluation of how resources are allocated across sports.

The review, conducted by Navigate, found Arkansas lags behind many peer programs in overall athletics budget growth and trails top-tier programs in football spending.

Arkansas commissioned the review as part of a broader effort to evaluate the athletics department’s spending and identify new revenue sources.

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tperformed expectations based on the program’s market, fan base and on-field performance. Self-generated revenue does not include conference or NCAA distributions or state and institutional support.

Arkansas ranked 15th out of the 32 schools evaluated in self-generated revenue but 22nd in total athletics budget. Navigate found the top schools’ budgets were growing at nearly double the rate of Arkansas’ as more schools received direct support or subsidies from their universities, be it from student fees, access to campus auxiliary funds or loans.

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Based on Arkansas’ football expenses from the past five fiscal years, Navigate projected the Razorbacks to win four SEC games each year. In reality, Arkansas averaged 2.2 SEC wins per year during that span. Also during that five-year span, Arkansas’ recruiting classes were considered on par with its expenses.

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One of the biggest changes Arkansas can make to bring in more money in the near future, though, is in its approach to ticketing.

Currently, donors to the Razorback Foundation receive access to season tickets in every sport. Tickets aren’t guaranteed, but any donor at any amount could, in theory, get tickets to all sports based on one donation amount.

According to Navigate’s analysis, Arkansas is the only school in its peer group that operates that way. Navigate estimated that if Arkansas monetized football seats the way the top 10 peer programs did, it could increase its revenue by $7.6 million. In men’s basketball, it could increase by $8.3 million.

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In the next 12 months, Navigate recommended Arkansas re-examine how it allocates resources by sport. Navigate’s report broke down sports into four tiers based on “profitability” and “exposure potential.” Profitability was based on reported revenues and expenses, and exposure potential was based primarily on TV viewership.

In Tier I were football, men’s basketball and baseball. Football ranked highest in both profitability and exposure potential, while men’s basketball and baseball also landed in the top tier.

Tier II consisted of softball and women’s basketball, which were labeled “targeted investments with brand benefits.” Tier III, or “emerging sports with revenue potential,” listed volleyball and gymnastics.

Tier IV consisted of soccer, swimming and diving, golf, tennis and track and field. That group of sports was labeled “evaluate investment relative to impact.” In other words, the department needs to decide if it is still willing to fund sports in the lower tiers at their current rates.

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Navigate also recommended Arkansas hire more “revenue-generating” staff in departments such as marketing, fundraising and ticket sales. That includes some roles within the Razorback Foundation.

Arkansas could also explore the possibility of reorganizing its revenue-generating operations — such as ticket sales, sponsorships, ancillary events and donations — into a third-party organization similar to a professional sports team. Doing so would free the department from some regulations that apply to state-funded institutions. For example, ticket sales staff in many professional organizations earn commission. For state institutions, such a model is nearly impossible.

Some schools, including Clemson, have already created outside entities to manage revenue generation.

“At its most simplistic form, it's setting up, in effect, an LLC that houses those revenue-generating functions and has some sort of business relationship with the university,” Nelson said.

The longest-term recommendation involves “campus real estate development.” Another page out of the book of professional sports, this would mean creating a mixed-use district around a stadium that includes restaurants, shops and housing.

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