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June 15, 2012

Revenues projected to surpass $80 million



Ever increasing revenue streams - particularly from the pot-of-gold better known as the Southeastern Conference - should keep South Carolina on solid financial footing for the next fiscal year.

USC projects total athletic department revenues of $81.8 million - the figure includes Colonial Life Arena operations - for the 2012-2013 Fiscal Year starting Sept. 1, USC Athletics Chief Financial Officer Jeff Tallant told the Intercollegiate Athletics Committee of the Board of Trustees on Friday.

USC has generated close to $80 million in total athletic department revenues during the current 2011-2012 Fiscal Year.

One of the biggest eye-openers during Tallant's presentation was the sum being paid by USC to bring UAB to Williams-Brice Stadium for the non-conference clash on Sept. 15. The Blazers are guaranteed to receive $900,000 for their weekend visit to Columbia.

East Carolina (Sept. 8) and Wofford (Nov. 17) are both set to receive $250,000 for their trips to Williams-Brice. The home opener against the Pirates - the new $6.5 million high definition video scoreboard should make its debut that night - is the second of five meetings between the Gamecocks and Pirates under a contract signed a few years ago.

"The marketplace is skyrocketing," USC AD Eric Hyman told the committee. "That's what we started several years ago playing the I-AA schools in the state. It has kept our expenses down in that area. They will probably go up a little bit in the future, but we try to handle it advantageously."

USC will receive $250,000 from Clemson for the Palmetto Bowl in the Upstate on Nov. 24. Next year, the Gamecocks will pay the same sum to the Tigers when they return to Williams-Brice Stadium.

The IAC unanimously approved the 2012-2013 budget by voice vote without a hint of dissension.

As usual, one of the key reasons for USC's rise in revenues is another expected record payout from the SEC office. USC's payout from the SEC for the 2011-2012 FY should approach $21 million, Tallant told Gamecock Central.

The most lucrative revenue source for USC remains athletic ticket sales, which account for $20.31 million, approximately 24.8 percent of the department's total projected revenues. The estimation represents a slight increase over the FY 2011-2012.

Football admissions continue to represent an overwhelming majority (86.47 percent) of ticket sales. The three major men's sports (football, basketball and baseball) account for 99.64 percent of all athletic ticket revenues for USC.

Football season ticket sales have been brisk, Tallant said, and revenues from men's basketball is expected to increase with the recent coaching change.

"It's a sign the economy is improving and some success athletically," Tallant told the Board.

The highest grossing home football games in 2012 are projected to be Georgia ($4.05 million), Tennessee ($3.46 million) and Arkansas ($3.46 million). Missouri is fourth-highest at $3.29 million.

Total football ticket revenue for seven home games in 2012 is projected at $17.56 million. Subtracting the guarantees paid to East Carolina, UAB and Wofford (total of $1.4 million) leaves a net revenue figure of $16.41 million.

USC plans to contribute $10 of every ticket sold from the Georgia game to university scholarships for an anticipated amount of $618,800.

The second-largest projected revenue source for FY 2012-13 is the SEC. The USC athletic department has conservatively estimated the school's payout next year at $18.5 million since the pie must now be split between 14 schools with the additions of Texas A&M and Missouri.

However, USC president Harris Pastides told the Board that the school should receive a greater sum in the future once the TV contracts with CBS and ESPN are renegotiated in the wake of Texas A&M and Missouri joining the league and a possible SEC Network is launched.

"We're confident we'll make up in distribution from the addition of two new teams," Pastides said. "Next year, we would have a slight dip. But we were essentially guaranteed in discussions before expanding the league that no university would take a dip in its revenue from the TV contracts. Right now, we're negotiating with them."

The Gamecock Club is expected to bring in $12.39 million into the athletic department's coffers. Premium seat licenses (YES Program) should amount for about $4.1 million.

Additional sources of projected revenue for FY 2012-13 are gifts and donations ($7.03 million), sponsorships ($7.55 million), student fees ($2.28 million) and ancillary (merchandising, etc.) sales ($3.05 million).

"We're one of the best properties in the country," Hyman told the Board. "Our fans support our programs. About 97 percent of our sales is generated because of athletics. Under Armour loves us because we generate so many dollars, but that money goes to the university."

All of the funds generated from the YES program are utilized for improvements to athletic facilities, USC officials have said.

USC plans to transfer about $12.53 million to the university, including $9.22 million for athletic scholarships and about $1 million in TV monies received from the SEC and ESPN.

In addition, the athletic department will help subsidize the marching band in the amount of $350,000, an increase of $100,000 over a couple of years ago. The band recently purchased new uniforms for the 2012 season.

"We are self-supporting, so we're not a burden on the university," Tallant reminded the Board. "We try to do our part as far as representing the entire university."

The largest expenses for the athletic department include salaries and benefits for athletic department employees ($28.44 million), scholarships ($9.22 million), team travel ($4.62 million), game services ($3.85 million), and facilities ($5.44 million).

The greater amount for "facilities" is attributable to the new athletics administration (coaches support) building set to open in July.

Payments on the school's debt service is projected to be just under $3 million in FY 2012-2013.

USC's recruiting budget is projected at $1.01 million, significantly lower than some other SEC schools, but Hyman insisted it wasn't an "apples to apples" comparison.

Tallant projects a net profit of $793,000 from athletic department operations in FY 2012-13.

Since Hyman took over as athletic director at USC on July 1, 2005, the USC athletic department has utilized zero-based budgeting.

Annually, Hyman aims to set aside 15 percent of all athletic department revenues into a reserve account. Recently, Hyman tapped into the fund to pay off former men's basketball coach Darrin Horn ($2.4 million) and pay new coach Frank Martin's buyout from Kansas State in full ($1 million).

PROJECTED SOURCES OF ATH. DEPT. REVENUE IN FY 2012-13
Ticket Sales - $20.31 million
SEC Payout - $18.5 million
Gamecock Club - $12.39 million
Gifts and Donations - $7.03 million
Seat Licenses (YES) - $4.08 million
Student Fees - $2.28 million
Sponsorships & Royalties - $7.55 million*
Ancillary Sales - $3.05 million
Other Revenue - $1.07 million

TOTAL PROJECTED REVENUES: $81.797 million
TOTAL PROJECTED EXPENDITURES & TRANSFERS: $81.003 million
NET PROFIT: $793,200.

* Includes licensing and royalty payments, Under Armour, ISP, marketing, merchandising, etc.

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D. McCallum


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