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June 13, 2014

Revenues rise to $94 million in FY 2014-15

Twelve years ago, when Ray Tanner was guiding South Carolina to its first appearance in the College World Series in 17 years, the USC athletic department was wrapping up a fiscal year (2001-2002) in which revenues totaled just over $38 million.

Today, that figure is significantly higher.

Bolstered financially by the SEC's enormous growth and evolution into a powerhouse conference over the last decade, USC has projected revenues of $94.07 million in Fiscal Year 2014-15, an increase of almost 150 percent since 2002.

Expenditures are projected to be $83.47 million, resulting in operating revenue over expenditures of $10.6 million before transfers.

According to a recent national survey by USA Today, USC is 25th nationally in yearly athletic revenues, yet only 10th in the SEC.

"We've made a lot of progress and there are certainly some schools that have bigger budgets," Tanner told the Board of Trustees' Intercollegiate Athletics Committee on Friday. "Although we're 10th in revenue, we don't like to finish 10th."

The school anticipates receiving an additional $2 million from the SEC's enhanced bowl agreements, while increased salaries for coaches and staffs (jump of $3.8 million) and SEC Network startup costs and expenses ($1 million to meet 'ESPN production quality' standards) and football guarantees ($1.3 million) account some of the largest escalations in costs.

When the selection committee is finished slotting teams into the four-team playoff and four more bowl games, the SEC will basically decide which conference teams play in which bowls, eliminating the politicking and posturing by schools that tainted the bowl selection process in the past.

"The SEC will basically decide which bowl you go to if you're in that position," Tanner said. "Certainly, the schools will be consulted and you'll get an opportunity to move around and change. But the financial arrangement would be equal, so it's a good place for all of us."

Any increase in shared bowl payouts from the SEC would be targeted for facilities (capital projects), Tanner said.

USC is paying East Carolina $1.2 million for the Pirates to travel to Williams-Brice Stadium on Sept. 6 as part of a comprehensive agreement with ECU. By paying the Pirates seven figures, USC assured itself of a seventh home game in 2014, Tanner said.

"When I took over (in July of 2012), we only had six home games this fall, so we made a deal with East Carolina going forward where we're moving a game to our campus this year and we'll in turn end up playing them three or four more times from this point until 2022," Tanner said.

In addition, USC is paying South Alabama the sum of $900,000 for the right to host the Jaguars on Nov. 22, while Furman earns a check for $250,000 for the teams' Oct. 18 contest.

Don't look for guarantees to decrease anytime soon as many Division I schools (FBS) seek to enhance their strength of schedule, Tanner cautioned.

"I'm concerned, and I don't think we have a choice in this matter, but we're going to have some guarantee increases as we move forward with some FCS (Division I-AA) teams possibly and some Division I teams," Tanner said. "All the conferences are trying to bolster their schedules. The demands are going to be greater."

Evidencing the surging influence of TV, USC's annual distribution from the NCAA/SEC is anticipated to eclipse ticket sales by more than $1 million, the largest gap in school history.

While some analysts predict the SEC Network will become a goldmine for the conference, Tanner said how much each school will specifically receive from the network remains undetermined with launch two months away.

"We're not sure where that will be," Tanner said. "We're excited and very optimistic it will be a revenue producer for the 14 schools in the SEC, but we're not there yet. We need more distribution before we get into a positive cash flow where the schools will benefit. Will it happen in 2014-15? I'm not exactly sure. Right now, there is no distribution to share. We're going to need more cable providers on board in order to get into a position where there will be a positive distribution."

Football ticket sales ($19.14 million) account for 87.7 percent of all ticket athletic department ticket sales, although Tanner believes men's basketball (projected $1.1 million in 2014-15) could become a bigger revenue producer in the future.

"We have a tremendous growth opportunity in men's basketball," Tanner said.

Gifts and donations are expected to leap 50 percent to $9.92 million in FY 2014-15.

The tremendous jump in income has transformed the Gamecocks athletic department into one of the university's major financial supporters. In the upcoming fiscal year, USC intends to transfer $4.28 million for scholarships and other causes, including $2 million from the conference's lucrative multi-billion TV deals with CBS and ESPN and $350,000 to the marching band.

Overall, USC plans to transfer $10.24 million for various purposes, including $4.74 million in total payments directly to the university. After scholarships, the athletic department has targeted $2.75 million for capital projects, $1 million for deferred maintenance and $1.75 million for debt service.

Two major construction projects are currently ongoing: football practice fields and indoor facility at the rear of Gamecock Park (formerly Farmer's Market), with the Plaza around Williams-Brice, new locker rooms for the two-year-old tennis center and a much-needed new track complex in the pipeline.

Paying for those new facilities is the major reason the athletic department's projected outstanding debt will rise to $156.38 million in FY 2014-15. The estimated debt service payment is $10.85 million.

Proposed Revenues - $94.07 million
Proposed Expenditures - $83.47 million
Projected Operating Revenue - $10.60 million
Proposed Transfers - $10.24 million
Projected Net Revenues - $358,000 (Reserve Fund)

NCAA/SEC Distribution - $23.07 million
Admissions (Tickets) - $21.82 million
Gamecock Club - $13.65 million
Gifts and Donations - $9.92 million
Sponsorship and Royalties - $9.70 million
Premium Seat Payments (YES) - $5.80 million
Ancillary Sales - $4.01 million
Other Revenue - $3.67 million
Student Fees - $2.43 million

Personnel Services (Salaries) - $36.29 million
Scholarships - $9.51 million
Facilities - $6.47 million
Team Travel - $6.07 million
General and Administrative - $6.04 million
Game Services - $5.83 million
Uniforms, Supplies & Equipment - $4.54 million
Other Services - $3.90 million
Guarantees - $2.98 million
Recruiting - $1.22 million


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