Wolf Pack reports $900,000 fiscal year deficit; owes university $5.9 million total

Chris Murray | Reno Gazette-Journal

Show Caption Hide Caption Nevada AD Doug Knuth gives "State of the Pack" address Nevada AD Doug Knuth address a wide range of topics in an Aug. 21 conference at the school.

It took a little longer for the Wolf Pack athletic department to crunch its final numbers for the last fiscal year, but the end result was the same as it has been in six of the last nine seasons – a deficit.

“It’s always a challenge to get the finish line and finish your budget every year,” Nevada athletic director Doug Knuth said during his “State of the Wolf Pack” address on Tuesday afternoon at Basin Street Club at Mackay Stadium. “This year, we came close, but close isn’t the right answer.”

Nevada reported a $214,000 operating budget deficit for fiscal year 2018, however the overall deficit was $900,000 when including three “one-time accounting inconsistencies.” That comes on the heels of a $2 million deficit in fiscal year 2017. In all, the Wolf Pack owes the university roughly $5.9 million to cover budget deficits that have occurred since the so-called Great Recession, which predated Knuth’s employment (he inherited a $3.2 million debt when hired in April 2013).

“We’re going to clean that up,” Knuth said.

The accounting inconsistences were three-fold. In previous years, the Wolf Pack included scholarship payments from its endowment, which is included as part of the UNR Foundation, as revenue. That was not counted a revenue this year, prompting $220,000 in debt. Additionally, Nevada added $175,000 more than expected to its debt obligation that dates to the 2016 renovation of Mackay Stadium. Finally, the Wolf Pack and the university had different interpretations on the annual debt payment as part of a five-year plan to pay off the new scoreboards at Mackay Stadium and Lawlor Events Center, which led to a $300,000 difference.

“This fiscal year, we counted $400,000 and change to pay off that (scoreboard) debt obligation and the university had counted almost $700,000, so that's an accounting thing and really a lack of communication,” Knuth said. “We counted it one way, they counted it another and ultimately we had to count it their way.”

Knuth said he could have rolled some of these accounting differences into fiscal year 2019 but opted to put them in 2018 to move forward with a fresh slate. Nevada’s $32 million budget in fiscal year 2018 was roughly the same as the previous year and remains among the bottom two in the 11-school Mountain West.

Despite the Wolf Pack basketball team, which reached the Sweet 16 last year, seeing rising ticket revenue, Nevada football's attendance continued to plummet. In Knuth’s first year as athletic director, the Wolf Pack averaged 24,939 fans per home game. Last year, that figured bottomed out at 16,722 per game.

While it’s not fair to pin Nevada’s financial struggles on one team, the football program didn’t hit its projected ticket-revenue number last year, and the Wolf Pack will fight an uphill battle financially until it does.

“It’s A number 1, the most important thing,” Knuth said of football’s impact on Nevada's bottom line. “We’ve had tremendous success in basketball and our basketball revenue has jumped, but when you’re winning in football and the community comes out and supports football, it changes the dynamics of your financial situation and your ability to do things. You’re talking about instead of hundreds of thousands of dollars (in basketball), you’re talking about millions of dollars or more to the bottom line when football is winning and Mackay Stadium is full and people are buying tickets.”

Knuth said Nevada football, which opens the season Aug. 31 against Portland State, has had an 80 percent season-ticket renewal rate this offseason, a number he was pleased with given the team’s 3-9 record last year. He’s optimistic a strong home schedule and potent offense will bring fans back to Mackay. Knuth said the football team’s financial health is essential to the solvency of the entire athletic department.

“It just makes such a big difference and that’s why we talk about the importance of having such a good home schedule and having a fun team to watch and getting our community to come out and see it and have fun,” Knuth said. “We have a great community. We have 350,000 people here and most of the people who live here did not go to school here, it’s not their alma mater, but if you live here and work here, there’s a great opportunity to support the local team, be a Wolf Pack fan, come to games, bring the family. It’s a fun thing to do and college athletics has amazing entertainment value. I tell people all the time to come check it out, come see games. It’s fun for you and it will help our program grow.”

That $900,000 deficit doesn’t include an additional $700,000 the Wolf Pack owes the university for completing the Ramon Sessions Performance Center, which was finished last fiscal year but also went over budget. The university picked up that $700,000 overage. The Wolf Pack is expected to pay back the school as soon as it raises the funds.

Finally, Knuth said the Wolf Pack’s new apparel contract with Adidas, which was announced in late May, still hasn’t been finalized. Nevada has already started receiving its Adidas equipment, and Knuth said just a few items remain before that contract is completed.

“The Adidas contract is something that’s already made a difference for us,” Knuth said. “The coaches and athletes are loving the product and loving the apparel, loving the shoes. We haven’t announced or shared a final contract yet because it hasn’t been signed. We’re still negotiating some stuff and the business elements are done and agreed to and that’s why we’re getting product and stuff shipped to us.

“But there is some legal terminology and stuff that we want in and they want in and we’re trying to go back and forth with the legal folks to make sure everything is buttoned up and exactly the way the university needs it and the way Adidas needs it, and that just takes time sometimes.”

WOLF PACK’S FISCAL YEAR

The Wolf Pack had a deficit of $900,000 during the 2018 fiscal year. Here is a look at Nevada’s profit/deficit in each of the last nine fiscal years.

FY Profit/Deficit

2010: -$750,000

2011: -$450,000

2012: +$50,000

2013: -$500,000

2014: -$39,450

2015: +$115,000

2016: +$135,000

2017: -$2,000,000

2018: -$900,000

Source: Wolf Pack athletics