Ryan Dunleavy

Staff writer

PISCATAWAY - Rutgers is making serious progress toward relinquishing a dubious distinction.

The subsidy needed to sustain Rutgers athletics dropped to $23.8 million in fiscal 2015, according to a review of the department’s annual financial report filed to the NCAA obtained by Gannett New Jersey.

Rutgers had the highest subsidy in the nation each of the last two years, beginning when it set a national all-time high at $46.9 million in 2013. The subsidy fell to $36.3 million in 2014, but it still led the nation and was double that required at the next closest Power Five conference member.

“I think what it does is it confirms what folks here have been saying for a while and that is: The trend is going to continue," athletics director Pat Hobbs said. "You are going to see the institutional support decline as we move toward full participation in the Big Ten. Certainly this year was evidence of it. It was hard to see in the last two years because you had special items, particularly the exit fee with the Big East."

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The money needed to balance a $70.5 million athletics budget in 2015 – when it wasn’t hit with multiple one-time expenses such as buyouts and a $11.5 million conference exit fee – came from the university’s general fund, student fees, and state and other government support.

The latest numbers available are for revenue and expenses generated July 1, 2014, through June 30, 2015 – the dates that make up the school’s first year as a Big Ten member. They reflect a two-year decrease of 49.2 percent and a one-year decrease of 34.5 percent in the subsidy.

Why the decrease? In addition to fewer unusual expenses, ticket sales increased by $3.4 million departmentwide, including about $2.9 million for football, which reached $11.6 million.

"We had some significant increases in revenue last year," Rutgers chief financial officer Janine Purcaro said. “It was really the impact of ticket sales across the board in all of our sports. With that came all the ancillary revenues that come with increased gameday attendance: Increases in parking revenues, concessions revenues, apparel sales.”

Rutgers received a partial share of $9.4 million in Big Ten membership revenue; that amount is still greater than the former payouts from being part of the American Athletic Conference ($9.2 million) or previously the Big East. A full share reportedly is about $32 million.

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Big Ten expansion members must go through a six-year integration phase, and Rutgers will not receive a full revenue share until June 2021. Those paychecks helped allow four Big Ten schools to operate without a subsidy in 2014 and another five to have a subsidy of less than $4 million.

“We point forward to that time of full membership," Hobbs said, "where – we are not going to be awash money – but we can look forward with confidence that we are going to be in the black.”

Rutgers spent $11.3 million on athletic student aid, $10.9 million on coaching salaries, $5.7 million on travel and $1.2 million on recruiting.

On the revenue side of the ledger, contributions experienced a jump to $8.8 Million, up from $8.1 million in 2014. However, that number only takes into account money spent.

Rutgers athletics raised $14.7 million in assets, including pledges, in fiscal 2015, according to school officials.

Reducing the subsidy by way of increasing fundraising and cutting costs has been a mission imposed on athletics by university President Robert Barchi throughout his tenure.

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But Rutgers did a bit of a reversal late in the 2015 calendar year when it fired athletics director Julie Hermann and football coach Kyle Flood and hired Hobbs and Chris Ash at higher salaries despite owing their predecessors money.

“We look at this on a five-year basis and an investment in our future based on what we know our capabilities will be,” Barchi said at the time. “It’s a little different than it was five years ago where every year was a year that we had to build from scratch, and we were concerned what the next year would look like.

“We know very well what the next years will look like, and we have confidence in the financial picture looking forward. We can now see ourselves in a position of building and investing what we need to invest to be competitive.”

In 2014, James Madison had the No. 2 highest subsidy in the nation ($35.7 million), followed by Air Force ($30.8 million) and Connecticut ($27.2 million). Maryland ($18.1 million) was No. 41 and closet to Rutgers within the Power Five.

Unlike Rutgers, fellow second-year member Maryland is borrowing against its future Big Ten full-share payouts to cover the $31 million exit fee from the ACC. Thus, its subsidy will be smaller in the short-term, but it won't experience the same long-term revenue jump as Rutgers upon full integration.

Rutgers will incur some added expenses in fiscal 2016 because of cost-of-attendance stipends for student-athletes as well as a decentralization of overhead costs of running the university, Purcaro said. Every department will take on allocated expenses, forcing an increase in the $12.9 million in university support and possibly subsequently in the subsidy.

“It’s certainly not going to go up to a $19 million level," Purcaro said. "The savings that we have been able to achieve over the last couple of years will help that."

Staff Writer Ryan Dunleavy rdunleavy@gannettnj.com