IPTAY Finances and CUAD Budget FY12

Like last season, we take the time after the big sports are over to look into various things around Clemson's athletic department, such as the budget. Two years ago we gave you the IPTAY budget for 2007-2009 and a comparison of Clemson's AD budget with other opponents (i would open those in new tabs for comparison). Two years ago we covered the FY10 budget here, and we did the FY11 budget before as well. Here, we're going to update that information for the FY that ended in June 2012 (July 1 2011-June 30 2012), and includes the 2011 football season only. The current fiscal year is not finished, remember.

The Mandate of IPTAY, from Rupert Fike

"to provide annual financial support to the athletic department at Clemson, and to assist in every way possible to regain for Clemson the high athletic standing which rightfully belongs to her."

In accordance with the IPTAY Constitution (Article IV-2), the four priorities of IPTAY are as follows:

• The payment of the annual cost of athletic scholarships.
• The payment or reimbursement of the operating expenses of IPTAY.
• The establishment and maintenance of an adequate reserve fund deemed appropriate by the IPTAY Board of Directors.
• Any expenditures other than those established under the previous three priorities, shall be limited to either direct or indirect aids to the athletic program of Clemson University and must be approved by the IPTAY Board of Directors.

Below we detail the current membership of IPTAY and the trends over the last 5 years. These figures are concluded on July 1 2012, so they do reflect aftereffects of the 2011 season.

IPTAY MEMBERSHIP 2007-2012

Donor Level	2007	2008	2009	2010	2011	2012
Purple ($140)	4217	3901	3912	3540	3237	3378
Orange ($350)	3915	2725	2636	2564	2477	2670
Champion ($700)	2092	2359	2187	2116	2084	2131
Tiger ($1400)	3406	2604	2059	2030	2009	2113
Howard ($2100)	652	1450	1192	1120	1047	1015
IPTAY ($2800)	1364	2255	2298	2065	2020	2071
Jervey ($4200)	-	-	-	238	245	276
McFadden ($5600)	113	361	338	289	249	274
Fike ($7000)	183	286	271	262	252	271
Heisman ($10000)	201	315	289	290	300	309
Total	16,143	16,256	15,182	14,514	13920	14508

Note that we only show membership by level information, you can donate and not be in one of these levels. These figures had shown a decline in 2011 in every category except Jervey and Heisman level, with the overall IPTAY trend headed downwards over the years. However in 2012 IPTAY had a nice bump of 500 or so members and more donations to go along with that. Recall the SEP was initiated in 2008 cycle, and some of the drop in 2009 can be partially attributed to fan discontent to the new seating policies. We're slowly creeping back up to those pre-SEP levels. Membership stats for the lower levels like Tiger Cub/Collegiate Club were not provided for all years, but there is significant membership there.

Other factors affecting membership numbers include the economic downturn, tax changes, gas prices, and the results on the football field. I suspect that small business owners tend to give in the middle membership levels moreso, and economic downturns hit them very hard. This may be why so many stopped giving altogether. The IPTAY level tends to be the largest giving level in terms of cash value.

In the long run though, the SEP is better for the school, as you'll see below.

IPTAY FINANCES	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012
Adjusted Balance on July 1	9,056,158	12,129,019	20,042,401	26,591,264	29,909,368	34,077,208
Contributions and Memberships	15,713,657	22,039,696	19,327,875	19,206,541	18,690,451	19,210,415
Investment Income	421,474	537,729	604,581	288,436	315,996	319,906
Transfers in	600,000	600,000	600,000	600,000	610,558	600,000
Total Additions	16,735,131	23,177,425	20,532,456	20,094,977	19,617,005	20,130,321
Expenditures & Transfers
Scholarships	5,312,116	6,314,579	6,404,132	6,769,782	6,913,985	7,168,576
IPTAY Operational Budget*	2,486,141	2,798,466	2,924,360	2,662,964	2,838,391	3,341,876
Vickery Hall	1,380,915	1,526,203	1,731,742	1,695,241	1,733,885	1,841,280
Tiger Cub/Collegiate Club	23115	54529	42393	43818	34754	58,592
IPTAY Special	44974	98067	95365	53340	114940	56,822
Priority Four Funding	1,411,299	2,467,073	2,780,469	4,849,098	2,210,991	8,181,402
Segregated Reserve Fund Transfer	2000000	2000000	0	700,000	1,600,000	600,000
WEZ Construction	1000000	0	0	0	0	0
Losses on Investments	3711	5126	5134	2,630	2220	2,105
Total Expenditures & Reductions	13,662,271	15,264,043	13,983,595	16,776,873	15,449,166	21,250,653
Net Excess	3,072,860	7,913,382	6,548,861	3,318,104	4,167,839	-1,120,332
Balance of Segregated Reserve Funds	3,000,000	3,578,257	4,529,054	4,593,586	7,322,615	7,825,354
IPTAY Total Spending Funds (Excess+Reserve+July 1 balance)	15,219,018	24.571,455	30,169,519	34,502,954	41,399,822	40,782,230
*-includes
Orange & White	445,421	483,280	492,359	415,379	453,481	437,462
WEZ/Capital Fundraising Budget	181,673	161,945	152,797	193,127	483,795	821,785

The first thing that jumps out to us is that Clemson is still sitting on the money. We retained $40 million dollars in spending assets by July 2012. This does not show all of the expenses for the IPF or the Training Table, but our giving is high enough that it did not make a big dent in FY12. We only netted a loss of $600K compared to the previous July.

Thankfully though we did start spending money on Priority Four, which jumped almost $6M over the previous year and $3M over the previous high. Priority Four is where the IPF and Training Table get paid for. The largest expenses here are:

• Gameday Operations - $824,000
  
• Stadium lights for Riggs/Death Valley - $568,000
  
• New bleachers in lower bowl of DV - $1.116,000
  
• Penley Golf Building - $1,418,000
  
• IPF - $ 1,668,740
  
• WEZ Dining Hall - $400,000
  
• Video Board upgrades - $735,000

We know the IPF cost about $10M to build in total, and I'm wondering if they paid that all via a separately funded capital account outside of IPTAY. When it was announced, they said IPTAY would pay matching funds for any raised number. The WEZ Dining hall was already built, just not finished.

Clemson's FY12 Athletic Department budget is a separate entity from the IPTAY budget, and neither the President nor the Athletic Director have discretion over the IPTAY funds. This process goes through the IPTAY Board of Directors, but a big part of the changes made over the last year has been to put these funds under the AD somehow without making it taxable or letting Barker take it. There has been a more streamlined process put in place to bring these finances under DRad's discretion, though its unlikely he'll ever be able to spend at will.Previously the AD had to request IPTAY pay for things, and Billy D was the go-between, which didn't quite sit well with anyone because he wasn't full-time to IPTAY fundraising.

More recently IPTAY has built more of its focus around major gifts, large donations that can come via someone's personal large lump sum or from their estate after death, for example. Before the WEZ, we didn't have a major gifts initiative. If Clemson is going to pump up the donation dollars more than current levels, they'll have to reiterate the focus on this area. We do have 6 employees whose specialty is arranging and handling these large gifts, there should be more. You can see we're putting the money into capital fundraising for major projects, this is where its going.

DRad is likely going to push for, perhaps even hire himself, a person whose job is solely to raise money and lead IPTAY across the southeast. His job will be to report to the Board of IPTAY, so he will not be an AD employee. We've heard one or two names, but there is not a timetable we know of to fill the spot. I would suspect someone with strong fundraising skills as an AD or within another BCS-level AD would be the leading candidate.

Below are snippets pertinent to these thoughts on IPTAY from Charles Dalton and David Wilkins.

I'm sure most people probably understand what total giving means, but can you put it in layman's terms the different facets of it?

DALTON: "IPTAY became known for its leadership in the annual fund. That's when you have a broad-based membership giving every year, and renewing that gift pledge annually through their membership. In 1934, seat location and parking were not an issue. It was just the love of Clemson, and wanting to see athletics become more competitive. In more recent years, seating and parking have been an incentive for increasing IPTAY contributions. Those annual giving-level contributions constitute the annual fund. The annual fund is tremendously important. IPTAY members who are willing to renew their memberships year after year after year help to build a loyal base of support.

"When I became more active with IPTAY, I think the annual fund gifts were approximately $16 to $17 million. It wasn't hard to see that we needed to expand IPTAY's footprint and increase our total giving, with IPTAY making a commitment of $15 million to the WestZone project, and you're not bringing in much more than that on an annual basis. It doesn't take long to figure out, 'Well if we're going to support these kinds of projects, we have to broaden our base. We have to enlarge IPTAY's footprint.'

"During that time, IPTAY was seeing increases in scholarship costs, in IPTAY's operating expenses, and in the cost of running Vickery Hall. That is when it came into focus that IPTAY needed major-gifts fundraisers. An additional part of the total-giving effort would include planned gifts. That entails including IPTAY in your estate planning. It is a tremendous opportunity that had not been addressed in the past."

Some of the changes with IPTAY haven't been finalized yet, according to my understanding. What can you share about that process and some of the particulars?

DALTON: "In order to meet the challenges and changes in college athletics, IPTAY must be an organization that will keep Clemson athletics competitive in this new landscape. The IPTAY Board realized that we needed a person committed to this mission of maximum fundraising for supporting our athletic program. Consequently, the position of Chief Executive Officer has been established. This person will need to be a skilled fundraiser in addition to being an effective administrator of the IPTAY organization. The individual will need to know about Clemson and understand the uniqueness of IPTAY."

You served on the athletic advisory committee that recommended changes with how IPTAY and the athletics department go about its business. Can you give an idea of what that was like and what all you addressed?

DALTON: "The committee embraced the idea of a CEO position, as well as the need for a larger fundraising organization. The structure of this larger agency does feature more robust fundraising along with the support staff and mechanism for this more comprehensive organization."

A consultant named Carl Beard did two studies in 2006 and 2011 that strongly suggested emphasis on the major-gifts part. Did the athletic advisory committee make the same conclusions and recommendations last year?

DALTON: "Yes, there were similarities. They obviously had access to those studies, and there were certainly elements there that they agreed with."

IPTAY's annual fund is quite healthy compared to the in-conference competition, but comprehensive giving seems to be middle of the pack in the ACC. How familiar are you with that, and what do you think about it?

WILKINS: "I don't know the numbers, but I know we don't have a huge, strong athletic endowment like Duke University does or others. We've got the numbers as far as participation, but the endowment-type gifts or large gifts is something we need to concentrate on and I think people recognize that. I think the IPTAY president, Charles Dalton, is providing tremendous leadership. And I think the IPTAY board recognizes that. They're in the process, as you know, of hiring a fundraiser. So it's good to have that recognition and focus on an area we can improve on. Now let's go do it."

IPTAY was founded on a great principle of a lot of people contributing a little to build something really powerful. And obviously IPTAY was a pioneer in the 1970s and 1980s. But did it take some shaking free from those comforting parameters to understand the importance of major gifts?

WILKINS: "I think you could have both. You need the base. You need the fan base. Nobody's leaving that, that I know of. That's Clemson. That's what makes Clemson special. At the same time, you can put added emphasis and focus on getting large gifts, endowments, bequeaths, that sort of thing. Other schools outperform us in some areas, and that's one of them. That's where we can make up ground."

According to our information, when fundraising began for the West End Zone project there were zero fundraisers for major gifts in IPTAY. Those numbers have increased significantly in recent years. Were you surprised a few years ago when you heard how few positions were devoted to major gifts?

WILKINS: "I can't say I was surprised. I've learned that. I can't recall at the time whether I was surprised or not. It was just recognition that this was an area we can improve on."

What was the most important finding or conclusion by the athletic advisory committee?

David Wilkins: "But as far as the advisory committee that Terry Don put together and Harry Frampton chaired, I think they served an excellent purpose. They brought to the forefront and to our attention the need to at least take a look at the focus of IPTAY and how it could improve and what could be done to make it an even better organization than it is. You know, there are universities that would kill to have an IPTAY. But at the same time, there were some things IPTAY needed to do to sort of bring it into the 21st century - new bylaws, new incorporation, that sort of thing.

"And I will tell you that Charles Dalton and the IPTAY board were incredibly receptive. Their attitude was not, 'We're doing good, leave us alone.' The attitude was, 'Anything we can do to be better we want to do, and let's work together and figure it out.' So I think Harry Frampton and his group deserve a lot of credit for putting attention on the issue. And then once the board became aware of some of the issues and working with Charles Dalton and others to see where they were going, this was certainly something the IPTAY board did. Nobody made them do it. They did it on their own. They did it because they care about Clemson, because they want it to be better. I give them total credit for where we are right now. I think it's much improved. I think they'll also have a very good working relationship with Dan, and I think that's important."

What's the benefit, in your eyes, to having a CEO exclusively devoted to IPTAY as opposed to the previous arrangement with Bill D'Andrea serving as head of external operations?

WILKINS: "I think that's important. They need a professional who's in there who's pushing them to do better and better and raise more money. I think it just makes it a more official organization."

Note also in the below table that at Clemson, and in the eyes of the NCAA, baseball is a non-profit/revenue sport. Its a money pit, as are all other sports aside from football and basketball when you look at the budgets. Thus, its not a separate category in the AUP reports. However, baseball always loses CU at least $600K each year, sometimes approaching $1 Million in losses. Even with our Top 10 attendance, we aren't paying our way with baseball. This is why Clemson needs to advertise itself better to generate more baseball revenue and attendance, in my opinion. You'll see below that we are spending more on advertising at least, which was one of the things the Athletic Advisory Committee brought up to TDP.

And now we show the CUAD NCAA AUP budget for FY12.

CUAD Revenues FY12

Revenue Item	Football	Basketball	Other Sports	Non-Specific	IPTAY	Total FY11	Total FY12
Ticket Sales	18,966,514	1,451,200	628,888	-	-	20,736,842	21,046,602
Student Fees	1,415,674	129,750	-	-	-	1,594,410	1,545,424
Away Game/Guarantees	250,000	-	13,450	-	-	1,007,500	263,450
Contributions	2,500,753	58,575	79,776	579,458	19,175,374	14,171,734	19,990,118
Direct Institutional Support	959,740	375,975	2,398,775	36,798	-	3,511,610	3,771,288
NCAA/ACC Distributions	12,413,500	4,460,580	-	254,744	-	11,563,730	17,128,824
Broadcast Rights	555,000	175,000	-	1,445,000		2,100,00	2,175,000
Sales/Concessions	1,726,008	107,963	79,070	93,054		1,786,824	2,006,095
Royalties/Advertisements	354,000	159,000	177,900	3,716,340		4,279,155	4,407,240
Endowment/Investment	-	-	214,078	317,786		198,094	531,864
Other	66,591	-	55,595	128,072	35,057	225,068	285,315
Subtotal Revenue	39,207,780	6,918,043	6,322,983	8,674,873	19,528,217	61,174,970	73,151,220

A couple things stand out to me when comparing previous years. The first is basketball: we're making less. We made $8.3M in FY11 vs. $7.2M in 2012 (note this is LAST season, not THIS season). I imagine we'll take another hard hit next year. $8.3M is a bit of a high water mark however, going by previous yearly budgets.

Clemson football also brought in a big revenue increase of $6 M, but this is, as we've discussed a lot here, due to the TV contract that went into affect before last season. We made a little more at the concession stands and at the ticket counter, but its the ACC distribution that makes up the lion's share.

Where Clemson still gets beaten relative to other school's budgets is in the broadcast rights area. This is mostly radio/internet broadcast, and a school like Georgia rakes in multimillion dollar deals while we get a measly 555K.

The IPTAY contributions deals with scholarship revenues (noted above to be $7M), Vickery, plus extra money from the capital expenses under Priority Four. It sums some monies previously directed under line items for basketball and/or baseball, for example. This is why its way bigger than previous years, and why Vickery isn't reported separately as AD budget this year compared to last. They just moved money around. It doesn't mean Clemson magically made another $12 million compared to previous years, it means IPTAY finally started spending their damn money that they've sat on for 5 years. They transfer it over and the AD spends it. You'll see this below because it forces us to show a net loss on the year.

Next the Expense report, note the switch in the columns:

CUAD Expenses FY12

Expenditure	Football	Basketball	Other Sports	Non Specific	IPTAY	Total FY12	Total FY11
Student Aid	3,363,558	1,018,577	5,676,427	881,302		10,939,864	10,425,595
Guarantees	2,050,000	557,582	35,706	9		2,643,297	1,549,693
Coach Salaries	7,836,614	2,877,677	3,900,084	355,985		14,970,360	11,851,183
Support Staff/Admin salary	1,997,748	417,584	96,306	10,095,269		12,606,907	11,423,337
Recruiting	498,610	324,257	353,842	-		1,176,709	1,069,566
Travel	2,168,639	958,991	1,444,587	403,270		4,975,487	3,884,803
Equipment/Supplies	691,614	189,308	657,253	231,581		1,769,756	1,523,058
Game Expenses	2,140,992	494,884	338,588	-		2,974,464	2,773,048
Fund Raising/Marketing	-	-		2,627,912		2,627,912	2,028,046
Facilities/Maintenance	190,096	16,919	53,833	1,465,443		1,726,291	2,104,666
Indirect Facilities/Admin Supp	-	-	-	2,218,483		2,218,483	2,590,776
Other	1,722,779	428,812	553,643	5,653,660		8,358,894	7,839,401
Total Operational Expenses	22,660,650	7,284,591	13,110,269	19,118,218	-	66,988,424	59,063,172

Most of the expenses were pretty close to previous years. Football spent a good bit more however, $22M vs $16.5M. A large chunk was the ever-increasing salaries and support staffers. The category "other" is not a separated item but we spent a lot more here (1.7M vs 800K) as well. I'm unable to find what they spend that on.

The support staff and administrative expenses increased by $4M in the non-specific category, meaning this is the AD's own support staff and/or those who aren't directly tied to one specific sport. Also, the Orange Bowl expenses ended up being $2.7 million to get our asses kicked.

For those wondering what Baseball makes, it was a total revenue of $693,069 with expenses of $1,806,156. Baseball lost the Clemson AD a million dollars.

Non-Mandatory Transfers	Football	Basketball	Other Sports	Non-specific	IPTAY	FY12	FY11
-Scholarships	2,403,818	642,602	3,277,653	6,118,074	12,442,147	-	-
-Student Services	-	-	-	94,000	-	94,000	31,000
-Construction Projects	-	-	-	1,605,918	4,351,812	5,957,730	989,183
-Band Support				235,202	-	235,202	260,297
-Ops Support				2,854,589	3,854,589	1,000,000	600,000
-Institutional Research					-
TOTAL EXCESS	+16,547,130	+276,054	(6,399,162)	(10,427,827)	(1,120,331)	(1,124,136)	+216,318

So as a result of how the money is displayed, you would think Clemson lost a chunk of money in FY12. In reality we did well and IPTAY decided to finally pony up some cash and pay for stuff. However, I think IPTAY has yet to do enough spending. Assuming they paid matching funds after this, they would've paid another $3-4M on the IPF. This means they'll still be sitting on around $35 million dollars. IPTAY needs to have a cushion, but it doesn't need a $35 million dollar one. We do not know how much IPTAY is going to end up spending on the Hwy 93 project/Riggs construction that is underway currently, but I don't think it will approach $5M by any means.

IPTAY needs to get moving on capital fundraising to build whatever is going to replace or upgrade Littlejohn, that will become a major expenditure going forward, as will Phase 3 of the WEZ and upgrades to the luxury suites/boxes that are sorely needed at Death Valley. The Oculus will make a dent in the IPTAY funds, but they could still start half the projects outlined thus far by the Athletic Department right now without asking for specific donations.

The AD's operating balance is still slightly under $10M, so they also have cash to spend.

Now to the issue of how much funding CU takes away that we're interested in. Clemson taxes the AD at a rate of 6% for overhead costs based on the AD earned revenue figure from two years prior. Earned revenue is revenue such as ticket sales, corporate sponsorships, etc., but it does not apply to contributions. The institution uses two years' prior so the AD can budget an amount with a level of certainty. So they look at the FY budget from two years beforehand (FY10 here), take the total revenue figure minus our contributions and levy a 6% tax on the department budget so they know ahead of time how much to plan to donate back. This came out to be under $3 Million. The $2,218,000 above for Indirect support is the majority of it.