No plans to cut UW sports despite financial devastation of COVID-19, AD Cohen says
Back in May — in the early months of the COVID-19 pandemic — Washington athletic director Jen Cohen and chief financial officer Kate Cullen presented a best-case scenario for fiscal year 2021.
That budget assumed a full fall sports season, football included, with fans in the stands — and even that predicted a deficit of nearly $10 million that could drop to about $1.6 million with mitigation strategies.
Months later, that best-case scenario isn’t a possibility anymore.
Not even close.
Instead, the Pac-12 postponed all sports competition until the end of 2020. So when Cohen and Cullen presented a financial update to the Board of Regents last week, it included a plan to cut $28 million in expenses. The new cost-saving measures included more salary reductions, furloughs, layoffs and a 40% total cut in operating expenses.
The News Tribune spoke with Cohen this week to further explain UW’s financial decisions.
UW eliminates 16 positions
The athletic department announced Thursday it had eliminated 16 positions — some filled, other vacant — and instituted temporary furloughs or FTE (full-time equivalent hours) reductions for 35 staff members.
The cuts followed an initial round of cost-saving measures in June that included voluntary pay reductions, furloughs, a hiring freeze and a 15% overall cut to the operating budget. Those cuts were expected to save $13 million.
Now that fall football season has been postponed and a winter or spring season remains uncertain, Cohen has said the department could lose up to $70 million.
The new scenario presented by Cohen and Cullen assumes a truncated football season in winter/spring, no fans at events, lower sponsorship revenue and staff and operational cuts equal to about $28 million.
“A lot of the cuts that we’re making now are not going to be cuts that we can manage in the future,” Cohn said. “We did make some cuts that were permanent positions, and we did so strategically with the plan that we weren’t going to be able to hire those back in the future. The other cuts, those operational cuts and furloughs and voluntary reductions and all those other cuts, those are not maintainable cuts.
“That’s why it’s so important for us to generate revenue where we can complement those expense reductions. It’s a pretty expensive endeavor what we’re doing right now. We’re doing what we’re supposed to be doing, which is to provide students with an educational opportunity to grow and develop. Without revenue streams coming in with 22 teams and 650 students, it’s incredibly challenging.”
Many of the operational cuts stem from the lack of game-day expenses, Cohen said.
“If you look at big buckets like game guarantees for non-conference games that we’re paying or $5 million just for game-day expenses and you don’t have bowl postseason expenses, you have all that in savings,” she said. “But we also took significant cuts across our teams and operating budgets, a minimum of 15%. Part of that’s also the schedules from projecting less games this year in all our sports and less travel and the costs associated with that.
“Then we have a lot of expenses that are just set and guaranteed, like scholarships, that will eventually creep over in $18 million in the next fiscal year. And a ton of people on contracts where their compensation is guaranteed. There are some fixed expenses that are hard to move around, too, in the model we’re in.”
For those reasons, UW’s new fundraising campaign — dubbed “Huskies All In” — is vitally important to the athletic department. Cohen also asked the board to approve a one-year deferral on the loan that funded the renovation of Husky Stadium and Husky Ballpark. That payment would have been about $14 million this year.
The athletic department will also dip into more than $20 million of reserves and issue a one-year waiver for overhead costs paid to the university.
Huskies All In
The “Huskies All In” campaign asked fans to transition their seat-related gift and/or season ticket payment to a donation.
“I really feel the appreciation from our Tyee Club members,” Cohen said. “It’s been a really good kickoff to start to a very aggressive goal that we have. We have almost this entire year to raise the money that we need to stabilize this department and come out of this thing hopefully faster than any of the competition. That’s the goal of our fundraising campaign.”
Fans were given the option to convert their season-ticket purchase into a tax-deductible gift, credit the fees to the 2021 season or request a full refund. In their presentation to the board of regents, Cohen and Cullen estimated the following the results:
▪ Ticket donation: 15% ($3.2 million)
▪ Converted to credit: 55% ($11.7 million)
▪ Ticket refund: ($6.4 million)
“Donations are not supposed to be refundable and not supposed to be credited,” Cohen said. “(We said), let’s just let everybody have a credit if they need it. Let’s make sure we’re not trying to change point system models and trying to trick fans into letting us keep their money. Let’s just give them options and hopefully, some will do it. Some won’t, and we respect why some couldn’t. We need to treat people well.”
Commitment to all 22 teams
Cohen confirmed UW’s commitment to all 22 of its teams. Several schools have been forced to drop sports, and Stanford dropped 11 of its programs.
Cohen said that’s not an option for the Huskies.
“Our athletic department, the pride and joy that it brings to the community, is based on a very broad-based athletic program,” Cohen said. “We’ve had success across the board in a number of different sports. I’m a mother, and I think about those men and women. No matter what sport they play, they contribute equally to the culture and the diversity and the environment that we’re creating here. It’s who we are.
“I’m not saying that it’s not incredibly challenging. I think that trying to manage this many teams with the revenue model in college athletics quite frankly doesn’t make sense if you were looking at it from a business standpoint. We were already facing challenges prior to COVID, and so we’ve got a long way ahead. We’ve got great kids and great coaches and our job is to create opportunities. The last thing I want to do and we want to do is take opportunities away from students.”
Cohen used the same reasoning to explain why UW fully supported the NCAA’s decision to give spring and fall athletes an extra season of eligibility, even though that will add the cost of scholarships for seniors who decide to return.
“It was just one of those things where financially it didn’t make any sense and from a business standpoint it didn’t make any sense,” Cohen said. “We were from the very beginning at the very front saying we were still going to offer scholarship support for those seniors to come back. Our scholarship costs went up by another million with that decision.
“That just goes back to again our purpose and why we exist. If we stay true to that, we’re going to be able to raise more money to do that. We’re going to be able to recruit future student-athletes because we stayed true to our student-athletes and engaged alums because they felt like they had a great experience when they were at Washington. That’s been one of our goals with every hard decision we made is just to ask ourselves, how are we treating people in this scenario?”
