Maryland athletics continues to struggle financially, despite planned move to Big Ten

August 13, 2013

A report released by a University of Maryland commission on Tuesday detailed an athletic department that continues to operate at a significant deficit and is projected to do so until at least the 2017-18 academic year, even as the school prepares to jump from the ACC to the more lucrative Big Ten in 2014.

The commission found that the Maryland athletic department operated at a deficit of more than $21 million for the past academic year because of two reasons: “past financial decisions” that led to continuing debt and the ACC’s withholding of roughly $15 million in revenue. The conference began withholding the revenue last year as part of its efforts to collect a $52 million exit fee from the school, which maintains that the fee is illegal.

According to the report, the university has loaned the athletic department — which has a goal of being self-sufficient — upwards of $21 million to overcome the deficit, with additional loans of $20 million potentially required if the ACC continues to withhold revenue. The loans are funded by the university’s Non-State Auxiliary Funds, which are collected from school-run programs such as parking tickets and dining services, according to a university spokesman.

“That’s borrowed money,” Maryland President Wallace D. Loh said Monday in a telephone interview. “That’s not a gift to athletics. Unless we get [money] back from the ACC, athletics has to pay that back.”

Litigation over the exit fee — in both Prince George’s County and a court near ACC headquarters in North Carolina — is ongoing.

The commission projected a budget surplus by 2017-18, at which point the athletic department will begin repaying the school with 50 percent of its revenue. The remaining 50 percent will be set aside to build reserve funds, which the athletic department previously used to erase its budget deficits until the money ran out in 2011, a year before Maryland eliminated seven teams in an effort to become more financially stable.

The commission recommended that the Maryland men’s outdoor track and field team be restored to the maximum allowed 12.6 scholarships for the 2014-15 school year, a move that was anticipated. Others, such as the commission’s finding that some of the school’s student-athletes are not provided with “meal plans that offer 21 healthy meals per week,” shed greater light on the department’s shaky financial situation.

In a 2011 report, a separate commission pressed the school to maximize revenue from the Terrapins football and men’s basketball teams. But in the report that was released Tuesday, the commission found that football season ticket sales have fallen short of projections, and that revenue from the further monetization of Comcast Center — home to the school’s basketball teams, but an arena that lacks the infrastructure necessary for concerts and other entertainment events — has not materialized as expected.

The commission’s report also expressed concern about Maryland’s ability to compete with better-funded Big Ten teams, even after it begins to receive its full share of revenue from the conference’s lucrative television network in 2020. Maryland’s athletic department currently falls “in the lowest quartile for revenues per student-athlete when compared to its Big Ten peers,” according to the report, which expressed doubt that “the University will reach the per student-athlete spending of our Big Ten peers during the next twelve years,” or until around 2025.

The commission also recognized the need for new athletic facilities for Maryland to be competitive in the Big Ten. But those facilities — chief among them an indoor practice field for the football team — will not be built anytime soon. Loh has ruled out using money from the Big Ten deal to cover construction costs, meaning a private fundraising campaign is needed to update the facilities. But fundraising has been among Maryland athletics’ weakest links.

Maryland Athletic Director Kevin Anderson thinks that trend can be reversed.

“If you go and look at most of these universities that have great programs and great facilities, it’s been done by the generosity of the alumni and their fans. I think we’re no different,” Anderson said Tuesday in a telephone interview. “I believe there’s a base out there that will support us developing our venues, so our athletes can compete at the highest level. It’s not a big concern.”

The Post's Mitch Rubin talks with Terrapins Insider blogger Alex Prewitt about wide receiver Stefon Diggs, coach Randy Edsall and the team's confidence for University of Maryland's football season, which starts on Aug. 31. (Post Sports Live/The Washington Post)

But Loh stressed getting Maryland’s house in order before building any new facilities.

“Other people may disagree, but in my mind, providing students with three square meals, having trainers and nutrition and academic support so they can graduate on time, is more important than a shiny, new indoor facility,” Loh said. “Am I supportive of the University of Maryland becoming highly competitive in the Big Ten by having adequate facilities? The answer is yes. And those of us who join me in this will have to step up to the plate and make pledges for an indoor facility.

“I’m not closing the door,” he continued. “I’m enthusiastic about beginning that campaign. I’m ready to roll up my sleeves and go to work. But we’re not there yet.”

Staff writer Liz Clarke contributed to this report.

Alex Prewitt covers the Washington Capitals. Follow him on Twitter @alex_prewitt or email him at alex.prewitt@washpost.com.
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