October 24, 2004

Study: Over $100 Million From UT Athletics

FROM AS DETAILED AND ELABORATE a financial impact analysis as one will ever see, the University of Tennessee's Center for Business and Economic Research has concluded that UT athletics had an “economic impact” of $103.8 million last year.

Generously sprinkled with formulas and derivatives on the multiplier effect of spending and re-spending (and re-spending), trickle down projections and dizzying moneygoround computations, the analysis reads well but has some holes in its scope and assumptions.

The study came up with the following numbers:

• Total income of $103.8 million ($44.6 million from “multiplier effect” spending and re-spending, $35.8 million from direct athletic department spending and $23.4 million from fan expenditures).

• The total revenues for the athletics department were $65 million (including ticket sales, concessions, donor contributions and broadcasting fees).

• The football program alone took in $45 million.

• Attendance for the three big revenue-producing sports was 735,269 for football and 400,000 for men’s and women’s basketball.

• Tax revenues from Tennessee athletics were computed to be $12 million.

The study listed several areas where the athletics income was used for purposes described as “nonathletic:”

• A contribution of $1.5 million for scholarships for nonathletes.

• $400,000 for travel costs for the Pride of the Southland band.

• $1.15 in debt service for UT’s five parking garages.

While the analysis comprehensively chronicled a one-year snapshot of the impressive performance of one of the most (financially) successful of all athletics programs, it is nonetheless subject to the same questions about similar analyses made regarding for the supposed economic impact of pro teams on local economies.

Specifically, studies—usually trotted out when taxpayers are being pitched on a gazillion dollar stadium--made on the impact of pro teams generally take into account a range of related and alternate scenarios, many of which project the spending patterns without improvements and additions to the infrastructure.

Time after time these analyses concluded that spending is largely diverted to the new facility in town, and a lot less of that spending is truly supplemental spending as initially projected.

However, in the case of the glowing UT analysis, it seems that all direct and indirect athletics expenditures are captured, and that its multiplier effect projections seem to be no more ambitious than other analyses of its kind.

Kudos to the Vols.

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(this 385 word excerpt—with attendant commentary—was culled from a 1218 word article from the Knoxville News of 10-24-04)