Athletics hundreds of thousands ‘in the hole’, requests bailout from SGA

By: Joshua Ceballos/Staff Writer

 

Athletics is requesting a bailout from the Student Government Association to help cover hundreds of thousands in revenue losses.

The request for funds comes after years of losing revenue, spending borrowed money and not reimbursing the University for cash advances on time, according to an internal audit of the Athletics program in 2017. The audit also found examples of unallowed spending on room service during team trips.

Meanwhile, the program owes almost $10 million in debt to the University which it must begin paying off in June. Athletics Director Pete Garcia does not plan to use the money from student fees to pay off the debts, instead he is looking for other sources of funding to pay back the loans.

On Thursday, April 18, the Athletics Fee Committee met for the first time to discuss the proposal to reduce Activities and Service fees by 42 cents per credit hour and increase the Athletics fee by the same amount starting in Fall 2019 and staying that way into the foreseeable future.

Currently, students pay $14.85 in Activities and Service fees and $16.10 in Athletics fees. If the change goes through, students will pay $14.43 in A&S and $16.52 in Athletics, effectively a net zero change.

This fee change would have no impact on the total paid by students every semester but, it would move between $500,000 and $600,000 in Activities and Service fees (which the Student Government Association distributes to organizations throughout FIU) into Athletics, if the University can find external funding for Career Services, which A&S fees currently pay for.

Members of the Athletics Department including Garcia and Senior Associate Athletics Director Julie Berg told the committee they are in serious need of money and the over $500,000 that would go to Athletics after the rearrangement of fees would be a big help.

The Athletics Department is several million dollars “in the hole” according to Garcia. Expenses have gone up in recent years due to increases in travel costs for sports teams and more maintenance costs because of the new practice fields on the Modesto Maidique Campus, while revenues from one of their more steady sources -television- has gone down.

FIU belongs to Conference USA, an athletic conference which includes Florida Atlantic University and the University of Alabama at Birmingham. The conference negotiates television deals with networks and then distributes the revenues to the universities within the conference. The most recent deal made in 2015, according to Berg, led to a loss in revenue for the institutions of about $900,000.

“Our revenues have gone down for every school in the conference, so this money [from A&S fees] would be a big help to us,” said Garcia.

Garcia and Berg both said that by helping Athletics with the money, it would help not only the student-athletes who receive scholarships from the department but also increase the “prestige” of the University by allowing teams to travel to and play more away games.

Loss of television revenue isn’t the only financial issue plaguing the Athletics Department.

An audit taken of Athletics in 2017 states that the department is about $10 million dollars in debt, and the first payments are set to begin this year.

Athletics was loaned $5 million between 2011 and 2014 from the University’s treasury, and another $4.5 million was loaned to them by the University in 2015 to help pay for the building of the intramural practice fields. A one-time payment of $631,000 was made towards this debt account in 2016, but no payments have been made since then.

The payment plan for Athletics set by the Office of the Treasurer requires payments to begin in June 2019 with a payment of $125,000, which increases each year until 2042.

The same audit report mentioned numerous instances of Athletics employees mismanaging receipts and money orders, charging unallowable expenses to the University such as room service on trips and not reimbursing the University for cash advances on time.

When asked about the debts and the department’s mismanagement of financial policy at the April 18 meeting, Garcia said he did not know about any of these instances. One of his colleagues, Senior Associate Athletics Director Heath Glick, said that Athletics’ new Director of Finance and Accounting, Sandra Duran, has worked to improve the department’s practices and to cut spending.

Student Media reached out to Duran, who referred us to Sports Media Relations.

Garcia and Berg said that Athletics is looking for more ways to supplement revenues such as new sponsorships and better television deals, but this money from the fee change would act as an important “band-aid” to their existing money problems.

The SGA, which allocates A&S fees each year, would not have to bear the brunt of the $500,000 decrease in revenue because the deal is contingent on the University paying for Career Services using Education and General funds provided by the State, according to the proposal.

E&G money is provided to Universities by the Florida government each year specifically to be used for purposes “such as, but not limited to, general instruction, research, public service, plant operations and maintenance, student services, libraries, administrative support, and other enrollment-related and stand-alone operations of the universities,” according to the Board of Governors.

E&G funds can’t go towards Athletics, but they can pay for Career and Services.

FIU Chief Financial Officer Kenneth Jessel told Student Media that the University receives E&G funds from the State. If FIU receives a cut in E&G funding this year or cannot secure the funds to pay for Career Services, the change in fees will not happen. However, he is confident that the State will provide more E&G funds due to FIU’s compliance with performance metrics like increasing graduate employment and meeting four-year graduation requirements.

“We are not doing this [the fee change] without the E&G dollars, so there is absolutely no risk to students,” said Jessell.

Peter Hernandez, vice president of the Student Government Council at MMC and Athletics Fee Committee member, voiced his concern at the meeting that somewhere down the line, Career Services may come back to SGA to ask for funding if the E&G money does not cover all of their future expenses. He wanted a guarantee that students would not have to worry about Career Services coming out of A&S at all in the future before agreeing to change the fee distribution.

Although Athletics and the other committee members acknowledged his concern, they didn’t say for sure that a guarantee would be made.

“What the future provides, nobody really knows and so nobody is gonna be able to make a commitment to you,” said Matilde Gramling, assistant vice president of administrative affairs.

Town hall meetings regarding the fee change are being held on Wednesday, April 24 at 9 a.m in WUC 155 at BBC, and the same day at 3 p.m in the GC ballrooms on MMC. Students are invited to ask questions of the committee and share their concerns about changing the fees.

 

This article was edited for clarity.