LSU Financial Woes

LSU’s independent athletics department has formalized its method of making financial contributions to the university:

Over the initial five-year term of the policy, LSU Athletics will provide $36 million to other parts of LSU. In addition, in years in which the athletics program generates a surplus, a portion of the surplus would be transferred to other components of LSU, with the remainder of the surplus being used to fund reserve accounts to protect against future financial uncertainties and provide a funding source for long-deferred maintenance projects for athletics facilities.

The first $3 million of any surplus will be devoted strictly to athletics reserve accounts. Of any surplus between $3 million and $5 million, 75 percent will be devoted to athletics reserve accounts and the remaining 25 percent would be transferred to other parts of LSU. Any surplus above $5 million will be split equally between athletics and the rest of the university.

Groundbreaking, indeed.

Why would this happen? Here’s an obvious answer:

The LSU Athletics Fund Transfer Policy would formalize an annual transfer of $7.2 million from the Athletic Department to other components of LSU for use in supporting LSU’s academic, research, public service and other missions. In addition, it would establish a revenue sharing component that could provide additional funds to the university’s mission and ensure that all facets of LSU share in the success of the athletics program.

Over the years, various informal practices have been adopted for the transfer of funds from the Athletic Department to other components of LSU. As LSU has faced increasing budget pressures over recent years, fund transfers from Athletics to other components of LSU have increased. Most recently, the Athletic Department transferred an additional $4 million and assumed financial responsibility for the Academic Center for Student-Athletes at the cost of approximately $1.5 million to help offset a shortage in the university budget, staving off budget cuts and potential faculty and staff layoffs.

That makes sense. But what about this:

“There are some promising financial developments on the horizon for universities that participate in major college athletics, including potential new television revenues and additional revenues from a reviseds Bowl Championship Series that begins in 2014,” said Alleva. “This policy sets the stage for the academic mission of LSU to benefit from these future developments.”

Ahhhh, now that makes even more sense. The cash-strapped university has set its hooks in the cash-cow athletic department that is potentially set to receive a windfall in a couple of years.

It seems to me that athletic departments around the SEC wouldn’t be interested in this phenomenon spreading.

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