UNIVERSITY OF UTAH Agreed-Upon Procedures Report Report No. 16-39-a OFFICE OF THE STATE AUDITOR AUDIT LEADERSHIP: Hollie Andrus, CPA, Audit Director Jason Allen, CPA, CFE, Audit Supervisor
OFFICE OF THE STATE AUDITOR INDEPENDENT STATE AUDITOR S REPORT To the Board of Trustees, Audit Committee, and David W. Pershing, President We have performed the procedures enumerated below, which were agreed to by the s (University) management, solely to assist you in evaluating whether the accompanying Statement of Revenues and Expenses (the Statement) of the University s (Department) is in compliance with the National Collegiate Athletic Association (NCAA) Bylaw 3.2.4.15 for the year ended June 30, 2016. The University s management is responsible for the Statement and the Statement s compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures and the associated findings are as follows: Internal Control Agreed-upon Procedures A. We reviewed the general control environment for the Department. As part of this review, we reviewed the organization of the Department. We also made certain inquiries of management regarding departmental organization, control consciousness of staff, competency of personnel, adequate safeguarding and control of records and assets, the extent of the Internal Audit Department s involvement with athletics, controls over interactions with the Information Technology Department, and other relevant matters. We found no exceptions as a result of these procedures. B. We tested samples of Ticket Office cash receipts, Business Office cash receipts, payroll transactions, and non-payroll transactions to ensure that the internal controls of the Department are the same as those addressed in connection with the audit of the University s financial statements for June 30, 2016. Our sample sizes were limited to 5 items each for cash receipts at the Ticket Office and at the Business Office, payroll, and non-payroll transactions. We found no exceptions as a result of these procedures. C. We reviewed and tested the University s procedures for gathering information on the nature and extent of affiliated and outside organizational activity for or on behalf of the Department. The only booster group activity is the Crimson Club, which is under the accounting control of the University. We found no exceptions as a result of these procedures. Statement of Revenues and Expenses Agreed-Upon Procedures D. We obtained the Department s Statement of Revenues and Expenses (the Statement) for the year ended June 30, 2016, as prepared by management. Utah State Capitol Complex, East Office Building, Suite E310 Salt Lake City, Utah 84114-2310 Tel: (801) 538-1025 auditor.utah.gov
We agreed the amounts reported on the Statement to the University s general ledger. We ensured that the amounts were reported in accordance with NCAA Guidelines and generally accepted accounting principles and then reported to the Department the matters that came to our attention that caused us to believe an account or item should be adjusted by more than $100,000. We noted one instance that exceeded this limit and an adjustment was made to the Statement to increase Guarantee revenues by $110,000, reduce Ticket Sales revenues by $92,582, and increase Team Travel expenses by $17,418 (see Guarantees in section E. below for further detail). We compared and agreed each revenue and expense category that comprised more than 0.5% of total revenues or total expenses, as reported on the Statement during the reporting period, to supporting schedules provided by the University. We compared and agreed samples of 14 revenue receipts and 30 expenses obtained from the above supporting schedules to adequate supporting documentation. We noted no contributions constituting 10% or more in aggregate of all contributions received. We compared each major revenue and expense account over 10% of the total revenues or total expenses to prior period amounts and budget estimates. We obtained and documented an understanding of any variations over the lesser of $1 million or 10%. We have reported our analysis as a supplement to this Agreed-Upon Procedures report (see Exhibit I). We reviewed the notes to the Statement for propriety and compliance with NCAA guidelines. Except as noted above, we found no exceptions as a result of these procedures. E. We performed the following procedures related to the Intercollegiate Athletics Program. Revenue Procedures: Student Fees 1. We compared and agreed student fees reported by the University in the Statement for the reporting period to student enrollments during the same reporting period and recalculated totals. Guarantees 2. The University did not have settlement reports for its fiscal year 2016 away games. Thus, we selected a sample of 3 contracts for away games during the reporting period and agreed each selection to the University s general ledger and/or the Statement and recalculated totals. 3. We selected 1 contractual agreement pertaining to revenues derived from guaranteed contests during the reporting period and compared and agreed each selection to the University s general ledger and/or the Statement and recalculated totals. The Department did not properly recognize $110,000 for a men s basketball game as Guarantee revenues in the Statement. See section D. above for the adjustment that was made to the Statement as a result. Contributions 4. The University did not receive any gifts or contributions of moneys, goods, or services for intercollegiate athletics that constituted 10% or more in aggregate contributions for the reporting year. Therefore, we did not obtain and review supporting documentation for such contributions. 2
Media Rights 5. We obtained and inspected agreements to understand the University s total media (broadcast, television, radio) rights received by the University or through their conference offices as reported in the Statement. 6. We compared and agreed the media right revenues to a summary statement of all media rights identified, if applicable, and to the University s general ledger and recalculated totals. Conference Distributions 7. We obtained and inspected agreements related to the University s conference distributions and to participation in revenues from tournaments during the reporting period to gain an understanding of the relevant terms and conditions. 8. We compared and agreed the related revenues to the University s general ledger and/or the Statement and recalculated totals. Except as noted above, we found no exceptions as a result of these procedures. Expense Procedures: Coaching Salaries, Benefits, and Bonuses Paid by the University and Related Entities 9. We obtained and inspected a listing of coaches employed by the University and related entities during the reporting period. We selected a sample of 5 coaches contracts that included football, and men s and women s basketball from the listing. 10. We compared and agreed the financial terms and conditions of each selection to the related coaching salaries, benefits, and bonuses recorded by the University and related entities in the Statement during the reporting period. 11. We obtained and inspected summary payroll registers for the reporting period for each selection. We compared and agreed summary payroll registers from the reporting period to the related coaching salaries, benefits, and bonuses paid by the University and related entities expense recorded by the University in the Statement during the reporting period. 12. We compared and agreed the totals recorded to any employment contracts executed for the sample selected and recalculated totals. Recruiting 13. We obtained and documented an understanding of the University s recruiting expense policies. 14. We compared and agreed these policies to existing University- and NCAA-related policies. 15. We obtained general ledger detail and compared it to the total expenses reported and recalculated totals. Equipment, Uniforms, and Supplies 16. We obtained general ledger detail and compared it to the total expenses reported. We selected a sample of 5 transactions to validate the existence of and accuracy in recording the transactions and recalculated totals. Fund Raising, Marketing and Promotion 17. We obtained general ledger detail and compared it to the total expenses reported. We selected a sample of 5 transactions to validate the existence of and accuracy in recording the transactions and recalculated totals. The Department did not record and pay the correct 3
invoice amount for one of the five transactions, resulting in a $60 overpayment. adjustment to the Statement was made. No Athletic Facility Debt Service, Leases, and Rental Fees 18. We obtained a listing of debt service schedules, lease payments, and rental fees for athletics facilities for the reporting year. We compared a sample of 5 facility payments, including the top two highest facility payments, to additional supporting documentation (e.g. debt financing agreements, leases, rental agreements). 19. We compared amounts recorded to amounts listed in the general ledger detail and recalculated totals. Direct Overhead and Administrative Expenses 20. We obtained general ledger detail and compared it to the total expenses reported. We selected a sample of 5 transactions to validate the existence of and accuracy in recording the transactions and recalculated totals. Except as noted above, we found no exceptions as a result of these procedures. Additional Agreed-Upon Procedure F. We compared and agreed the sports sponsored as reported in the NCAA Membership Financial Reporting System to the squad lists of the University. We found no exceptions as a result of these procedures. We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on the accompanying Statement s compliance with NCAA Bylaw 3.2.4.15. Accordingly, we do not express any such opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. As noted above, this agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. These standards require us to convey that this report is intended for the information and use of the Board of Trustees, Audit Committee, and Administration of the University and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a public document and its distribution is not limited. Office of the Utah State Auditor January 12, 2017 4
Statement of Revenues and Expenses REVENUES: Non-Sport Men's Women's Other Sports Specific Football Basketball Basketball Gymnastics (Note 1) (Note 1) Total Ticket Sales (Note 2) $ 12,607,207 $ 2,923,433 $ 8,565 $ 440,677 $ 34,613 $ 961,750 $ 16,976,245 Direct State or Other Gov't Support - - - - - - - Student Fees - - - - - 6,084,769 6,084,769 Direct Institutional Support (Note 4) 859,487 100,975 131,010 145,313 971,242 1,884,467 4,092,494 Indirect Intitutional Support 33,147 - - - 44,625 1,665,420 1,743,192 Guarantees 300,000 110,000 - - 16,058 20,921 446,979 Contributions (Note 3) 6,565,864 1,363,716 27,201 51,482 374,912 87,530 8,470,705 In-Kind (Note 3) 15,000 5,000-10,000 640 47,902 78,542 Compensation and Benefits by 3rd Party - - - - - - - Media Rights 16,916,771 2,985,313 - - - 35,012 19,937,096 NCAA Distributions (Note 5) - 1,278,048 28,251 6,405 76,394 1,539,898 2,928,996 Pac-12 Distributions (Note 6) 7,669,417 48,222 60,532 - - 515,095 8,293,266 Program, Novelty, Parking, and Concessions Sales (Note 7) 336,311 - (221) 379 36,865 1,466,499 1,839,833 Royalties, Licensing, Advertisement, and Sponsorships (Note 8) 4,283,891 698,786 80,000 23,500 183,691 130,645 5,400,513 Sports Camps (Note 12) 162,933 101,854 122,222 38,331 394,801-820,141 Endowment and Investment Income 20 63 (67) 1-283,712 283,729 Other Revenue - 3,815 4,608 100 66,119 338,774 413,416 Bowl Revenues 1,637,596 - - - - - 1,637,596 Total Revenues 51,387,644 9,619,225 462,101 716,188 2,199,960 15,062,394 79,447,512 EXPENSES: Student Aid (Note 4) 3,649,424 543,578 655,052 589,694 4,617,663 627,826 10,683,237 Guarantees 1,000,000 585,000 113,222-33,555-1,731,777 Salaries and Benefits 8,785,441 4,425,774 1,085,075 997,200 3,471,569 8,261,236 27,026,295 Severance Payments 145,116-276,216-21,658-442,990 Recruiting 616,820 334,135 214,352 84,447 345,644-1,595,398 Team Travel 1,637,125 1,044,312 409,061 158,598 2,257,037 19,464 5,525,597 Equipment, Uniforms, and Supplies 1,183,869 213,486 123,737 187,295 896,374 1,263,555 3,868,316 Game Expenses (Note 9) 941,754 404,408 166,497 258,691 301,563 315,606 2,388,519 Fund Raising, Marketing, and Promotions 584,493 241,557 10,571 88,661 95,100 1,168,324 2,188,706 Sports Camps (Note 12) 79,572 37,433 113,873 65,134 129,228-425,240 Spirit Groups - - - - - 250,590 250,590 Athletics Facilities, Debt Service, Leases, and Rental Fees (Note 10) 1,706,713 33,000 16,000 7,500 58,500 4,643,365 6,465,078 Direct Overhead and Admin Expenses 99,843 38,820 23,416 16,703 72,379 922,954 1,174,115 Indirect Institutional Support 33,147 - - - 44,625 1,665,420 1,743,192 Medical Expenses and Insurance 316,557 39,800 28,948 39,947 504,116-929,368 Memberships and Dues 3,227 3,431 1,116 530 11,414 45,178 64,896 Student Athlete Meals 658,135 83,781 16,611 13,751 40,093 252,834 1,065,205 Other Expenses (Note 11) 1,639,400 696,482 111,188 81,591 247,780 5,941,344 8,717,785 Bowl Expenses 1,765,667 - - - - - 1,765,667 Total Expenses 24,846,303 8,724,997 3,364,935 2,589,742 13,148,298 25,377,696 78,051,971 Excess (Deficit) Revenues over Expenses 26,541,341 894,228 (2,902,834) (1,873,554) (10,948,338) (10,315,302) 1,395,541 Transfers, Net In/(Out) (Note 13) - - - 25,000 (15,000) (355,678) (345,678) Change in Net Position $ 26,541,341 $ 894,228 $ (2,902,834) $ (1,848,554) $ (10,963,338) $ (10,670,980) $ 1,049,863 The accompanying notes are an integral part of this financial statement. 5
Notes to the Statement of Revenues and Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying Statement of Revenues and Expenses (Statement) has been prepared on the accrual basis of accounting, with the exception of Direct Institutional Support revenues and Student Aid expenses which have not been reduced for scholarship allowances of $2,234,855. Donations and contributions are recognized in the Statement when both received and used, rather than when promised or received. The Statement presents the results of financial activity of the (University) Intercollegiate Athletics Department (Department), which includes the George S. Eccles Tennis Facility, Spence & Cleone Eccles Football Center, and Jon M. & Karen Huntsman Basketball Facility. The financial activity of the Department s endowment and fixed assets, in accordance with NCAA reporting guidelines, is not included in the Statement. In addition, the financial activity of the Huntsman Center and Rice-Eccles Stadium is not included in the financial statement because they are not under the jurisdiction of the Department. The significant accounting policies followed are described below. Sports Accounting Because of the significant revenues and expenses generated by football, men s basketball, women s basketball, and gymnastics, they are reported separately. Other sports in which the University participates are combined and reported as Other Sports. The administrative functions of the Department and activities, which provide support for all sports, have been combined for reporting purposes under the caption Non-Sport Specific. These supportive activities include costs such as those related to weight and training rooms, academic advising, marketing, compliance, information technology, sports information, media relations, etc. Revenue Allocation Sales and services revenues have been allocated to the activity generating the income. All revenues student activity fees, contributions, conference distributions, media rights, investment income, direct institutional support, etc. have been allocated based on the Department s management decisions and categorized as instructed by the NCAA s revenue and expense policies and procedures. Expenses Allocation Generally, expenses have been allocated to the activity incurring the expense. The majority of the advertising/promotions, and general and administrative expenses were charged to Non-Sport Specific. Additional Significant Accounting Policies Other significant accounting policies are set forth in the following notes. 6
Notes to the Statement of Revenues and Expenses 2. TICKET SALES Football ticket revenue includes $806,425 generated from the sale of the Rice-Eccles Stadium suites. 3. CONTRIBUTIONS Donations are used to subsidize student athlete scholarships, facility upgrades, and academic support. Donations received are posted to Crimson Club, Athletic Restricted, and Scholarship Circle Development accounts. Donation money is transferred from the development account into the Crimson Club operating account to cover the costs of scholarships. The remaining donations deposited to the Crimson Club accounts were allocated 85% to football and 15% to men s basketball. All sport specific donations are allocated accordingly. In-Kind Contributions include: dealer provided automobiles, equipment, and goods and services. 4. DIRECT INSTITUTIONAL SUPPORT Direct Institutional Support includes facilities, general and administrative, and Title IX support. The Department receives state funds as tuition waivers such as: Title 53, special, and continuing scholarships. These waivers of $2,234,855 are included as revenue under Direct Institutional Support and subsequently expensed under Student Aid. 5. NCAA DISTRIBUTIONS NCAA distributions include NCAA sport sponsorships, NCAA grant-based aid, Student Athlete Opportunity Fund subsidies, NCAA reimbursements for post season participation, and any NCAA distributions that pass through the Pac-12 Conference. 6. PAC-12 DISTRIBUTIONS / MEDIA RIGHTS The Department received a net distribution of $25,289,119 from the Pac-12 conference during fiscal year 2016. The distribution represents a full share of conference revenues less conference operating expenses, championship expenses, NCAA basketball expenses, officials payments, and other miscellaneous items. The University also booked and accrued a receivable in the amount of $3,333,333. For NCAA reporting purposes, the Department reports gross revenues (less conference operating expenses and contributions to reserves) in the Pac-12 Distributions and Media Rights revenue line items. That revenue is 7
Notes to the Statement of Revenues and Expenses then netted by allocating conference deductions and expenses to their respective expense category (i.e. game officials, bowl expense sharing, etc.). Except for $35,012 of media rights, gross broadcast rights for fiscal year 2016 were $19,902,083, which were allocated 85% to football and 15% to men s basketball. 7. CONCESSIONS, MERCHANDISE, AND NOVELTIES Concessions are now operated by Auxiliary Services, who provided $1,500,000 in fiscal year 2013 to the Department to obtain those rights. The funds were amortized over three years, and $456,000 was recognized in fiscal year 2016. 8. LICENSING AND SPONSORSHIPS Licensing and University Campus Store merchandise sales are allocated 85% to football and 15% to men s basketball. Per contract, Utah Sports Property (USP) retains all rights to local media and corporate sponsorships for University athletics. The financial agreement to obtain these rights for fiscal year 2016 was a guaranteed payment of $1,401,816. After achieving an agreed upon threshold, the remaining generated revenue is split between the Department (70%) and USP (30%). The Department s portion of additional revenue for fiscal year 2016 totaled $1,470,580. The combined guaranteed payment and additional revenue payment was allocated 85% to football and 15% to men s basketball. Under Armour (UA) is the exclusive outfitter of the Department. Per contractual agreement, UA paid the Department $600,000. An additional payment of $22,500 was also received for football Bowl game participation, men s basketball NCAA tournament appearance, and baseball conference championship. 9. GAME EXPENSES Game Expenses include the cost of officials expensed through the conference office as a deduction from the University s year-end revenues. The total for fiscal year 2016 was $591,995. 8
Notes to the Statement of Revenues and Expenses 10. FACILITY RENT AND DEBT SERVICE The Department paid $1,733,712 in facility rent and fees for use of the Rice-Eccles Stadium and its suites during fiscal year 2016. A portion of these costs are associated with miscellaneous facility agreements and one-time rentals. The Department has assumed the annual bond payment for the Spence & Cleone Eccles Football Center. In fiscal year 2016, the annual debt service totaled $2,050,875. As of June 30, 2016, the Department had $22,420,000 of outstanding Series 2012 Auxiliary and Campus Facilities Revenue Bonds for the Spence & Cleone Eccles Football Center. The Department anticipates the bond will be paid off as follows: Fiscal year Principal Interest Total Payments 2017 $ 1,000,000 $ 1,052,475 $ 2,052,475 2018 1,040,000 1,012,475 2,052,475 2019 1,060,000 991,675 2,051,675 2020 1,090,000 957,525 2,047,525 2021 1,145,000 903,025 2,048,025 2022-2026 6,660,000 3,595,375 10,255,375 2027-2031 8,475,000 1,773,575 10,248,575 2032 1,950,000 97,500 2,047,500 $ 22,420,000 $ 10,383,625 $ 32,803,625 The Department has also assumed the annual bond payment for the Jon M. and Karen Huntsman Basketball Training Center. In fiscal year 2016, the annual debt service totaled $896,245, but an additional payment of the same amount was deferred to fiscal year 2017. As of June 30, 2016, the Department had $25,580,992 of outstanding debt for the Jon M. and Karen Huntsman Basketball Training Center. The Department anticipates the bond will be paid off as follows: Fiscal year Principal Interest Total Payments 2017 $ 736,970 $ 1,055,519 $ 1,792,489 2018 765,287 1,027,203 1,792,490 2019 794,733 997,757 1,792,490 2020 825,356 967,134 1,792,490 2021 857,204 935,286 1,792,490 2022-2026 4,706,538 4,152,205 8,858,743 2027-2031 4,719,721 3,205,676 7,925,397 2032-2036 5,811,613 2,113,784 7,925,397 2037-2041 6,363,570 769,288 7,132,858 $ 25,580,992 $ 15,223,852 $ 40,804,844 9
Notes to the Statement of Revenues and Expenses These outstanding bonds are secured by the University s pledging of net revenues, student building fees, and other miscellaneous fees. The debt service payments are paid by the Department s revenues. Additional information related to these bonds is available in the University s separately-issued financial statements. 11. OTHER EXPENSES Other Expenses include miscellaneous expenses such as Independent Contractors/Consultants ($2,044,656), Conference Bowl Game Expenses ($1,199,768), and Pac-12 Conference Operating Costs ($1,764,750). 12. SPORT CAMPS In fiscal year 2013, the Department began conducting in-house sports camps. The profit earned from the sports camps are paid to Department coaches as compensation upon completion of the camps. Revenues from the sports camps are recognized in the Statement when earned and expenses are recognized when incurred. 13. TRANSFERS The Transfer line items include the transfer of funds to plant operations for general construction projects and maintenance. They also include the transfer of funds to the Athletics Training Education Program and funds to support the Band. 14. CAPITAL ASSETS As described in the University s separately-issued financial statements, capital assets are recorded at cost at the date of acquisition or fair value at the date of donation in the case of gifts. Buildings, infrastructure and improvements, and additions to existing assets are capitalized when acquisition costs equal or exceed $250,000. Equipment is capitalized when acquisition costs equal or exceed $5,000. All land is capitalized and not depreciated. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Capital assets of the University are depreciated on a straight-line basis over their estimated useful lives: 40 years for buildings, 15 years for infrastructure and improvements, and 5 to 20 years for equipment. 10
Notes to the Statement of Revenues and Expenses 15. ATHLETICS RESERVES In addition to the statement of revenue and expenses, the Athletic Department has included other pertinent information to further illustrate its current financial condition. This information can be found in the table below. In the first few years of being a member of the Pac-12 Conference, the Athletic Department did not receive a full revenue share. However, it was evident that expenses would need to increase in order to compete at a high level with its new peers. Recognizing that in the first few years expenses would climb faster than revenues, the Athletic Department assumed a loan from the University to subsidize its budget for fiscal years 2012 and 2013. The Athletic Department borrowed roughly $7.5M but has made payments reducing that debt since fiscal year 2014. The current balance on that loan is listed as the Operating Fund Balance ($4,678,030). The Athletics Reserves include facility and sport specific contributions, which are not recognized in the statement. This is in accordance with the NCAA s definition to only include contributions that are provided and used by athletics within that reporting year. The additional unrestricted reserves were originally established in fiscal year 2015 in order to offset additional costs associated with current and future autonomy or NCAA legislation. For example: the cost of attendance legislation, new recruiting rules, more meals for student athletes, etc. The facility reserves are for assistance in subsidizing future debt payments and/or R&R projects in our facilities. Football Men s Basketball Women s Basketball Gymnastics Other Sports (Note 1) Non-Sport Specific (Note 1) Total Operating Fund Balance $ - $ - $ - $ - $ - $ (4,678,030) $ (4,678,030) Capital Expenditures 118,000 - - - 121,701 89,500 329,201 Athletics Reserves: Unrestricted Reserves - - - - - 4,635,772 4,635,772 Facility Restricted Reserves - - - - - 10,640,987 10,640,987 Sport Restricted Reserves 97,104 726,959 69,565 202,098 433,144 86,154 1,615,024 Total Reserves 97,104 726,959 69,565 202,098 433,144 15,770,240 16,621,783 Value of Endowments - - - - - 6,447,708 6,447,708 11
Exhibit I Incollegiate Athletics Department Auditor's Analysis of Significant Variances Comparison of Current Year Actual to Prior Year Actual: REVENUES: 2016 2015 Variance $ Variance % Totals Totals Over/(Under) Over/(Under) Ticket Sales $ 16,976,245 $ 13,100,456 $ 3,875,789 29.59% (A) Contributions 8,470,705 7,880,084 590,621 7.50% Media Rights 19,937,096 18,748,852 1,188,244 6.34% (B) Pac-12 Distributions 8,293,266 3,792,511 4,500,755 118.67% (C) EXPENSES: Student Aid 10,683,237 8,667,970 2,015,267 23.25% (D) Salaries and Benefits 27,026,295 23,279,385 3,746,910 16.10% (E) Other Expenses 8,717,785 5,975,364 2,742,421 45.90% (F) Comparison of Current Year Actual to Current Year Budget: REVENUES: 2016 2016 Variance $ Variance % Totals Budget Over/(Under) Over/(Under) Ticket Sales $ 16,976,245 $ 13,550,800 $ 3,425,445 25.28% (G) Contributions 8,470,705 10,530,000 (2,059,295) -19.56% (H) Media Rights 19,937,096 19,398,166 538,930 2.78% Pac-12 Distributions 8,293,266 7,815,701 477,565 6.11% EXPENSES: Student Aid 10,683,237 7,551,187 3,132,050 41.48% (I) Salaries and Benefits 27,026,295 25,454,678 1,571,617 6.17% (J) Other Expenses 8,717,785 N/A (K) (continued next page)
Exhibit I Explanations for Variances: (A) The change in Ticket Sales from the prior year was caused in part by hosting 7 football home games in fiscal year 2016 versus 6 games in fiscal year 2015, increases in suite revenue due to new contracts with suite holders, increases in overall ticket prices, and increases in ticket demand for men's basketball. (B) (C) The change in Media Rights is due to a change in revenue distribtuion from the Pac-12 Network. The Athletic Department is also receiving increased compensation from broadcast rights due to the rising popularity of the University's athletic programs. The increase in Pac-12 Distributions from the prior year is due to a prospective change in the accounting treatment of conference expenses. In prior years, the expenses were netted against the revenues. The expenses are now being recognized in the Other Expenses category. (D) (E) (F) (G) (H) (I) (J) There are several factors that contributed to the change in Student Aid from the prior year. An increase in cost of attendance, the moving of pre-season room and board expenses from Other Expenses to Student Aid, an increase in the tuition differentials expense, and an increase in the cost of withdrawals were the primary factors contributing to this variance. The increase in Salaries and Benefits from the prior year was due to salary increases for retention needs and added bonuses due to increased post-season participation. Other Expenses increased from the prior year due to the change in accounting treatment of the conference expenses. The variance is due to the increase in the success of the University's athletic programs from the prior year. Football game ticket prices were adjusted to dynamic pricing for high demand games and there was an increase in standing room ticket sales. The men's basketball team was in the running for a conference championship throughout much of the season, leading to an increase in ticket sales. The Athletic Department did not receive any donations for capital purposes during fiscal year 2016, causing this difference between actual and budgeted amounts. Student Aid differs from the budgeted amount because financial aid received for tuition waivers is expensed out of the Student Aid line item on the financial statements, but it is not included in the budget. The tuition waivers are recognized as Direct Institutional Support revenues. The change in Salaries and Benefits is due to new hires, salary increases for retention needs, and coaching bonuses, all of which were not anticipated when preparing the budget. (K) The University does not have a specific budget category for Other Expenses.