Show Me The Money: A Comprehensive Overview of Hokie Football Finances
Money.
No other variable matters more in college football, for better or worse.
It is the most cited reason for a team’s shortcomings, outside of coaching, which if you think about it, money also influences how much your team can attract the best coaches.
The problem is, any discussion about college athletic department financials usually fails to provide a comprehensive enough picture of how much a school actually spends on their football team, so in the absence of having all the facts, the same lazy narratives get circulated over and over again.
Now stop me if you’ve heard any of these statements about Virginia Tech football:
● Better financial resources are why Head Coach Justin Fuente almost left Virginia Tech for Baylor
Etc. etc.
Every time a critique concerning the Virginia Tech football program arises, beyond that of the shortcomings of the coaching staff, there is a common narrative… money, or in this case, the lack thereof.
However, to me, none of the above narratives really move the needle. Why?
Well, it’s not because they couldn’t necessarily be true, but rather, they are anecdotal. Statements made based on subjective observations and emotion, often without sufficient supportive data or facts.
And even when an article or message board discusses Virginia Tech’s finances, the talking points fail to capture the WHOLE picture and instead, focus too much on broad level factors such as Total Revenue, Total Expenses, and even Gross Football Revenue.
The problem with that information is, college football finances are incredibly nuanced, meaning the comparison between two Football Bowl Subdivision (FBS) programs based only on their Total Revenue or Expenses, inevitably leads to an incorrect analysis.
Don’t believe me? Just look at the two top teams from this year’s College Football Playoff, Alabama and Ohio State.
In the 2018-19 USA Today financial reports, you will notice that in 2018, the Ohio State Athletic Department earned $205.5m in Total Revenue, compared to Alabama's Athletic Department who earned $177.4m, a difference of $28.1m.
So intuitively, that much of a difference in Total Athletic Department Revenue should represent a huge competitive advantage for the Buckeyes, right?
Wrong.
That’s because what these reports DON’T provide is how much each school invests their revenues back into their respective football programs.
So the better question is, how much do Ohio State and Alabama SPEND their revenues on football?
Well, that’s a different story and one where you have to dig a bit deeper.
The good news is, thanks to the Knight Commission, that information is available to review if you take some time to dig around.
So I did.
In 2018, Alabama was the No. 1 ranked team in terms of Total Football Spending at $62.9m, while Ohio State was the No. 9 ranked team at $46.1m, a difference of $16.8m or just over HALF of the Total Revenue advantage the Buckeyes supposedly enjoyed over the Crimson Tide.
Or in other words, in terms of the Total Football Spending percentage of their Total Revenue, Ohio State spends roughly 21% of its money on football, while Alabama ponies up over 38%.
When you factor in giving Nick Saban a 17% financial competitive advantage over arguably the second-best team in college football, the result is the Tide hoisting their 6th National Title in the last 12 years.
Also, they aren’t lying when the SEC says “it just means more”.
To put it plainly, metrics such as Total Revenue and Total Expenses are great at face value, but it makes way more sense to understand the percentages of Total Revenue and Total Expenses in terms of Total Football Spending, which leads to the following list of questions that I wanted to answer, in the hope of better understanding the true financial capacity of the Virginia Tech Hokies:
PART ONE
● What are the major sources of revenue for Virginia Tech's Athletic Department budget?
PART TWO
● How much does Virginia Tech spend, as an Athletic Department and on football, and where does it rank amongst the competition?
PART THREE
● What strategy would yield the biggest effect on Virginia Tech’s Total Revenue, and if implemented, how would it impact the football team’s total budget?
PART ONE: What are the major sources of revenue for Virginia Tech's Athletic Department budget?
Before we begin understanding more about Virginia Tech's budget, it makes sense to start by looking at what items comprise a standard FBS athletic department budget, specifically with revenues.
Why?
Just consider the level of variability that exists between each institution, and how those variations create huge disparities that can impact how much a college football program has to spend, such as:
● Total number of living alumni
● Stadium capacities
● Conference affiliation
● Total number of scholarship sports
And the list goes on.
However, given those variations, there are a few standard categories in regards to revenues, as you can see in the below chart, which is mainly sourced from:
● NCAA / Media Rights
● Donations
● Ticket Sales
● Other Revenue (i.e. School Support, Student Fees, Corporate Sponsorships, etc.)
But from that group of "standard" categories, it is really only the first three items (NCAA / Media Rights, Donations, and Ticket Sales) that should be considered "strategic sources" considering the disparities that exist across all FBS schools in how they choose to source funding among the "Other Revenue" line items.
For example, in 2018 Virginia Tech brought in $9.7m from "Student Fees" (or 10% of their total budget), whereas Clemson sourced a whopping $0 from "Student Fees".
I don't know about you, but I would consider $9.7m versus $0 to be a highly variable institutional decision, rather than considering it a standardized strategy that is practiced across all NCAA programs.
OK. Let's take a closer look at Virginia Tech.
As you can see, the three primary sources of revenue (NCAA/Media Rights, Donations, and Tickets) comprise 80% of Virginia Tech's Total Revenue, meaning any conversation on how to grow the Athletic Department's budget, with the intent to increase team spending, particularly the football team, it all starts with "the big three".
Also, on a smaller note, Virginia Tech only getting $2.23m (or 2% of all revenues) from "Corporate Sponsorships" is... not great.
And for those that say "but VT isn't a national brand so how could we get more in sponsorship revenue", keep in mind that Washington State, who was ranked DEAD LAST among all Power 5 conference public universities (private schools are not required to report their finances to the NCAA), and who brought in nearly $30m LESS in Total Revenue than the Hokies, ended up making $4.44m (or 7% of all WSU's revenue) from "Corporate Sponsorships", or in other words, DOUBLE the amount of Virginia Tech.
Want my two cents on how to increase "Corporate Sponsorships" revenue?
Do better.
Alright, moving on.
First of "The Big Three": NCAA / Media Rights
To clarify, Virginia Tech's "NCAA / Media Rights" revenue entails conference distributions, media rights deals (ACC Network / ESPN), and post-season football (which, let's be honest, is not very substantial for Tech at the moment). It also happens to be the Athletic Department's bread and butter, serving as the single largest percentage source of revenue since 2012.
FYI, in 2011, "Ticket Sales" was actually Virginia Tech's largest source of revenue, comprising 28.8% of Total Revenue (compared to "NCAA / Media Rights" which was only 24.5%), and since then, "Ticket Sales" has shrunk to one of the smaller sources of revenue, but we'll get to that later.
Now, this article isn't intended to analyze the ACC Network's ability to grow its product and increase its consumer base, which probably deserves an entire article all by itself, but rather, it's to drive home the reality that... Virginia Tech's largest percentage of athletic revenue stems from a source that it controls the least.
Meaning, when it comes to Virginia Tech's ability to influence the necessary changes to its media deal or conference distribution, the Hokies are standing in line behind Clemson, Florida State, Miami, and probably even Louisville (who is gaining ground pretty quickly on the Hokies) for football as well as Duke, UNC, Virginia, Louisville, Syracuse, and Florida State for basketball, as the traditional "power brokers" of the ACC.
So we can complain all we want about the ACC Network and how sub-par of a product it is in comparison to the SEC and BIG TEN Networks (and how substantially less lucrative it is as well), but just remember that those revenues are driving the ship for Virginia Tech at the moment.
Second of "The Big Three": Donations
To say that "Donations" is a sensitive subject amongst the Hokie faithful would be putting it lightly, but the numbers don't lie. Virginia Tech has consistently underperformed in terms of growing its "Donations" revenue for as long as I can remember, and the data backs it up.
As you can see, with only slight upticks in 2007 and 2018, Virginia Tech's "Donations" revenue has remained pretty flat, even though Total Revenue has increased two-fold.
The reason?
Well, actually I have no idea, but there have been many theories thrown around such as poor Hokie Club engagement and the football team's lackluster on-field performance over the last 9 years.
However, none of these reasons hold up to the fact that the donation numbers have been stagnant for the last 14 years, which included the 7-year stretch of Beamer's 10+ win / NY6 bowl game seasons, consistently sold-out crowds at Lane Stadium, a basketball Sweet 16 appearance, and the excitement of hiring a new head football coach, who reached the ACC Championship in 2016, and most importantly, the overall growth of the Virginia Tech student body, which had a total enrollment of 27,619 in 2005 that has since ballooned to 37,010 in 2019.
Every single one of those factors should have pointed to systemic growth, and yet, it didn't happen.
Furthering how bad it has been regarding flat "Donations" revenue, one just needs to look across the ACC and to those neighbors to the north... UVA.
What this graph doesn't show is the 2019 "Donations" revenue, where once again Virginia Tech dipped back down to $18.8m, placing them behind every other team on that chart.
Now the purpose of this section isn't to show how much Clemson and FSU fans love football (hint, they do) but rather to serve as a reality check that... VT can't even measure up to UVA, let alone the teams at the top of the ACC.
And if the response to that point is "well the UVA basketball team has been outstanding and just won a National Championship," keep in mind that they weren't performing consistently as a program until recently (2011-12), but STILL outpaced Tech in terms of donations revenue from 2005-11, which is exactly when the Hokies were rolling on the football field.
In fact, if you add it up over the last 14 years (2005-19), the UVA fanbase has donated over $373.4m to athletics in comparison to VT's $236.4m, a difference of $137m or about $8.9m per year!
Just imagine what an additional $8.9m per year could have provided in terms of Virginia Tech's athletic spending capacity.
So here's a hashtag campaign that may resonate among the Hokie faithful in terms of donations... #BEATUVA!
Third of "The Big Three": Ticket Sales
"Ticket Sales" revenue is a bit trickier in that, its growth potential is mostly limited by facility expansions, particularly increased seating capacity, as well as the sustained enthusiasm across Virginia Tech's 22 sports teams.
Or in other words, "Ticket Sales" = Hokie fans sitting in seats.
However, not all college sports are created equal in addition to the massive difference between stadium/venue capacities across Virginia Tech's 22 athletic teams, so in this case, when you consider the single largest component of increasing "Ticket Sales" revenue, the formula is rather:
"Ticket Sales" = Hokie fans sitting in Lane Stadium.
In terms of capacity, Lane Stadium's 65,632 seating capacity far outweighs Cassell Coliseum's 9,257. If you factor in total home games, which gives you a better perspective of the maximum annual fan attendance for each venue, Lane Stadium (total of 393,792 with an average of 6 home games) still overshadows Cassell Coliseum (total of 157,369 with an average of 17 home games), even if you account for the Men's and Women's Basketball teams as shown below.
Now, this isn't a clean breakdown for all of Virginia Tech's 2019 "Ticket Sales" revenue, but if you consider the top 3 sports in terms of attendance that same season, it went:
● Football - Total Attendance of 408,051
● Men's Basketball - Total Attendance of 131,793
● Women's Basketball - Total Attendance of 23,534
However, what separates these venues, even more, is when you consider the average ticket price per venue.
By taking the 2019 total "Ticket Sales" revenue of $20,543,204 and making a tiered average ticket price based on the demand for each ticket, it would probably look something like this:
● Football - Average of $45 per ticket ($18,362,295)
● Men's Basketball - Average of $15 per ticket ($1,976,895)
● Women's Basketball - Average of $5 per ticket ($117,675)
As stated before, this isn't an exact science but it at least accounts for the full allotment of "Ticket Sales" revenue, which is primarily driven by the attendance levels for Virginia Tech's top 3 teams, and if the average prices per ticket seem low, just remember that student section seating represents a substantial discount on the average ticket price for each venue.
Or in other words, think of the above breakdown as the rule, rather than the exception.
Now of that top 3, the one thing to remember specifically for football is the recent implementation of "Seat Gifts" in 2018, which are essentially season ticket reservation fees that have helped increase "Ticket Sales" revenue, even though Lane Stadium attendance has been declining since 2013.
Don't believe me? Just take a look for yourself.
If you look at the above chart, attendance levels at Lane Stadium have been waning away from the former 100% sellout levels in some form since 2013. In fact, the year over year attendance at Lane Stadium has dropped from 100% capacity in 2012 to 88.8% capacity in 2019. Considering Lane Stadium ticket revenue represents the single largest component of the total "Ticket Sales" revenue, it is important to understand the impact that declining attendance has on the Athletic Department's Total Revenue.
By breaking up attendance levels over the last 14 years into "coaching eras", you also get an idea of the impact the Hokies on-field performance (in addition to a bunch of other factors) has on attendance levels at Lane Stadium, with the following eras:
● Prime Beamer (2005-11) - 100% average capacity - $16.3m in average annual "Ticket Sales" revenue
● Waning Beamer (2012-15) - 95.8% average capacity - $16.3m in average annual "Ticket Sales" revenue
● Begining of Fuente Era (2016-17) - 96.1% average capacity - $17.6m in average annual "Ticket Sales" revenue
● Current Fuente Era (2018-19) - 89.8% average capacity - $19.9m in average annual "Ticket Sales" revenue
Now some factors can help explain the increase in revenue in light of declining Lane Stadium attendance such as the above mentioned "Seat Gifts", the general increase in ticket prices (especially for prime seating), the resurgence of the basketball team, and probably a few others not mentioned in this article.
However, these factors seem to be more of a band-aid on a much more disturbing trend.
Also, and I can't emphasize this point enough to Hokie fans... just imagine what "Ticket Sales" revenue could be with a full Lane Stadium given the added "Seat Gift" fees.
Actually, hold that thought, we'll get to it later.
PART TWO: How much does Virginia Tech spend, as an Athletic Department and on football, and where does it rank amongst the competition?
After spending the bulk of this article on revenue, it's about time to focus on the single biggest factor regarding the Hokies' ability to compete... expenses.
Virginia Tech can earn as much as possible through a variety of different revenue streams; however, it probably isn't a good strategy as an athletic department if a significant portion of that revenue is NOT making it back to the team that drives the ability to make money in the first place.
And in this case... the single biggest driver at Virginia Tech is the football team.
So in turn, it makes sense to understand... just how much Virginia Tech spends on football, especially in comparison to its Total Revenue and Expenses.
Well to start, as you can see, the generic NCAA expense reports do not separate football as a major category. However, they do give you a sense of appreciation of what categories impact an athletic department's expenses, which for the most part is... people.
In fact, if you compile all of the coaches' salaries, administrative staff, and athletic scholarships, it totals over 51% of Virginia Tech's Total Expenses of $48.4m. Adding in "Facilities and Equipment" to the pile brings the total amount to over 76% of all expenses at a cost of around $72m.
Basically, people and buildings dictate the strategy of investing in athletics, of which football is no different, so any conversation on how to affect winning should start with... what is the return on investment of increasing the amount of spending on a person or building?
Or in other words... can the addition of a person or place help a particular Virginia Tech athletic team increase its capacity to compete, thus increasing the demand to watch that team compete, thus increasing the amount of revenue returned from fans watching each television broadcast, purchasing tickets, and donating back to Hokie athletics.
Makes sense right?
OK.
Virginia Tech's Total Revenue VS Total Expenses VS Total Football Spending
Continuing to Total Football Spending, the above chart shows, that given a somewhat exponential rise in Total Revenue and Total Expenses, the level of Total Football Spending hasn't increased at the same rate, especially since 2014, which is exactly when the current Athletic Director Whit Babcock was hired.
So it's true, Whit Babcock came to Virginia Tech to destroy football. Case closed.
In the famed words of Lee Corso, "Not so fast my friends".
It turns out that context exists and is required to better understand the current level of Total Football Spending.
Starting in 2007 (I'm leaving out 2005-06 since there was a massive jump in football spending from 06-07 of roughly $8.7m), the football team's average budget was actually pretty flat from 2007-13, where it started at $26.2m in 2007 and represented about 46.9% of Virginia Tech Athletic Department's Total Expenses.
But, as Total Revenue continued to increase, the football budget actually DECREASED down to $24.7m in 2013, which was before Whit Babcock was even hired, where it only represented about 37.2% of Tech's expenses.
In other words, Beamer & Co. oversaw a major jump in football spending back in 2007, then basically let it ride at the same level for almost a decade, even as revenues increased.
However, after Whit Babcock was hired as AD in 2014, the level of football spending actually jumped from $24m to $32m as of 2018, albeit with a more consistent gradual increase, where Total Football Spending still only represents about 34.7% of VT's Total Expenses.
Basically, VT has executed two football spending strategies over the last 14 years:
● The "One and Done", and
● The "Trickle Up"
Let's look to see where exactly those strategies placed the Hokies in terms of the competition during the same timeframes.
Virginia Tech's Total Football Spending VS the Competition
The first chart shows Virginia Tech versus the top quartile median of FBS programs (i.e. the average spending of the top 25 teams) from 2005-18, where you can see Tech's 2007 "one and done" bump in spending helped accelerate the Hokies way ahead of the college football power curve in terms of Total Football Spending.
Unfortunately, the following idle period allowed the rest of the field to eventually catch up and surpass Virginia Tech, where from 2014, the "trickle up" strategy hasn't been able to keep pace with the top of the FBS, especially over the last few years.
But why?
Well to understand that separation, the top chart is a bit too high level to help differentiate which teams are spending more than others; however, the second chart does a lot better job of showing the culprit... the SEC.
Thanks in part to a massive bidding war between CBS and ESPN/ABC for the rights to the SEC Network over the years, that entire conference has become...
In fact, if you scan the top 25 teams in 2018 in terms of Total Football Spending, 9 of them are in the SEC, starting with Alabama at No. 1 ($62.9m) down to South Carolina at No. 23 ($33.3m).
And if you really want your mind blown in all of this, in 2018, Virginia Tech actually outspent... Louisiana State University, who was listed at No. 27 overall ($31.5m), though I think they have the upper hand now with that whole undefeated 16-0 National Championship season in 2019... but hey... we spent more!
But in terms of Total Football Spending, Virginia Tech is actually on par with a median BIG TEN program (as you can see in the second chart), which is a good position to be in when you consider who those BIG TEN teams in the striking distance of VT are such as Wisconsin, Michigan State, Iowa, and Minnesota. All of which are solid football schools (and basketball for that matter) that have a lot in common with the Hokies... large public universities, blue-collar fan bases, cold weather locations, and developmental programs.
Lastly, the third chart probably reflects the best news for Virginia Tech which is... how much we spend on football in comparison to the ACC.
It's no surprise that Florida State and Clemson top the chart (although it was a bit surprising to see how much more Florida State spends than Clemson), but in terms of Total Football Spending, Virginia Tech was third in the ACC in 2018.
Keep in mind this chart does not include Miami (a private university), but you would be surprised at how little they spend on anything, let alone football, and how much they rely on their brand to stay competitive.
So what does all this mean?
That Virginia Tech is not that far off the competition in terms of Total Football Spending, both against the ACC and the top of the FBS, where they were listed at No. 25 overall in 2018, despite having a limited ACC media deal, flat donations, declining attendance, and possibly having one of the worst corporate sponsorship deals in the entire FBS (didn't think I would bring that up again did you?).
Virginia Tech's Total Football Coaching Salaries
Looking a bit closer at "Total Football Spending", it also makes sense to better understand "Total Football Coaching Salaries".
Why?
Because if you are spending a lot on football, but those expenditures aren't concentrated on attracting and retaining the best possible coaches, then you probably aren't making the most of your Total Football Spending budget, especially since "people", or in this case "coaches", are the major driver in terms of return on investment for any given football program.
Well, by looking above, you can see that Tech's total coaching salary pool over the last 14 years (2005-18) has been on par with pretty much every other major conference aside from the SEC, meaning, that the capacity to attract and retain the best coaches available has not actually been a systemic issue in comparison to the competition.
And while there is a difference in "Total Football Coaching Salaries" between Virginia Tech and the SEC, that difference as of 2018 was only $1.46m, not exactly what you would consider a substantial margin, especially given how much more SEC schools are raking in per year from their far superior Media Rights revenue.
As for WHO the Virginia Tech coaches are at the moment, and how much we are paying them, that is a much different question, but in terms of the financial capacity of the current "Total Football Coaching Salaries" pool, the Hokies seem to be right in the mix with their competition.
Virginia Tech's Football Recruiting Expenses
Ah, recruiting.
Even though it is one of the smallest line items in Tech's football-related expenditures, the recruiting budget is often the most criticized.
But what exactly entails a recruiting operation, let alone the budget?
In general, recruiting entails two primary categories:
● The cost of recruiting, i.e. all operational and personnel expenses such as off-field staff, travel, and administrative support
● The recruiting strategy, i.e. how the staff evaluates and executes its vision of acquiring the players that best fit their program
It is also important to know that the recruiting program is influenced by both off- AND on-field staff and coaches, meaning Tech's recruiting outcomes are muddied somewhat by coaches who are not directly compensated from the "Total Football Recruiting Expenses" budget. So any analysis of Tech's recruiting has to extend beyond the narrow view of "recruiting only" expenses.
Well, the good thing is, as stated in the previous section, Virginia Tech's "Total Coaching Salaries" pool is either at or above the level of its FBS competition.
But what about the support staff?
According to the team's website, the current Virginia Tech Football Support Staff now averages around 22 personnel whose functional areas include:
● Football Operations - 11 personnel
● Strength and Conditioning - 5 personnel
● Player Personnel / Development / Recruiting - 5 personnel
So now the question becomes, have the support staffing levels grown over the years, and if not, which areas could Virginia Tech continue to invest in, with regards to recruiting?
Well, as of 2017, an NCAA-wide survey was conducted to collect FBS program staff sizes for 127 programs (now 130). Thanks, internet!
Not only do the survey results help illustrate where Virginia Tech stands in terms of its competition, but also which areas it needs to improve, just take a look for yourself.
At first glance, the main thing that stood out was Tech more than DOUBLING its "Football Operations" staff since 2017, from 5 to 11 total personnel.
Yet, the "Off-field/Recruiting" staff stayed pretty much the same.
Also, what this chart does not convey is how Power 5 teams with national recruiting strategies also rank the highest in terms of "Total Football Recruiting Expenses" (i.e. Georgia, Alabama, Clemson, Texas, Penn State, etc.), in addition to having "Off-field/Recruiting" staffs of at LEAST 7 or more personnel.
And if you look closer at the "Total Football Recruiting Expenses" over the last 14 years, the reality of Tech's recruiting investment is much worse than expected.
Dating back to 2005, Virginia Tech, in terms of "Total Football Recruiting Expenses" has ranked either AT OR NEAR THE BOTTOM of all 52 publicly reporting Power 5 football programs.
Now, the primary takeaway shouldn't just be how small Virginia Tech's recruiting budget has been over the years, but also, WHY the budget was so low?
Well, at a high level, the minimal investment over the years probably made sense considering Virginia Tech's strategy was to focus primarily on in-state recruits, where the coaches were the primary facilitators of the recruiting effort, and 80% of the roster consisted of Virginia-based players.
In comparison, Wisconsin has been right there with Virginia Tech in terms of ranking at the bottom of the FBS and is renowned for primarily concentrating on in-state talent.
However, what doesn't make sense has been the recruiting strategy shift since 2016, especially given the mediocre investment in the recruiting budget.
By not substantively increasing the recruiting budget but still attempting to emphasize recruiting outside of Virginia, while also overtly announcing to the rest of the Commonwealth that the Hokies were actively looking for high school talent elsewhere (i.e. the recent NC/TX-2VT campaigns), Tech's recent recruiting strategy has had bigger eyes than its stomach.
To back that up, during the Fuente era from 2016-19, the "Total Football Recruiting Expenses" budget modestly increased Tech's previous 5-year average (which were the final Beamer years from 2011-15), from $356k up to... $542k, a total net increase of only $186k.
If the increase seems small, it's because it is, especially when you realize that time = money.
And "time", in this instance, meant using Tech's already limited resources to chase prospects from regions with no prior established connections to Blacksburg to expand its traditional recruiting boundaries, all while drifting further away from its "bread and butter"... Virginia players.
Not great.
The good news is... Virginia Tech's "Total Football Recruiting Expenses" is a pretty small number in comparison to "Total Football Spending", in which the current amount of $563k only represents 1.7% of the total football budget.
Considering the Top Power 5 teams average $1.6m respectively, Tech could essentially triple its "Total Football Recruiting Expenses" up to $1.6m, and the net increase would result in a whopping 4.9% of the football budget, in essence, the gap isn't insurmountable.
Virginia Tech's Total Debt
To wrap up PART TWO, it would be irresponsible to discuss expenses without also getting a better sense of its Total Debt, which is included in the "Facilities and Equipment" section of their Total Expenses.
If you are unfamiliar with "Facilities and Equipment" as an expense, it equates to how much an athletic department spends on facilities to include debt service, leases, rental fees, administration, and overhead (i.e. the cost of upkeep).
For some Hokies, this can be a point of contention since any decision to build or renovate a new or existing athletic facility, and that facility does not specifically involve football, is seen as somehow detracting funds away from the football team, therefore diminishing their ability to compete.
However, that's just not true.
Why not?
Because total debt is different than annual debt service, and as you can see from above, while Virginia Tech's total debt has fluctuated between $80m and $50m from 2005-18, the annual debt service payment, which is the primary cost component of VT's total debt, has been flat at around $5.5m the ENTIRE time.
So hypothetically (and this is totally hypothetical), if you were to invest, let's say, $20m into expanding English Field back in 2017-18 to help bolster the baseball team (along with a bunch of other athletic facility renovations), which increased the Athletic Department's Total Debt from $47.1m up to $74.9m BUT the total annual debt service payment only went from $5.3m to... $5.5m... then you didn't prioritize spending money on "non-revenue" sports at the expense of the football team.
Are we all on the same page now?
Also, whoever structured those debt service payments deserves a public financing gold medal, especially when you consider that a team like Florida State, which currently has over $200m IN DEBT and an annual debt service payment of $15.7m!!!
You can either spend smartly or irresponsibly. I would categorize Whit Babcock's ability to incrementally grow the football budget, keep the team near a competitive level in terms of football funding capacity, and achieve massive facility improvements for football AND non-football sports, all while not increasing the team's debt service (which is the only number that matters)... spending smartly.
PART THREE: What strategy would yield the biggest effect on Virginia Tech’s Total Revenue, and if implemented, how would it impact the football team’s total budget?
Now that there is a comprehensive understanding of Virginia Tech's Total Revenues, Total Expenses (to include Total Debt), and even Total Football Spending, the next question is, what can be done to actually grow the Athletic Department's budget, thereby increasing the capacity of the football program, given the current constraints such as declining attendance, flat donations, and an under-performing football team?
Strategy #1 - Increase VT's Total Football Spending Percentage
To start, one thing to consider without raising another dollar would be, just increase the football spending percentage up to the level it was during the height of the Beamer era. If you remember, between the 2006-07 seasons, Virginia Tech's Total Football Spending increased from $17.5m to $26.2m, a jump of $8.7m which skyrocketed the percentage of football spending for the athletic department up to 46.9%, before gradually returning to 33.6% by the end of the Beamer era.
I wouldn't advocate for a return to 46.9% (though that would be nice), as that approach isn't realistic considering the current Total Football Spending percentage sits at 34.7%. However, what if VT matched the AVERAGE Total Football Spending percentage of the Beamer era (2005-15 given the available data), which would be 39.1%, a slight uptick of 4.4%.
That means if you took the 2018 Virginia Tech Total Expenses of $93,588,260, and 39.1% of that cost was invested into football (instead of 34.7%), then Total Football Spending would jump from its current level of $32.5m up to $36.6m, an increase of $4.1m.
Granted, with Virginia Tech currently funding 22 athletic teams, and this approach not relying on increased revenues, it's impossible to execute this strategy without cutting other sports from the athletic department.
While this article isn't intent on advocating for cutting other sports, it is important to understand the benefit of returning the average percentage level of Total Football Spending to where it was under Frank Beamer and should consider doing so after increasing revenues.
Strategy #2 - Increase VT's Total Donations
Speaking of increasing revenues, let's talk about increasing donations.
It is no mystery to Hokie fans that donations need to increase, especially from the section above showing just how poor Tech has performed in terms of growing its donor base in comparison to the competition. However, it doesn't seem to have been for lack of trying, as the Drive for 25 campaign did help lift donations in 2018, though it did drop back down in 2019, which my guess is the lackluster performance of the football team from 2018-19 didn't help.
Breaking it down a bit, the 2018 "Donation" revenue of $22,314,095, reportedly came from a pool of 16,118 active donors, which equates to about $1,384 per donor (obviously some gave more and some gave less).
Now that pool of 16,118 donors in comparison to the roughly 245,000 living Virginia Tech alumni equates to about 6.5% of eligible donors contributing to athletics. In this case, the Drive for 25 seemed to have a goal of getting to 10% of all active donors and opted for the "25" theme as it was a play on Frank Beamer's retired number as well as the goal of getting to 25,000 active donors.
The issue is, the push for the "25,000" number doesn't exactly connect the fans with a specific financial goal, and instead serves as more of a "counting stat".
Meaning, the goal of 25,000 active donors is great, but what does it actually mean in terms of total donations revenue?
Instead, the goal should be to connect the fanbase to an actual financial goal. That doesn't mean to ask people for a specific amount of money, but rather, say transparently, "Virginia Tech is currently at $X and needs your help to get to $X, and with your donation, we can get there."
You know, like every PBS pledge drive has done throughout history.
Perhaps even tell a story of how far behind Tech is from UVA (remember... #BEATUVA), let alone the top of the ACC in terms of total donations (instead of total donors), and then let the fans decide how much their contribution can bridge the gap, which may resonate a bit more for those competitive fans that have voiced their love for Hokie football.
And with that approach, if Tech had actually realized the full weight of 25,000 donors in 2018, at an average of $1,384 per donor, then the "Donations" revenue would have jumped from $22.3m to $34.6m, an increase of $12.3m!
Strategy #3 - Increase VT's Total Attendance
Another strategy, though I'm not sure how cutting edge it is, would be to re-energize fan attendance at Lane Stadium.
As mentioned earlier, fan attendance has consistently dropped over the last seven seasons to its lowest levels in decades to about 88.8% capacity.
Looking back at 2019 alone, that 88.8% capacity equated to having 51,373 fewer fans at Lane Stadium, which at the average price of $45 per ticket (as previously deduced in this article), meant a potential loss of roughly $2.3m.
While that may not seem like a lot for an athletic department that brought in $96.7m in Total Revenue the same year, every dollar matters, especially if a significant percentage of that lost revenue could have been allocated to "Total Football Spending".
However, there could be some fan engagement improvements to enhance the "in-game" experience such as:
● Stadium wide beer sales, using local SWVA craft beers
● "Meet the Former VT Player" type events before, during, or after the game
● Craft beer festivals either in or outside of Lane Stadium early in the day before late PM kickoffs
● "The Skipper" t-shirt cannon to use between quarters
● "Seat Upgrade" raffles during the game
● "Run the Field" races or "What's your 40?" type events during prolonged timeouts or between quarters
I could do this all day.
Basically, Virginia Tech could benefit from utilizing some Minor League Baseball type "gimmicks" as a fun way to engage fans throughout the game, considering it seems to be fighting general apathy for a losing team AND a general trend across all live sports in terms of declining attendance. Also, for a program that's only been nationally relevant since the mid-'90s, we're not above it and should consider all options to help keep Lane Stadium full on Saturdays.
Unfortunately, the football team's performance seems to be intricately tied to the ability to maximize fan attendance, meaning this strategy ultimately requires a winning program.
So for now, just understand the relationship between lost revenues and declining attendance, which should be included in the AD's final calculus for whether or not hiring a new coach is required to win games thus increasing fan attendance, OR to continue with the status quo.
And in this case, it's about $45 per absent fan.
Strategy #4 - All of the Above
Wrapping this all up, it made sense to show what the net increase in Total Football Spending would look like if Virginia Tech were to implement each strategy, and how it would change the team's current national ranking in comparison to the rest of the FBS programs.
After breaking it down into a "before and after" chart, it's easier to see how each strategy can increase Total Football Spending, based on the net increases in Total Revenue, which would be apportioned out to the football team given the proposed Total Football Spending percentages (i.e. Strategy #1).
As a base, in 2018 the Hokies were ranked No. 25 overall in "Total Football Spending" at $32.5m.
By just increasing the spending percentage, Tech slightly increased to No. 22 which is not bad but also, probably not worth the reduction of VT's 22 athletic teams to fund the required increase to the football budget without raising additional revenues.
However, as you continue down the chart, any increase in revenues, regardless of percentage level, there is a much more substantial impact on "Total Football Spending" as well as Tech's national ranking, which has the potential to jump to No. 12 overall, just behind the University of Georgia if every strategy is achieved.
Now that's a goal!
And it can be realized given the somewhat simple improvements, which already align with what Virginia Tech is already trying to do.
Bringing it all home, Tech at its current level of football spending is not as far behind the power curve as some would lead you to believe; however, there is room for improvement, meaning the Athletic Department AND the Hokie fan base have to do better in supporting the program, regardless of whether the football team is winning or not.
Also, it is important to note that increased spending does not necessarily equate to winning. Just look at the rest of the teams in the Top 5 of the FBS.
BUT spending does increase the capacity to win, which includes the capacity to fund recruiting, the capacity to build modern athletic facilities, and the capacity to hire the best coaches in the country.
The numbers don't lie, and right now, they are saying that all you have to do... is show up and support the team.
Are you in?
Let's Go Hokies!
