Friday, December 16, 2011

What's a Couple Million In Lost Ticket Revenue Between Friends?

Morgan Burke, rocking the "short sleeves with tie" look. Nice.

Mike Carmin over at the J&C has a very interesting article up regarding the freefalling ticket revenue for Purdue football. It's essentially an interview with Burke about the issue and I encourage you to go read it, but I'll also pull out a few choice cuts for you here.

During the 2008 football season, Purdue's football program generated $12.5 million in ticket revenue.The next season, the figure dipped to $11.5 million. In 2010, ticket revenue fell to $10.2 million.

That's $2.3 million in lost ticket revenue in just two years and it's expected that it will have fallen again when 2011 is officially accounted for. So let's say, conservatively, that it's another $700,000 down for 2011 just to play with nice round numbers. That puts Purdue in a $3 million hole (or loss, whatever you want to call it) in three years. Which, and I'm no math major, works out to {checks math} yes, a million dollars per year. Yowsa.

There are roughly 14,000 fewer season ticket holders compared to 2007, when the count was 42,880. Purdue sold 28,914 season tickets for the 2011 season.

So in a four year span, season tickets have declined in numbers by about 33%. Obviously, we all know this is alarming, but let me ask you this: What if we see another 33% decline over the next four years? That's a little over 9,000 more seats not filled (and, really, is it hard to imagine another 9,000 empties given the way people are flocking away in droves?), bringing season ticket totals down to the sub-20,000 range.

I don't know about you, but that sounds almost impossible, doesn't it? And yet, so possible, given the current trajectory.

Burke veers into comments about the coaching situation as well, and it's hard to know if he was asked specifically about it or if he is just very aware of the noise outside his office:

Burke said the responsibility for attendance and ticket revenue is "on me" but added "if everybody thinks you make one personnel change ... how many different coaches have been at Notre Dame and Indiana since I've been here? It's staggering. 

I'm not sure anyone has suggested Purdue needs to make "one" personnel change. I think some want the whole coaching staff gone. I think others have said, hey, maybe Danny Hope can work out, but not with this staff. I will tell you this, however: how many coaches ND and IU have had in the past 20 years is probably the least relevant part of this equation.

"The head coach is like the quarterback -- they may get too much credit when things are going good but too much blame when things go bad. But they're the captain of the ship and ultimately I'm the captain of the ship too and I have to take responsibility."

I could not love this quote more, because it sounds like something Hopeful Danny on Twitter would say. Mixing up metaphors and figures of speech is one of my personal favorite things to take note of. So we have two captains here? Who outranks who? Wouldn't Burke be the....admiral? I'm so confused.

Asked if the steady downturn in football ticket revenue is hurting the overall athletic department, Burke said: "It's not yet but you can't go on very much longer. 

Wow, that doesn't sound good...right? Wait. I'm so confused. 

"The way we budget, we try to build reserves. Our business is much more cyclical than people think. That's one of the reasons you live within your means."

Ah, yes, live within your means. Like underpaying your basketball coach no matter how good he is, to the point where he nearly leaves. That sort of living within your means? Gotcha.

This next nugget is telling in some ways:

While football ticket revenue is down, the athletic department -- which receives no funding from the university and is expected to show a net income of $9.85 million following the 2011-12 academic year -- probably will remain in sound financial shape because of other revenue sources. 

Net income, by its definition, is basically profit. It's interesting that the term "profit" is not used here. That could be Carmin's choice of words or it could come from the University in one way or another. But the point is, the athletic department is going to be positive by almost $10 million after this school year is over. So when you find yourself wondering why Burke isn't taking a flame-thrower to the coaching offices, that's a big, big part of it.

Burke also expresses surprise in the story that more fans didn't come to the Purdue-Iowa game. (Hey, we were there! We did our part, Morgan!) And for those who think Burke may be a little out of touch, he commented that he expected to see 50,000-52,000 in the house for that game, which wound up having just over 40,000 in attendance.

I think an athletic department, in order to be realistic and make the logical decisions so many fans want, needs to first have someone at the helm who is fully in touch with reality. I'm not going so far as to say Burke is not in touch with reality, but I can only hear so many comments like this until I begin to think he's just a guy riding out his time to retirement.

And finally, Purdue has sold 3,900 tickets for the Little Caesars Bowl. Western Michigan has sold 4,500. The interest, quite simply, is not there. I don't know if it's Coach Hope or the players or Morgan Burke or the fans. Maybe it's some combination -- in life, it usually is. But I know things aren't in good shape and this article doesn't make me feel much better.


Anonymous said...

This article is depressing. I'm a big supporter of Burke. I think he's done a lot of good things in his time at Purdue and made a lot of hard decisions. That being said it's hard to defend some of his comments.

I wonder what exactly that $9.85 million dollars is being used for. I know part of it is to offset these types of losses but couldn't it be used to invest in new and better assistant coaches/coordinators for Hope? The old expression you gotta spend money to make money seems to apply here. Everyone knows football is the money making force in college sports so you should invest in the program to help it succeed.

This is very frustrating to read.

Yoder said...

I'm not a math major either, but I think you are calculating the loss of revenue the wrong way.

If you set the baseline of 12.5 million for 2008, 11.5 for 2009 would be a loss of 1 million.

Bringing in 10.2 million in 2010 would see a total loss of 2.3 million compared to the baseline.

The drop of another 700K would bring in 9.5 million for a loss of 3 million in 2011 compared to the baseline.

Total losses during Hope's career equal out to 6.3 million or 2.1 million per year.

Ultimately, this loss in revenue will be the downfall to Hope.

Unknown said...

I don't think we can blame this entirely on poor coaching and complacency on the part of Burke. Remember too, that the housing bubble burst mid-season 2008. The following recession has affected the ticket sales for 2009-2011. College football games are not cheap, and we already know Purdue is playing mediocre, boring football, so when Purdue fans were cutting back, former dedicated ticket holders may have decided that the Purdue games were a luxury that they didn't really care to spend money on.

Ryan said...

Unknown- IU's season football ticket sales have increased 21% over the last three years...and took a massive jump last year. Just in case you haven't noticed IU plays simply awful and boring football.

The BT as a whole is the most-attended conference in the land...and no team in the conference has seen the decrease in sales that Purdue has...all are in the midwest...all affected by the same economy. In fact, Indiana's economy has actually been slightly better than the surrounding states...but I digress.

Do you think the mediocre football might be caused by the mediocre coaching?

Maybe two years ago wasn't the wisest time for Burke to make an aggressive price increase on football tickets...but he did it anyway.

I think Burke and Hope have built this house of doo doo together.

Anonymous said...

One fact from the link to rivals that really got me worried is Burke will give Hope a performance review by Dec. 31st. If Burke gives Hope a contract extension, we know for certain Burke doesnt care whether the football program wins or not. The major thrust I get from the interview is that Burke has done his time and needs to be replaced or asked to retire. Definitely on the downslope of his utility.

Aquidneck Island Boilermaker said...

Okay...I'll play devil's advocate here. There's not enough info here for me to make a judgment. Ticket sales is not a good metric for a successful program. Loss of ticket sales revenue doesn't tell me a thing because I have to assume they have increased revenue from the Big Ten network which wasn't well established three years ago. Is there a full accounting someplace? You know, look at the number of new buildings on campus. They are all named for people who gave a lot more than a couple million. You don't think the John Purdue Club membership can make up a $2 million shortfall in ticket revenue? Empty seats look bad, true, but for what we pay coaches we're probably well positioned given the record. We just are a positioned team (or business) as other Big Ten teams are. I'd like to have some more accounting information.

Unknown said...

I am not the same Unknown as above - but I have been in marketing in one form or another for 35 years. And Marketing 101 is that, especially in tough economic times, your product has to stand out from the pack in order to be attractive to potential customers who are increasingly stingy with their entertainment dollar. Bottom line - Purdue football is an entertainment choice, just like television, movies, etc. And when the economy went south, ticket prices went up, but the perceived value of the product fell in the eyes of customers. Poor, unimaginative product equals less and less customer sampling.

Unknown said...

I am not the same Unknown as above - but I have been in marketing in one form or another for 35 years. And Marketing 101 is that, especially in tough economic times, your product has to stand out from the pack in order to be attractive to potential customers who are increasingly stingy with their entertainment dollar. Bottom line - Purdue football is an entertainment choice, just like television, movies, etc. And when the economy went south, ticket prices went up, but the perceived value of the product fell in the eyes of customers. Poor, unimaginative product equals less and less customer sampling.

Lord Montegue said...

Dark have been your posts of late! In defense of Burke, Purdue does not have the money that a lot of the larger schools have. There is not a culture of winning in our sporting history overall so Purdue alums are less likely to throw money at athletics (which is okay as I am pretty proud of the level of education I received). I think any athletic director at Purdue will have similar issues because, while 10 million is nice, they also have to pay off Mackey as well as update other facilities, infrastructure, etc. And, per this article and dwindling ticket sales, who knows if that level of cash will be there next year. First, I think the Purdue fans needs to take their responsibility in all of this. You want a winning program and the money to support said desire, then show the f**k up. No blue chipper wants to go to a school where the stands are half empty, dominated by the visiting team fans, the students have such great chants as first down bitch and everything you read is NEGATIVE. That being said, I think Morgan Burke needs to go for two main reasons) 1. A new athletic director brings excitement and hope to a program that is stagnant and 2. because I don't think he has done a great job of making his limited resources go very far. We need a shrewd person who can obtain and utilize undervalued assets to build up the war chest and change the culture. We have to start expecting to win and not to not loose and until that changes make all the changes you want because we will continue to find ourselves right back here. BTFU.

B-Kizzle said...

Ugh. I walk passed him in the hallway of the IAF every single freaking day of the week. I wish I had the balls to walk into his office, sit down, and talk to him. Business requires investment. Investment requires capital, which is one thing we SEVERELY lack. O$U and Michigan generate over $100 million per year in revenue on their own. With BTN money, we make $60. Without it, we generate about $30.

College sports is a game of money, something the athletic department of one of the premier academic institutions in the world will never win. We have an AMAZING alumni base, but the sad thing is, since we don't have the name of a state in our name, our fan base consists of just about only alumni. Hailing from Ohio, I can tell you that An O$U's "fanbase" consists of every community college dropout who thinks he's better than you because "his" team beat yours. It's the fans with no university affiliation that worship these athletes so much that they GIVE them free cars just to say "So and So on the football team knows me!" are the ones that spend all of their money on OSU. I shit you not, I see more OSU jackets at church on Christmas Eve than I do holiday sweaters. You know its a formal occasion when they bust out the nice OSU stuff. I've even been to an OSU themed wedding between two 19 year old kids that got knocked up and drooped out of high school! OSU paper plates and all! Ugh! Hate hate hate hate hate hate....

Anyway, Burke's claim to fame was and still is the Tiller hire. That's a one in a million hire. Then again, he also gets the blame for both him and Keady leaving because he wouldn't pay them (or so I've heard). The board of trustees were on his ass HARD to get the Painter deal done.

To be frank, nothing sells tickets and recruiting like a high-profile coach, but high profile coaches want high profile programs and high profile money, which are all things Purdue will NEVER have. As one of the biggest Boiler fans out there, I know that I will never see a National Championship in football as long as I live. I still have hopes for basketball, but last year with Rob in the lineup was our best shot in a long time. The new and renevated bball, soccer, and baseball/softball complexes are all great steps in the right direction to improve the overall quality of the program. That being said, ESPN doesn't talk about that stuff. They talk about the guys who make $5 million a year base salary and put 100,000 fans in the seats.

zlionsfan said...

I think this is consistent with what we've talked about before: Burke thinks that he can build a solid athletic program by establishing non-revenue sports first and then growing football from there.

Of course, this is ass-backwards, but given the three massive revenue streams the Big Ten enjoys (BTN revenue, bowl revenue, NCAA tournament revenue), Burke can get away with it because there is plenty of money available to cover up his incompetence.

To be fair, Burke has overseen some impressive results in non-revenue sports like diving and women's basketball, golf, and volleyball, but it would be possible to have that success and also have a middle-of-the-road football program. (I doubt it's possible to have a top-tier program without a Boiler billionaire making it his life's ambition to fund Purdue athletics.)

Purdue fans aren't buying Burke's reprisal of Kevin Bacon's role in Animal House. All is not well. It would be nice if Hope is the guy who can make Purdue a consistent second-tier bowl team, but at a minimum, he has to have the resources to do that, and more likely, Burke will have to be willing to pay for a second-tier coach to get the job done. (Again, no top-tier coaches are going to want this job, at least until winning seasons are the norm.)

If that doesn't happen, people aren't going to pay to see the games, and thus revenue isn't going to increase. I'm assuming Burke isn't stupid enough to raise ticket prices yet, but who knows? It's happening at other Big Ten schools, even in a down economy. It could happen here too.

some guy said...

@B-Kizzle -

You see lots of people at church wearing OSU jackets and you attended an OSU-themed wedding?

Sounds like you associate with some really classy people.

I am friends with and work with several OSU grads. I don't see any of them break out the OSU fan gear except for game day.

Yes, OSU has a very large, very loyal following...many of them didn't even attend OSU....but only the economically downtrodden OSU fans wear logo gear to church or use it as a wedding theme.

Mommatried said...

@ Some obviously haven't spent much time in the state of Ohio. B Kizzle is absolutely spot on- 100% without flaw in that assessment. Every swinging tom dick and harry that lives in that state, regardless where they went to school, Akron, Toldeo, Ohio U, Cincinnati, University of Dayton...they are all Ohio State fans. And most of them would pledge their allegiance to OSU before their Alma mater any day of the week. I got into a bar fight once with a shmuck who went to Bowling Green. He talked a bunch of trash praising Ohio State and when I pointed out he WENT to Bowling Green. I WENT to Purdue- he tried to hit me.

Finding "classy" Ohio State fans would be a hell of a quest.

some guy said...
This comment has been removed by the author.
some guy said...

@J Money -

Thanks for the "choice cuts". Great work. Stellar journalism.

Although you tried hard to follow along with what was being said, it's obvious that you were missing one of the key fundamentals that would have allowed you to understand what Morgan Burke was saying.

You don't understand how a public, "state school" university is run. Not even close. You come across as Joe Average Fan....I'm cutting you a break and calling you "Average" because there are quite a few people of average intelligence that don't understand how a public university is run. Whether or not your intelligence even hits the "average" mark is in question...but like I said, I'm willing to cut you a big piece of slack here.

To illustrate that you don't know what you're talking about, you trotted out this "choice nugget":

"Net income, by its definition, is basically profit. It's interesting that the term "profit" is not used here. That could be Carmin's choice of words or it could come from the University in one way or another."

It's obvious that you got excited because you thought you'd caught Burke red-handed as he attempted to pinch pennies when it appears that there is no need to. To your mind, Purdue has a positive net income. Net income = profit. SO WHY AREN'T THEY SPENDING SOME OF THAT PROFIT TO HIRE BETTER COACHES!?!?! (heh)

Let me clue you in, J Money. Public universities do not report a profit. They report net income (or loss) because they are, by nature, a public institution that is not designed to generate profits.

Profit is a metric used for gauging the success of corporations and other entities. It's what you'd call "the bottom line".

In higher education there is not a "bottom line". But public universities must operate within their budgets. (think hard) Does that comment ring a bell? Did Burke mention that in his article? Come on J Money...think hard, you can maybe start to figure this out.

Do you know what happens if a public university doesn't operate within their budgets or as Burke says "live within our means"? Bad things, J Money. Very bad things.

I could go on and on about how it's blatantly obvious that you don't understand how the game (college athletics & budgets) is played. But what I've already given you is more than enough for today.

Next time you decide to type up a blog post, make sure you understand what it is you're writing about. Otherwise you're going to make yourself look painfully average. At best.

J Money said...

The athletic department is separate from the University budget. The University does not put money into the athletic department. So net income (or profit) is actually relevant with regard to the athletic department. My only point was that the athletic department is still profitable and that if people want Hope fired for not performing and filling the stadium with spectators then they might have a long wait, since they're not losing money.

But thanks for the "lesson."

J Money said...

Oh, and by the way, this is an opinion site. So your insult of "stellar journalism" doesn't really make sense because we've admitted for years that we're not journalists and don't wish to be. But thanks for your continued childish remarks. Like a child, though, your act is getting rather old.

some guy said...

@J Money - did you mean to say "The athletic department *budget* is separate from the University budget."?

Fingers getting a little twitchy? Getting a little angry?

Of course the Athletic Department has it's own budget. There are countless departmental budgets at Purdue or any other public university. And each and every one of them rolls up to the overall budget of the university. You state that the University does not put money into the athletic department....and you're correct! But the Athletic Department has not been privatized. It is part of the university and subject to the same accounting rules that the University has to follow. You weren't a math major. Definitely not a business major or even an economics major.

If you bothered to learn anything about how a university Athletic Department is run, you'd know that if they were showing a net loss (vs. net income) the absolute *last* thing they'd be doing is conducting a search to hire a highly paid football coach.


I tried to explain some of it to you, but it's beyond you. Best of luck figuring it out. If you don't, you'll continue sounding like Joe Average Fan complaining about all them millions the athletic department has and why cain't they hire a gosh durn decent coach, get some butts in the seats and make a real dollar and cent?

Really. Best of luck with that.

J Money said...

Yeah, uh, I don't think you understood any of what I was saying. And I am not going to explain it again. I get it, you're an antagonistic, lonely loser who gets his rocks off by picking Internet fights. You're a tiny coward and we've all known people like you.

Be gone.

some guy said...

@J Money - I understand exactly what you are *trying* to say. You don't understand the deeper implications beyond "Purdue's athletic dept. is making a profit so they should hire better coaches".

You can lead a horse to water...

Speaking of cowards, aren't you the one threatening to delete what I post? And deprive 15 or 20 people of the pleasure of reading it?

Do what you think you've gotta do, J Money. You said this is "an opinion site" and I've stated my opinions. I haven't resorted to vulgarity, threats and well...only just a tiny little bit of name calling. So yeah, if it makes you feel tough and proud, delete my stuff. The only way you're going to look smarter than me is if people don't read my responses to your stellar journalism.

J Money said...

I'm not a journalist, so I'm not sure what you're referring to.

Man, you must be a lot of fun at parties.