July 16, 2018 11:20:10 AM
STARKVILLE -- Mississippi State is in a top class of sorts, yet doesn't act like it.
The most recent USA Today database of college athletics finances revealed MSU is one of 31 schools in the nation with an athletic department revenue exceeded $100 million, the first time in school history it has reached that benchmark. But MSU Director of Athletics John Cohen doesn't aim to be one of 31 in the nation, he aims to compete with the best of those 31; in exclusive interviews with The Dispatch, he and Deputy Athletic Director/Chief Financial Officer Jared Benko described the department's fiscal strategy, one that is encouraged but not influenced by revenue increases.
"Everything is relative to your competition. We have to do it differently than our competition does it. We're not going to out-money the SEC," Cohen said. "We have to make great decisions on how we spend our budget money, and we're going to make great decisions. We're going to have input from our coaches, we're going to have input from our administration, input from our fans, input from the president of this great university (Mark Keenum) and we're going to do the best with what's around us. To be honest with you, nothing else matters."
Cohen used that dedication to smart spending as one way to explain MSU's lack of spending relative to its conference mates in the context of revenue. MSU's $86,351,432 athletic expenses reported compared to $100,062,237 left $13,710,805 unspent in the given fiscal year, or 13.7 percent of revenue; for comparison, Alabama left 8.9 percent of its athletic revenue unspent, Florida 11.6 percent, LSU 10.8 percent, Auburn 9.9 percent and Tennessee 7.3 percent.
Benko agrees with Cohen's care with every MSU dollar and makes his decisions the same way -- "I treat Mississippi State's money like my own." -- but he sees other reasons for spending to be what it is. The first is the future of the department from a financial standpoint.
"It's great to say our revenue is increasing, but I'm more concerned about the trajectory of our department," Benko said. "As a department, we're scaling. If you think about a business and how a business scales, you have to be careful of not growing too fast, getting too fat, getting too many processes. We focus on being lean in our operations."
From 2014 to 2017, MSU has seen its athletic department revenue rise consistently, from $62.2 million to $75.4 million to $94.9 million to the $100.06 million it was in 2017. Ticket sales have gone up in that time, according to the USA Today database, but actually suffered a minor setback from 2016 to 2017. Contributions in the form of boosters, Bulldog Club, etc., have helped as they've gone from $13.9 million to just over $25 million from 2014 to 2017, but the real power comes from television rights and licensing fees.
According to the database, in 2014, MSU made $28,305,623 from television rights and licensing. 2014 was also the launch year for SEC Network, the conference network run in partnership with ESPN, expanding the conference's television possibilities. The next year, MSU's right/licensing revenue jumped up to $40,267,330; in 2017, it was $54,843,236.
"We're growing, but I think it's responsible growth," Benko said. "Our push over $100 million really is a credit to our fans and patrons, alumni and supporters, continuing to support Mississippi State athletics at a high level, but also SEC and NCAA revenue continues to rise."
The second reason Benko and Cohen keep athletic department spending to its current level is for a different future -- the future of its facilities.
The difference in the database between revenue and expenses of $13,710,805 suggests that the surplus money is not being spent or otherwise allocated, simply transferred to a reserve fund of some sort; Benko knows better than to do that.
"What happens in this league is if you take your money and just stockpile it in reserves, it's easy to get left behind in the shuffle against your peers," Benko said. "We are saving capital. We're saving capital and redeploying it."
Benko likened it to an average family walking around with more money when it is about to put a down payment on a home, as if MSU is simply keeping more in the pocket as it completes a $55 million renovation to Dudy Noble Field, as it goes about adding video boards to the soccer and volleyball facilities, as it puts a new locker room and recruiting suite in place at Davis Wade Stadium. That is not to say all that is in reserves is earmarked for future construction: this being Benko's fourth stint with a SEC school, he knows a certain level of reserves is a good thing to have, in the event the school has to pay a coach more to keep him/her on campus or to adjust if the cost of a scholarship goes up.
It is a nuanced spending strategy that is not easy to figure out, especially as it changes from year to year. That's why Benko chooses to make the entire department start from scratch.
Instead of taking the previous year's budget and tweaking it to what is expected for the upcoming year, Benko has the entire department start from the beginning when the budgets are formed in the spring. He acknowledges it is difficult and tedious work, but MSU's efficiency in spending makes it worth it.
"That's why our finances are as strong as they are, we are really good stewards of dollars," Benko said. "The interesting piece in that is when you involve a large constituent group -- coaches, staff, administrators -- you get more people giving feedback and they're invested in the process. It's not unilaterally me saying, 'Here's your budget, work with it.' If people feel like they have skin in the game and you're in this together, ultimately we come up with a better plan."
The plan is not all about making money.
"We've made some decisions that hurt our bottom line. Here's a great example: We just negotiated with Aramark, we're going to lower all of our prices for concessions, in some cases by more than half," Cohen said. "That's probably going to hurt our bottom line; I don't care. I want to meet our fans halfway. I don't want a grandfather from Meridian to send his granddaughter to the concession stand with 10 bucks and she come back with one item. I want her to be able to come back with several items. Fan experience is really important to all of us.
"If it's lowering a hot dog from 5 dollars to 2 dollars, if it's giving away free water at some of our early games when it's really hot, if it's providing more transportation from our parking lots to our stadium, as long as it's servicing our fans, that's of major importance to me."
It remains to be seen whether that move has a positive or negative impact on MSU's revenue that ultimately got it over the $100 million mark recently, but Benko sees nothing in his projections that suggests MSU will dip beyond that threshold in the coming years. But even if it stays there, it only proves their point about an emphasis on spending money more than generating it. Even if MSU spent every penny of the $100,062,237 it generated in 2017, it would still have spent $58 million less than Alabama and $46 million less than Texas A&M, two schools in direct competition with MSU in every sport. That's why this benchmark won't impact how MSU goes about its business.
"There's a great sense of pride in doing more with less," Benko said.
Follow Dispatch sports writer Brett Hudson on Twitter @Brett_Hudson
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