On top of losing games, Oregon baseball is hemorrhaging cash
A previous version of this article misstates the annual debt amount paid for PK Park. The article stated the athletic department pays $4 million per year for PK Park, when the actual annual debt amount paid is $570,000 with an outstanding debt of $7.5 million. The Emerald regrets this error.
If Oregon baseball was winning championships, it’d be a bit easier to justify the amount of money it’s costing the University of Oregon.
When then-athletic director Pat Kilkenny decided to revive the baseball program and drop wrestling in 2009, he projected it to turn a profit within five years. But according to an Emerald analysis of the team’s financial transparency reports, the baseball program’s annual budget deficit has increased every year since 2009. Ticket sales, its greatest revenue driver, are down nearly 50 percent, and administration salaries now exceed the entire income of the program. The team has lost $17.5 million in nine seasons.
Divide the team’s yearly net loss by its number of games, and the Ducks lose about $40,000 for every game they play. That does not include the $570,000 a year Oregon spends on debt payments for PK Park, the funds for which come out of a separate account.
Meanwhile, the team hasn’t fared well on the field. Its win percentage has declined each of the past three seasons, and the Ducks (27-24, 11-16 Pac-12) are on pace for another down year. They sit in eighth place in the Pac-12 standings and are all but guaranteed to miss the NCAA Tournament for the second year in a row.
Eric Roedl, the Oregon athletic department’s chief financial officer, acknowledges the declining baseball attendance and ticket revenue. But the athletic department, he says, has no plans eliminate baseball or any other sport.
In a time when academic programs are facing budget cuts, faculty are being laid off and students are facing drastic tuition increases, UO administrators show no indication of directing any money from the athletic department’s $110 million operating budget for academic purposes.
“PK Park is one of the nicest baseball facilities on the west coast, and baseball attendance and revenue growth have been and continue to be a priority for us,” Roedl said by email. “Our marketing and ticket sales teams continue to work closely with our baseball program to maximize the visibility and promotion of our games, create the best possible fan experience, and grow interest in our baseball program within the campus and surrounding communities.”
UO spokesman Tobin Klinger said President Michael Schill is “working to determine the best approach forward,” but suggested it is unlikely he would take any away from athletics to mitigate cuts to academics. Schill did not respond to multiple email requests for comment.
“Should it come down to re-examining the budget, it would be safe to say that we will need to think as broadly as possible,” Klinger said in an email. “That said, athletics is a self-sustaining auxiliary unit… and this exercise is ultimately about right sizing our general fund budget.”
Trending in the wrong direction
Head coach George Horton’s contract is set to expire in September, and his future at Oregon is uncertain. He’s a well-respected coach who has taken Oregon to five NCAA Tournaments and won a national championship with Cal State Fullerton, but the Ducks have yet to reach Horton’s goal of qualifying for a College World Series, and the team’s winning percentage has waned the past three seasons.
“We’ve had a couple crummy years; there’s no mistaking that,” Horton said May 13 after Oregon State swept the Ducks. “Hopefully [my bosses] have confidence in me. You can only do what you can do. I would like for them to think I’m the right man to turn it around and get it going in the right direction.”
Horton’s five-year contract, worth up to $800,000 per year in possible incentives, is a lucrative one among college baseball coaches. It stipulates that each year, on top of his base salary of $450,000, he gets to take home 10 percent of Oregon’s revenue from ticket sales or $50,000, whichever is greater. Horton has always gotten the $50,000, though, because the team never sold $500,000 in tickets in a season during his tenure.
Ticket sales peaked at $480,000 in 2010 and have dropped almost in half since. The team brought in only $260,000 in ticket sales in 2016. Ticket sales, on average, account for about two thirds of the Ducks’ annual income. As ticket sales have declined, so has Oregon’s overall revenue.
On the other hand, the baseball team’s yearly expenses have increased over time, so its annual deficit has grown every year: from about $1.4 million in 2009 to $2.2 million in 2016, not including the debt payments for PK Park. In 2009 — the Ducks’ least costly season financially — Oregon brought in $720,000 while spending $2.1 million. Eight years later, the team brought in just $390,000 while spending $2.6 million.
Doing less with more
Administrative salaries, including Horton’s, are the biggest single cost driver of the team’s annual expenditures. They’ve risen 27 percent since 2009, while revenues have fallen 46 percent. In 2014, the team’s annual administrative salary costs actually exceeded the program’s total revenue, and since then, the gap has only widened.
“Pat Kilkenny is a smart businessman who has made a lot of money for himself and his investors in the insurance business,” UO Senate president and economics professor Bill Harbaugh said. “If only he’d been as careful when making decisions on behalf of UO, we’d have many more millions to invest in student scholarships. But then, people are notoriously careless when spending other people’s money, as the economist Milton Friedman often said.”
Oregon State’s baseball program, on the other hand, has done far more with less money. The Beavers currently rank No. 1 in the country and have done so with 40 percent less day-of-game operating expenses than Oregon. According to 2016 Equity in Athletics Data Analysis (EADA) reports from the U.S. Department of Education, Oregon State spent $420,000 on operating expenses while Oregon spent $740,000, but the Beavers finished the season with six more wins.
After the Beavers ended the Ducks’ hopes of a winning Pac-12 record on May 13, Horton said he has not yet discussed a possible contract renewal with athletic department officials.
He wants to stay at Oregon, he said, but he’ll “probably have some other opportunities” if he doesn’t.
“The main reason I want to be here is I’ve got work to do,” Horton said. “I think I’ve let the people who hired me originally, Pat Kilkenny and President [Dave] Frohnmayer, when he was here — I think I’ve let them down a little bit. We were supposed to be in Omaha by now. I hope they continue to give me an opportunity.”
Zak Laster contributed reporting to this story.
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