IU facing severe revenue shortfall

January 21, 2009
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tixdealThe announcement that Indiana University is lowering the price of its balcony seats from $23 to $5 for the last seven home games got me wondering how new athletic director Fred Glass is going to tackle the serious revenue shortfall that is hurtling his way.

A quick calculation shows the men’s basketball season is going to render a hefty seven-figure revenue decline from last season. If, and at this point it’s a big if, IU can sell those balcony seats for $5 a pop, that’s still a loss of $18 per butt. Since this affects several thousand seats, you can quickly figure the loss over the final seven home games will be more than $500,000. That loss obviously rises if the $5 sales plan doesn’t work.

IU, which is averaging about 12,900 per home contest through its first eight home games, has already lost about $800,000 for that stretch—in ticket sales alone. For every dollar IU loses in ticket revenue, the school loses another dollar in parking, concession and merchandise sales. That’s conservative. And while IU doesn’t generally sell out every single home game every year, the arena has long been full for Big Ten games. My calculations show IU’s men’s basketball revenue will be down more than $2.5 million this year. And since IU relies on men’s basketball to cover more than one-fourth of its $45 million athletic department budget, that’s a pretty serious issue.

Couple that with the football revenue shortfall this year, and Glass is suddenly trying to figure out how to score the $6 million or so the school’s athletic department had coming in last year—but isn’t ringing the cash register this year.

I have a theory about why IU’s attendance has plummeted this year, while another national basketball power managed to sell out every home game during its similarly disastrous 1994-95 men’s basketball season. But I’ll save that for another post.
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  • How many fans twisted their ankles jumping off the bandwagon this year? Couple iu's financial losses with the money they are putting out for the renovations at memorial stadium, and they will be hurting. Are there any more big time grads to lean on for more money? This will probably delay a replacement for Assembly which is sad, because that is where their bread and butter is made.
  • Yeah... they're still hurting, but I think the $5 balcony seats is at least an attempt. Just for argument's sake... say there are 3,000 balcony seats. Well priced at $23, let's say they're averaging 500 of the 3,000 sold... that makes $11,500. Now, price those seats at $5 and it causes them to sell 2,500 of the 3,000 and that makes $12,500. The second scenario looks better... and quite honestly, from a revenue perspective, they don't care if all 2,500 people show up to the game or not... they only care if they buy the tickets or not. Again, these are just made-up numbers... but hopefully I got the point across that you can't judge if it's a good marketing technique or not until after the last ticket has been sold. You can't look at it that they are losing money by discounting the ticket price. An empty seat is by far worse than selling a seat with a discounted price.

    Yes, it won't come close to making up the total revenue difference from last year to this year... but this is similar to what the Pacers are doing... you can't just sit back and hope fans come back in this economy (people cutting back) or wait for the team to get better (the bandwagon fans), from a sales perspective. You have to be pro-active and do something right away. Again, they're not going to make up the loss from last year... but sitting back and doing nothing, in my opinion, will create a larger loss.... so, by doing promotions like these, it may (key word, may) soften the blow that they're going to take. But it may not... if people don't jump on those $5 tickets, then using the same example I used above, it can be easy to lose money.

    To close, I still think doing something is better than doing nothing. There will always be bandwagon fans... but coupled with the economy right now... it's just not a good time for IU Basketball.
  • Glass has a history of making poor financial decisions with other peoples money.

    Just look at the Lucas Oil Stadium contract with the Colts that gives taxpayers millions of dollars of unsustainable operating losses while the Colts pocket tens of millions.

    Go figure he got a promotion to IU. Look out NCAA.
  • With the admin and coaching hires (except Creen) this past decade-coupled with left-wing fascist social control freak-behavior it's no wonder the varsity product is bad and the once glorious campus atmosphere has been made less than inviting.
  • Really Nick? Are we talking about the same guy? The same Fred Glass that has become one of the most respected and prominent deal makers this City and State has ever seen.

    Glass was at the forefront of Indianapolis bid to land the 2012 Super Bowl, The NCAA Contract that includes Mens & Womens Final Fours until 2039 with additional rounds of games, the long term host of the Big Ten Championships, the Lucas Oil Stadium, the World Baskeball Championships (although that didn't exactly 'sweep the nation').

    Fred Glass has done more for the Business side of Sports in this State than any other figure in Indiana History.

    The Lucas Oil Stadium Revenues will not reach full fruition until the Conv Ctr expansion is complete. Ironically around the time when we are hosting another Final Four and just before we reap millions in city-wide benefits from the Super Bowl. It is a larger facility that will require more expenses, but will take in larger revenues when it's capabilities are fully reached, which isn't for another few years.

    Look at the ENTIRE PICTURE here.

    As for IU. This is the PILE-ON. This is the fallout. What WILL occur in about 9 months from now is a revitalized focus on their main program's revenues (Basketball). This season is a wash. A freshman/walk-on team will not sustain any sort of money making venture. However, that changes with a highly touted group and a much improved team next year.

    As IU returns to the national stage and climb back into the Big Ten you WILL see their revenues mirror that. This is a program has historically has an amazing attendance record (of course under normal circumstances... GARBAGE ECONOMY, THE YOUNGEST TEAM IN THE ENTIRE NCAA, A PATCHWORK TEAM are not Normal Circumstances.).

    Use a little logic here people. It's a tough scenario for IU right now, but that is temporary.

    Also understand they are building around $50 Million dollars worth of Facility Upgrades as we speak. Further, they are always ranked very high in terms of Donations and Endowments... IU will be fine in the long run and unfortunately the Critics will be there every step of the way to spout about it.
  • Baloney CreamCrimson.

    Please note that Glass not only gave Irsay every possible revenue producing source from Colts events, but also gave him 50% of all non-Colts events (NCAA, SuperBowl, Bands of America etc) and left taxpayers with all operating expenses.

    Yes the convention center expansion is what will create all positive economic impact. (assuming the ICVA can fill the venue with paying customers), but Glass added insult to injury by allowing the vast majority of the $1 billion construction budget to be spent on Lucas Oil Stadium forcing the convention center expansion to be downsized.
  • The school in Bloomington has a history of poor adinistration, but Glass will only be as good as the peole around him. The basketball team (unfortunately) will me back around the 2010-11 season. But the school will have to answer for the Memorial Stadium project. That is going to be the drain on the budget.
  • nick has a small grasp on the situation.
  • How appropriate for the Loosiers. They allowed the leftist freaks to run amuck and had trustees that allowed the once proud university to rain ruination on the sports program. They should be forced to take the name Hoosier away from the school in its current, embarrassing state of declination.
  • Wow, berwickguy, I didn't know someone so largely positive would be so eager to sling the muck. You go!
  • I'm glad to be a graduate of Ball State and Butler!
  • I will say those National Championships seem a long time ago. The biggest concern for iu is will this affect recruiting? Kids do not like programs in turmoil, losing programs and programs that cannot afford to provide them the finest of luxuries.

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