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VII. STANDING COMMITTEES B. Finance and Asset Management Committee Intercollegiate Athletics Annual Financial Report for FY14 This item is for information only. Attachment ICA Financial Review Feb. 12, 2015

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ICA FINANCIAL REVIEW FEB. 12, 2015

ATTACHMENTF–7.1/202-15 2/12/15

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z 2014 FALL QUARTER ICA PERFORMANCE

OUTsTANdINg PERFORMANCE bOTh ON ANd OFF ThE FIELd

hIsTORIC ACAdEMIC REsULTs: 70% OF sTUdENT AThLETEs OVER 3.0 gPA• 17teamsearnedover3.0GPA,5teamsover3.4GPA• Footballover3.0forfirsttimeinhistory• GraduationSuccessRateat81%,abovenationalaverage

ALL FALL TEAMs RANkEd IN TOP 25 OF NATIONAL sTANdINgs • VolleyballandMen’sSoccerrankedintop5duringseason• Men’sCrewearned4thnationalchampionshipinarow• CurrentDirector’sCuprankingat#7,bestFallperformanceever

PAC-12 CONFERENCE PERFORMANCE• Continuingtoexcelbothscholasticallyandon-fieldperformance• Pac-12TVrelateddistributionandexposureaccelerating• LeadingthewayinstudentathletewelfareissuesandNCAAreform

70%

30%

BELOW 3.03.0 OR ABOVE

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z WhERE WE ARE NOW

College of Arts and Sciences 160PreMajors 146School of Business 23College of the Environment 16School of Engineering 7School of Education 6Other 5Individual Studies 1

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z NCAA FINANCIAL RANkINgs

‘000s CONFERENCE REVENUE NAT’L RANk EXPENsE NAT’L RANk CAPACITY (k) TEXAS BIG12 165.7 1 146.8 1 100.1 WISCONSIN BIG10 149.1 2 146.7 2 80.3 ALABAMA SEC 143.8 3 116.6 4 101.8 MICHIGAN BIG10 143.5 4 131.0 3 109.9 OHIOST. BIG10 139.6 5 116.6 5 102.3 FLORIDA SEC 130.0 6 107.0 7 88.5 OKLAHOMA BIG12 123.8 7 102.4 11 82.1 LSU SEC 117.5 8 105.3 9 92.5 OREGON PAC-12 115.2 9 95.0 15 56.0 TENNESSEE SEC 111.6 10 110.3 6 102.5 IOWA BIG10 107.2 11 107.0 8 70.6 AUBURN SEC 103.7 12 103.1 10 87.5 ARKANSAS SEC 99.8 13 92.1 19 72.0 MINNESOTA BIG10 98.3 14 96.4 14 50.8 GEORGIA SEC 98.1 15 96.9 12 92.7 MICHIGANST. BIG10 97.9 16 93.7 16 75.0 LOUISVILLE ACC 96.2 17 92.4 18 55.0 KENTUCKy SEC 95.7 18 93.4 17 67.6 CALIFORNIA PAC-12 94.5 19 90.1 20 62.7 TEXASA&M SEC 94.0 20 85.1 21 82.5 OKLAHOMAST. BIG12 93.7 21 96.6 13 60.2 KANSAS BIG12 93.1 22 79.2 27 50.1 FLORIDAST. ACC 91.4 23 84.8 22 82.3 NEBRASKA BIG10 86.9 24 81.7 26 92.0 WAshINgTON PAC-12 85.1 27 76.2 32 70.1

2012-’13 NCAAFINANCIALRANKINGS

Fb sTAdIUM

sEC & bIg 10 dOMINATE REVENUE RANkINgs

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‘000s REVENUE NAT’LRANK EXPENSE NAT’LRANK SUBSIDIESOREGON 115 9 95.0 16 2.3CALIFORNIA 94.5 20 90.1 21 7.6WAshINgTON 85.1 27 76.2 32 3.3UCLA 83.9 29 83.9 26 2.6ARIZONA 68.5 42 68.3 38 7.3ARIZONAST. 65.7 44 65.6 43 10.1OREGONST. 65.5 45 64.2 44 12.3COLORADO 58.3 53 66.3 41 7.1WASHINGTONST. 47.2 54 52.1 54 6.5UTAH 46.9 55 49.5 55 10.2AVERAgE 73.1 71.1 6.9

NEW AgREEMENT WILL dECREAsE UW sUbsIdY TO $1.9 MIL FOR ‘14-15, LOWEsT IN PAC-12

2012-’13 PAC-12FINANCIALRANKINGS&SUBSIDIES

z PAC-12 PUbLIC INsTITUTION FINANCIAL RANkINgs & sUbsIdIEs

CAMPUS

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sTRATEgIC INVEsTMENTs IN ICA As AN ENAbLER IN ACCELERATINg sUCCEss

CAPITAL INVEsTMENTs IN FACILITIEs TO COMPETE ANd dRIVE REVENUEs• HuskyStadium($282Mil,ILPfinanced)• HuskyBallpark($17Mil,ILPfinanced)• StudentAthleteAthleticServices(SAAS)renovation($2Mil)–improvelearningfacilities• BasketballOperationsBuildinginplanningphase

INCREAsE IN sTAFFINg sUPPORT ANd CAPAbILITY• Continuehiringoftopleveltalentinallfunctions• HeadcountnowonparwithotherPac-12universitypeers• SAASinvestmentcontinuestoyieldunprecedentedsuccess

TEChNOLOgICAL INVEsTMENTs TO kEEP PACE WITh EVOLVINg LANdsCAPE• Newdigitalboardstoenhancefanexperienceandmarketingopportunities• MediarelatedinvestmentstomakefacilitiesTVready• Investmentindigitalandcreativeteamstogrowin-housecapability

z ICA INVEsTMENTs

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bALANCINg INCREAsE IN OPERATINg COsTs W/PRUdENT COsT sAVINgs• Continuedincreaseofdepartmentalstaff• Operationsandmaintenancecostsofnewfacilities

gROWINg REVENUE UNCERTAINTY• Decliningfootballgaterevenuesacrossthecountry• BasketballgaterevenuessignificantlyimpactedbyTVevolution(dates/times)

CONTINUINg NCAA REFORM WILL REQUIRE AddITIONAL INVEsTMENT • StudentAthletewelfareconcernswillcontinue• Mealallowance,fullcostofattendance(COA),stipend,medicalcoverage,posteligibility,insurance...totaladditionalcostestimatedat$3.5Milin‘15-16

• Power5conferenceschoolswillalllikelyfollowsuit

z ChALLENgEs

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z OPERATINg REVENUEs

OTHER

OTHER SPONS. & DONATED SUPPLIES

MULTIMEDIA RIGHTS

NCAA & PAC-12 DIST.

CONTRIBUTIONS

GATE REVENUE

 22,656      22,856      22,034      23,789      $20,481      $28,830      $29,316    

 12,488      15,732      15,840    

 23,501      $26,599    

 $24,031      $23,556      10,278      9,829      12,584    

 16,215      $22,453    

 $24,935      $29,078    

 4,924      5,692      5,373    

 5,484      $3,580    

 $6,179      $6,370    

 2,996      5,265      5,302    

 5,465      $4,974    

 $5,142      $5,800    

 1,373    

 6,177      6,643    

 8,139      $6,986    

 $11,159      $10,321    

 -­‐        

 20,000    

 40,000    

 60,000    

 80,000    

 100,000    

'08-­‐09   '09-­‐10   '10-­‐11   '11-­‐12   '12-­‐13   '13-­‐14   '14-­‐15  

100,276  100,276  

$54,715

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OTHER: SUPPLIES, TRAINING TABLE,

RECRUITING, MEDICAL, ETC

O/H, UTILITIES, REPAIR, & MAINTENANCE

DAy OF GAME

TRAVEL

SCHOLARSHIPS & FIN’L AID

SALARIES & BENEFITS

z OPERATINg EXPENsEs (NOTINCLUDINGDEBTSERVICE)

 25,909      25,340      27,838      30,286      $30,853      $33,941      $36,615    

 8,310      8,261      8,806    

 10,066      $10,894      $11,806    

 $12,315    

 5,152      4,352      5,690    

 6,551      $7,635    

 $7,300      $6,973    

 4,409      4,486    

 4,807    

 4,602      $4,977    

 $7,156      $5,984    

 4,418      4,497    

 4,788      3,909    

 $4,534    

 $6,909      $6,197    

 13,177      16,221    

 15,972    

 18,420      $17,317    

 $18,985      $16,768    

 -­‐        

 10,000    

 20,000    

 30,000    

 40,000    

 50,000    

 60,000    

 70,000    

 80,000    

 90,000    

'08-­‐09   '09-­‐10   '10-­‐11   '11-­‐12   '12-­‐13   '13-­‐14   '14-­‐15  

$86,097

$61,375

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GATE REVENUE 29%

CONTRIBUTIONS 24%

NCAA & CONFERENCE DIST. 25%

OTHER ICA REVENUES 22%

TOTAL $100.3 M

2013-’14 OPERATINGREVENUE

SALARIES & BENEFITS 43%

FINANCIAL AID 15%

OTHER 42%

TOTAL $86.0 M

2013-’14 OPERATINGEXPENSE

z FINANCIAL bREAkdOWN

REVENUE NOTEs:•“OTHERICAREVENUES”INCLUDE

MULTIMEDIA RIGHTS, OTHER SPONSORSHIPS, AND MISCELANEOUS REVENUES•GATEREVENUE+CONTRIbUTIONS+

NCAA/PAC-12 DISTRIBUTION= 78% OF ALL REVENUE•85%OfREVENUESDRIVENbyfOOTbALL

EXPENsE NOTEs:• “OTHEREXPENSES”INCLUDETRAVEL,DAy-

OF-GAME, OVERHEAD/MAINTENANCE AND MISCELANEOUSEXPENSES

• SALARIES&bENEfITS+fINANCIALAID=58%OfALLEXPENSE

• SALARIES&bENEfITS+fINANCIALAID+TRAVEL+DAy-Of-GAME=73%OfALLEXPENSE.

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$ MIL ‘11-12 ‘12-13 ‘13-14 13-14 ‘14-15 CAgR ACTUAL ACTUAL ACTUAL VSPy% PROjECTED %GATEREVENUE 23.8 20.5 28.8 40.5% 26.8 4%CONTRIBUTIONS 23.5 26.6 24.0 -10% 24.0 1%NCAA/PAC-12DIST. 16.2 22.5 24.9 11% 28.6 21%OTHER 19.1 15.5 22.5 45% 22.7 6%TOTAL OPERATINg REVENUE 82.6 85.1 100.3 18% 102.1 7%SALARIES&BENEFITS 30.3 30.9 33.9 10% 36.6 7%FINANCIALAID 10.1 10.9 11.8 8% 12.3 7%TEAMTRAVEL 6.6 7.6 7.3 -4% 5.2 -7%DAyOFGAME 4.6 5.0 7.2 44% 6.0 9%OTHER 22.2 21.8 25.9 19% 25.9 5%TOTAL OPERATINg EXPENsE 73.8 76.2 86.1 13% 86.0 5%

NET OPERATINg INCOME 8.8 8.9 14.2 60% 16.0 DEBTSERVICELEVELS 1.1 1.1 14.6 17.9DEBTSERVICECOVERAGE 7.8 7.8 1.0 0.9

z 2013-’14 ICA FINANCIAL REVIEW

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z 2013-’14 ICA FINANCIAL REVIEW

OPERATINg REVENUE - Increase of 18% vs. Py

• Gateincreaseof$8.3Milvs.‘12-’13drivenmainlybymovefromCenturyLinkFieldtoHuskyStadium

• Newstadiumattendancewas66kactualvs.62.3kinRegentsmodel

• Contributionsdown,though$6Milwasraisedforstadiumcontributionfund(capitalgifts)

• Pac-12distributionup,mainlyfromnetworkssurplusandAT&TU-Versedeal

• IMGmultimediarightsfeesincreasedto$6.1Mil(newcontract)

OPERATINg EXPENsE - Increase of 13% vs. Py

• Salary&BenefitsincreasedrivenbycompleteturnoverinFootball&otherstaffsalaryincreases(4%prof/2%classified)

• FinancialAidincreaseinlinewithtuitionincreases(in-state/out-of-state),andfeeadjustments

• Day-of-gameincreasedrivenlargelybyadditionalexpensesrelatedtonewstadiumopening&operations.

• HigherthanplannedFootball/newstadiumrelatedcosts(graphics,computers,IT,uniforms/supplies,etc.)droveincreases

NET OPERATINg INCOME - Increase of 5.3% vs. Py

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z dEbT sERVICE vs REsERVE bALANCE

$1,134

$7,804

$16,039

$12,132

$13,456

$17,484

$18,932

$1,134

$14,576

$17,476 $17,889 $17,841

$20,000

$18,000

$16,000

$14,000

$12,000

$10,000

$8,000

$6,000

$4,000

$2,000

‘11-12 ’12-13 ‘13-’14 ‘14-’15 ‘15-’16 ‘16-’17

(’000)

DEBT SERVICE UNRESTRICTED RESERVE BALANCE

WhILE dEbT sERVICE INCREAsEs, ICA WILL CONTINUE TO gROW REsERVEs TO MEET ILP COVENANTs

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$ MIL ‘13-14 ‘14-15 ‘15-16 ‘16-17 ‘17-18 ‘18-19 ‘19-20

ACTUAL PROjECTED

GATEREVENUE 28.8 26.8 29.9 31.1 32.2 33.1 34.5

CONTRIBUTIONS 24.0 24.0 24.4 24.1 30.5 29.9 25.8

NCAA/PAC-12DIST. 24.9 28.6 30.7 31.6 33.9 35.8 37.1

OTHER 22.5 22.7 25.5 26.2 26.8 27.3 28.2

TOTAL OPERATINg REVENUE 100.3 102.1 110.5 113.1 123.5 126.1 125.6

SALARIES&BENEFITS 33.9 36.6 38.1 40.7 41.8 42.8 43.9

FINANCIALAID 11.8 12.3 13.7 14.3 15.0 15.7 16.4

TEAMTRAVEL 7.3 5.2 5.4 5.7 5.9 6.1 6.4

DAyOFGAME 7.2 6.0 6.1 6.3 6.4 6.6 6.8

OTHER 25.9 25.6 27.8 28.8 29.4 30.1 31.4

TOTAL OPERATINg EXPENsE 86.1 86.0 91.2 95.8 98.4 101.3 104.7

NET OPERATINg INCOME 14.2 16.0 19.3 17.2 25.0 24.8 20.8

dEbT sERVICE 14.6 17.5 17.9 17.8 20.4 20.4 20.4

NET OPERATINg INCOME (w/ debt) (0.4) -1.5 1.4 -0.6 4.6 4.5 0.5

DEBTSERVICECOVERAGE 1.0 0.9 1.1 1.0 1.2 1.2 1.0

z FINANCIAL PROJECTIONs (INCLUDINGBASKETBALLOPS)

•$50MILLIONBASKETBALLOPSILPDEBTSERVICETOSTARTIN‘17-18($3.1MIL/yEAR)

•DEBTSERVICECOVERAGETARGETAT1.1XNETOPERATINGINCOME,PERTREASURyAGREEMENT

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$ MIL ‘13-14 ‘14-15 ‘15-16 ‘16-17 ‘17-18 ‘18-19 ‘19-20

ACTUAL PROjECTED

GATEREVENUE 28.8 26.8 29.9 31.1 32.2 33.1 34.5

CONTRIBUTIONS 24.0 24.0 24.4 24.1 30.5 29.9 25.8

NCAA/PAC-12DIST. 24.9 28.6 30.7 31.6 33.9 35.8 37.1

OTHER 22.5 22.7 25.5 26.2 26.8 27.3 28.2

TOTAL OPERATINg REVENUE 100.3 102.1 110.5 113.1 123.5 126.1 125.6

SALARIES&BENEFITS 33.9 36.6 38.1 40.7 41.8 42.8 43.9

FINANCIALAID 11.8 12.3 13.7 14.3 15.0 15.7 16.4

TEAMTRAVEL 7.3 5.2 5.4 5.7 5.9 6.1 6.4

DAyOFGAME 7.2 6.0 6.1 6.3 6.4 6.6 6.8

OTHER 25.9 25.9 27.8 28.8 29.4 30.1 31.4

TOTAL OPERATINg EXPENsE 86.1 86.0 91.2 95.8 98.4 101.3 104.7

NET OPERATINg INCOME 14.2 16.0 19.3 17.2 25.0 24.8 20.8

dEbT sERVICE 14.6 17.5 17.9 17.8 17.3 17.2 17.2

NET OPERATINg INCOME (w/ debt) (0.4) -1.5 1.4 -0.6 7.7 7.6 3.6

DEBTSERVICECOVERAGE 1.0 0.9 1.1 1.0 1.4 1.4 1.2

z FINANCIAL PROJECTIONs (WITHOUTBASKETBALLOPS)

•DEBTSERVICECOVERAGEIMPROVESBy0.2xWITHOUTBASKETBALLOPERATIONSBUILDINGINCLUDED

•DEBTSERVICECOVERAGETARGETAT1.1xNETOPERATINGINCOME,PERTREASURyAGREEMENT

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OVERALL PERFORMANCE•Healthyfinancialsoverpast5years,representingfiscaldisciplineinagrowingcompetitivelandscape•CompletedlargestcapitalprojectinICAhistory–HuskyStadiumrenovation•ContinuingNCAAregulatorychangesdrivinghigherStudentAthletefinancialsupport

OPERATINg PERFORMANCE•Topped$100Milinrevenuein‘13-14,withincreasescomingfromPac-12distributionandnewstadiumrevenue• ICAinvestmentscontinuingtodrivestrongresultsacademically,athletically,andfinancially• Contributionsrepresentsover30%ofrevenue,donorsupportcriticaltooverallmissionofICA

dEbT sERVICE• InternalLendingProgramusedtofinancelargefacilityupgrades(HuskyStadium&Ballpark)• ILPrequiresnetoperatingincometocoveryearlydebtserviceby1.1x•Managingoperationswithgoalofmeetingallinternaldebtobligations

z sUMMARY

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