It isn’t often that a year-end deficit of $10.8 million can be considered an achievement.

But that’s the case for UW Athletics in the 2021 financial year, which officially concludes June 30. In a budget presentation to the University of Washington Board of Regents on Wednesday, athletics director Jen Cohen and chief financial officer Kate Cullen outlined the department’s $65 million revenue decrease in FY21, brought on by an “inability to host fans at events and the loss of TV revenues resulting from football cancellations across the Pac-12 in the fall.”

To mitigate those losses, UW Athletics instituted a 10% salary and benefits reduction via voluntary salary reductions by all contract staff, 2-4-week furloughs for all professional and classified staff, FTE (full-time equivalent, measuring an employee’s scheduled hours) reductions to 17% of staff, and permanent layoffs to 4% of staff positions. Operating expenses were also cut by 27%, and the department raised $18.5 million in fundraising — as opposed to the typical $5 million — with $3 million more expected in the next 45 days.

In other words: Washington took on water, but the ship didn’t sink.

Jen Cohen and Jimmy Lake celebrate Washington’s win over Utah.  The University of Utah played the Washington Huskies in Pac-12 Football November 28, 2020 at Husky Stadium, In Seattle, WA. 215770 (Dean Rutz / The Seattle Times)

“We feel very proud to have gotten through this incredibly difficult and unpredictable year with a deficit of roughly $11 million, which can be fully covered by our reserves,” Cullen said. “It really could have been so much worse, and this achievement would not have been possible without our partnerships with the office of planning and budgeting and treasury and the diligent work of everyone in the ICA (Department of Intercollegiate Athletics).”

Added Cohen: “We had to have a shared sacrifice from our staff. Everybody in our department took a pay cut. Some people lost their jobs. We had two rounds of furloughs. But we did that in the spirit of being able to support our students.”

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UW Athletics remains committed to that support, stating in a document presented to the Board of Regents that its guiding principle is to “maintain sport sponsorship and operations for all 22 teams.”

But pandemic effects will still be felt this fall. That same document stated “there is still much uncertainty about the extent of COVID-19’s financial impact on ICA in FY 2022. This uncertainty hinges entirely on the number of fans ICA will be able host at events throughout the year — and in particular, at football in the fall of 2021.”

On Wednesday — less than 24 hours before Washington Gov. Jay Inslee announced plans to lift COVID-19 economic restrictions in the state by June 30 — Cohen and Cullen presented a FY22 budget projection with the conservative assumption that UW will be authorized to host 50% capacity for football games at Husky Stadium this fall. Under that assumption, the department is projecting a $5.016 million year-end deficit.

“We’ll obviously be prepared to host a full stadium,” Cullen said, “but we wanted to take a conservative approach in the budget process.”

Should UW be limited to said 50% football capacity, it projects $115.863 million in total revenue in FY22, as opposed to $113.129 million in operating expenses. The department is also asking for up to $10 million from the university’s Internal Lending Program (ILP) Rate Stabilization Account “as additional one-time assistance” to help make the annual $13.99 million debt service payment on the loan that financed the Husky Stadium renovation in 2013. The board will be asked to approve that request in June.

Additionally, UW is expecting to spend $3.76 million on deferred maintenance that includes replacing Husky Stadium’s turf this offseason, something the document states is “needed every 5-7 years for safety of student athletes.”

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In this particular projection, UW will spend $39.268 million on salaries — which “assumes no additional furloughs, voluntary salary reductions, position eliminations, etc.” Cullen emphasized that “we’ve lost a number of good staff members in recent months, “and we really feel strongly that we must be focused on retention and rebuilding.”

Still, UW plans to maintain a 10% operating budget cut from FY21 for teams and administrative units “in all categories except recruiting.” In fact, Cullen confirmed that recruiting budgets will increase by 10% this year.

“We need to prioritize investments in this area,” she said, “given the 14-month recruiting blackout period that was in place due to COVID.”

UW’s planned expenses also include a $1.75 million placeholder related to possible name, image and likeness legislation, as well as the financial aftermath of the NCAA vs. Alton antitrust case — which was heard by the Supreme Court at the end of March and could pave the way for players to eventually be paid.

“At this time we don’t have clarity on where these costs will ultimately end up, so this placeholder really represents a conservative guess based on the information that’s currently available,” Cullen said.

Of course, it’s possible — perhaps even likely — that UW will receive permission to host a full Husky Stadium this fall. Cohen and Cullen also presented revenue and expense projections for scenarios that include 100% capacity, 30% capacity and 0% capacity — though Cullen noted that “we feel optimistic that the low scenario won’t come to fruition, as we’ve already been able to host fans at our spring football game and player guests at softball and baseball.”

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How football fan capacity affects UW athletics’ financial projection

Determining fan capacity for football games at Husky Stadium this fall goes a long way in projecting UW athletics’ financial outlook in FY22.

In the high scenario, 100% capacity for football games, UW projects a year-end surplus of $2.3 million. But even then, Cohen and Cullen accounted for the likelihood that some fans might be hesitant to return to Husky Stadium.

“We assumed that there would be a reduction in demand, just based on some folks not quite being comfortable yet,” Cullen said. “So even if the capacity allows us to (host a full stadium), we’re sort of dialing back our assumptions on having sold-out games for Oregon and WSU. So it would be possible (to sell out) but it really is dependent on the demand from the fans.”

To this point, Cullen said roughly 29,000 fans have renewed their season tickets, while an additional 800 fans signed up for the first time. UW typically accounts for 6,000 student season tickets as well.

UW also provided an update on the pending construction of its basketball operations building and health and high-performance center on Wednesday, with a design builder to be selected in early June and an architect search commencing immediately after. Due to the pandemic, the project’s budget will be reduced from $60.5 million to $45-50 million to allow for full funding by existing donor pledges.

All things considered, FY21 has not been without its achievements — including (technically) a Pac-12 North title in football, a Final Four in volleyball, an Elite Eight in men’s soccer, a Sweet Sixteen in women’s soccer, a pair of rowing teams ranked No. 1 in the country and a No. 5 softball team boasting an overall record of 40-9. “That doesn’t happen by accident,” Cohen asserted Wednesday. “That happens because at Washington we care about equity and we care about opportunity and we’re committed to that moving forward.”

UW Athletics will move forward with significant financial concerns, as well as earned optimism, in FY22.

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“This has not been perfect. We have not been perfect. I have not been a perfect leader,” Cohen said. “But I think the thing I’m most proud of is we never lost our way in why we exist and who we are and what we’re all about, which is the development of students. So as we look at the numbers, looking at next year and kind of how we’re planning it, we’ve got some major issues that we’re tackling – not just the impact of COVID-19 and whether or not we’re going to have a full stadium, but also the landscape of college athletics is changing dramatically. We have issues around retention for our staff.

“There’s some big issues, but I’m really confident and optimistic about our plans for recovery because of your support, because of this community, and most important, because we’re going to keep our students centered in all of our decision-making.”