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January 15, 2020

Mr. Randy Boyd, Interim President


The University of Tennessee

Dear Mr. Boyd:

Transmitted herewith is the report on the results of certain agreed-upon procedures applied to the
statements of revenues and expenses of the intercollegiate athletic programs at the University of
Tennessee.

Sincerely,

Deborah V. Loveless, CPA, Director


Division of State Audit

cc: Ms. Amy Miles


Chairman of the Audit Committee

Mr. Brian Daniels


Chief Audit and Compliance Officer
Office of Audit and Compliance
Independent Accountants’ Report on the Application of Agreed-upon Procedures

Mr. Randy Boyd, Interim President


The University of Tennessee

We have performed the procedures enumerated below, which were agreed to by institution
management, solely to assist you in evaluating whether the accompanying statements of revenues
and expenses of the University of Tennessee’s Intercollegiate Athletics Programs are in
compliance with the National Collegiate Athletic Association (NCAA) Bylaw 3.2.4.15 for the year
ended June 30, 2019. The institution’s management is responsible for the statements of revenues
and expenses (statements) and the statements’ compliance with those requirements. The
sufficiency of these procedures is solely the responsibility of the management of the institution.
Consequently, we make no representation regarding the sufficiency of the procedures described
below either for the purpose for which this report has been requested or for any other purpose.

Exceptions totaling the lesser of $50,000 or 10% of the line item total to which an agreed-upon
procedure has been applied have not been reported. The procedures that we performed and our
findings are as follows:

Agreed-upon Procedures Related to the Statements of Revenues and Expenses

Procedure Results

 Obtain the summary of revenues and expenses There were no reported revenues or
for or on behalf of intercollegiate athletics expenses for or on behalf of university
programs for affiliated and outside athletic departments at affiliated or
organizations prepared by the institution. outside organizations.
Recalculate the addition of the amounts on the
summary and compare the summary
information with the amounts on the statement.

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 Obtain the statements of revenues and expenses No exceptions noted.
of the athletic programs and related notes for the
year ended June 30, 2019, as prepared by
management. Compare the amounts reported
on the statements with the institution’s general
ledger.

Revenues
 Compare and agree each operating revenue No exceptions noted.
category reported in the statements during the
reporting period to supporting schedules
provided by the institution. If a specific
reporting category is less than 4% of the total
revenues at that campus, no other procedures
were performed for that specific category.

 Compare and agree a sample of operating No exceptions noted.


revenue receipts from the operating revenue
supporting schedules to adequate supporting
documentation.

 At each campus, compare each major revenue No exceptions noted. See the
account over 10% of the total revenues to prior- supplements to this report.
period amounts. Obtain and document
management’s explanation for any variations
greater than 10%. Report the analysis as a
supplement to the final Agreed-upon
Procedures Report.

 At Chattanooga, compare tickets sold during No exceptions noted. At Martin, since


the reporting period, complimentary tickets ticket revenue was less than 4% of
provided during the reporting period, and campus revenues, this procedure was
unsold tickets to the related revenue reported by not performed.
the institution in the statement and the related
attendance figures and recalculate totals. At
Knoxville, review the home football and
basketball ticket reports prepared by an
independent CPA firm and compare amounts in
the reports to the campus statement.

 Compare and agree student fees reported by the No exceptions noted. At Knoxville,
institution in the statements to student since student fees were less than 4% of
enrollments during the same reporting period campus revenues, this procedure was
and recalculate totals. not performed.

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 If the athletics department is reporting that an The institution does not report in this
allocation of student fees should be countable as manner; therefore, this step was not
generated revenue, recalculate the totals of their performed.
methodology for supporting that they are able
to count each sport. Tie the calculation to
supporting documents such as seat manifests,
ticket sales reports, and student fee totals.

 Compare direct state or other governmental As the institution does not receive
support recorded by the institution during the direct state or other governmental
reporting period with state appropriations, support specific to athletics, this step
institutional authorizations, and/or other was not applicable.
corroborative supporting documentation and
recalculate totals.

 Compare the direct institutional support No exceptions noted. At Knoxville,


recorded by the institution during the reporting since there was no direct institutional
period with the institutional supporting budget support, this procedure was not
transfers documentation and other performed.
corroborative supporting documentation and
recalculate totals.

 Compare the transfers back to institution with Since no transfers back to institution
permanent transfers back to institution from the exceeded 4% of revenues at any
athletics department and recalculate totals. campus, this procedure was not
performed.

 Compare the indirect institutional support At Knoxville, no indirect institutional


recorded by the institution during the reporting support (categories 6 and 36 on the
period with expense payments, cost allocation statement) was reported by the
detail, and other corroborative supporting university, as university management
documentation and recalculate totals. determined that most other
Southeastern Conference member
institutions do not report in this
category, and they wanted their
statement to be comparable.
Chattanooga and Martin decided to
report in the same manner. The
NCAA agreed-upon procedures
handbook states that the university
should “input [the] value of costs
covered and services provided by the
institution to athletics but not charged
to athletics including: administrative
services provided by the university to
athletics, but not charged such as

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Human Resources, Accounting, and
Information Technology; facilities
maintenance; security; risk
management; and utilities.”

 Select a sample of settlement reports for away No exceptions noted. At Knoxville


games during the reporting period and agree and Chattanooga, since guarantee
each selection to the institution’s general ledger revenues were less than 4% of campus
and/or the statements and recalculate totals. revenues, this procedure was not
performed.

 Select a sample of contractual agreements No exceptions noted. At Knoxville


pertaining to revenues derived from guaranteed and Chattanooga, since guarantee
contests during the reporting period and revenues were less than 4% of campus
compare and agree each selection to the revenues, this procedure was not
institution’s general ledger and/or the performed.
statements and recalculate totals.

 Any contributions of moneys, goods, or There were no contributions that met


services received directly by an intercollegiate this criterion at Knoxville,
athletics program from any affiliated or outside Chattanooga, or Martin; therefore, this
organization, agency, or group of individuals step was not performed.
(two or more) not included elsewhere (e.g.,
contributions by corporate sponsors) that
constitutes 10% or more in aggregate for the
reporting year of all contributions received for
intercollegiate athletics during the reporting
periods shall be disclosed in the notes to the
statements of athletics department revenues and
expenses. Obtain and review supporting
documentation for each contribution and
recalculate totals.

 Compare the in-kind contributions recorded by Since in-kind contributions were less
the institution during the reporting period with than 4% of revenues at each campus,
a schedule of in-kind donations and recalculate this procedure was not performed.
the totals.

 Obtain and inspect agreements for the No exceptions noted. Only Knoxville
institution’s total media rights as reported in the had media rights revenue that
statement. Compare and agree the media rights exceeded 4% of total revenues. This
revenues to a summary statement of all media procedure was therefore not
rights identified, if applicable, and the performed at Chattanooga and Martin.
institution’s general ledger and recalculate the
totals. Ledger totals may be different for total

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conference distributions if media rights are not
broken out separately.

 Compare the amounts recorded in the revenue No exceptions noted. At Knoxville


and expense reporting to general ledger detail and Chattanooga, since NCAA
for NCAA distributions and other corroborative distributions were less than 4% of
supporting documents and recalculate totals. campus revenues, this procedure was
not performed.

 Obtain and inspect agreements related to the No exceptions noted. At Chattanooga


institution’s conference distributions and and Martin, since conference
participation in revenues from tournaments distributions were less than 4% of
during the reporting period. Compare and agree campus revenues, this procedure was
the related revenues to the institution’s general not performed.
ledger and/or statements and recalculate totals.

 Compare the amount recorded in the revenue Since program sales, concessions,
reporting category to a general ledger detail of novelty sales, and parking revenues
program sales, concessions, novelty sales, and were less than 4% of revenues at each
parking as well as any other corroborative campus, this procedure was not
supporting documents and recalculate totals. performed.

 Obtain and inspect agreements related to the No exceptions noted at Knoxville and
institution’s participation in revenues from Chattanooga. At Martin, since
royalties, licensing, advertisements, and revenues from royalties, licensing,
sponsorships during the reporting period. advertisements, and sponsorships
Compare and agree the related revenues to the were less than 4% of campus
institution’s general ledger and/or the statement revenues, this procedure was not
and recalculate totals. performed.

 Inspect sports camp contract(s) between the Since sports camp revenues were less
institution and person(s) conducting institution than 4% of revenues at each campus,
sports camps or clinics during the reporting this procedure was not performed.
period. Obtain schedules of camp participants
and select a sample of individual camp
participant cash receipts from the schedule of
sports camp participants. Agree each selection
with the institution’s general ledger, and/or the
statements and recalculate totals.

 Obtain and inspect the institution’s endowment Since endowment income was less
agreements. Compare the classification and use than 4% of revenues at each campus,
of endowment and investment income reported this procedure was not performed.
in the statements during the reporting period to
the uses of income defined within the related
endowment agreement and recalculate totals.

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 Obtain and inspect agreements related to the The institution did not participate in a
institution’s revenues from post-season bowl post-season bowl. Therefore, this step
participation during the reporting period. was not performed.
Compare and agree the related revenues to the
institution’s general ledger and/or the
statements and recalculate totals.

Expenses
 Compare and agree each operating expense No exceptions noted.
category reported in the statements during the
reporting period to supporting schedules
provided by the institution. If a specific
reporting category is less than 4% of the total
expenses at that campus, no other procedures
were performed for that specific category.

 Compare and agree a sample of expenses from No exceptions noted.


the operating expense supporting schedules to
adequate supporting documentation.

 At each campus, compare each major expense No exceptions noted. See the
account over 10% of the total expenses to prior- supplements to this report.
period amounts. Obtain and document
management’s explanation for any variations
greater than 10%. Report the analysis as a
supplement to the final Agreed-upon
Procedures Report.

 At each campus, select a sample of students No exceptions noted at Knoxville and


from the listing of institutional student aid Martin.  At Chattanooga, for one of 25
recipients during the reporting period. Data student athletes tested, the athletic
should be captured by the institution through grant amount per the NCAA
the creation of a squad/eligibility list for each Compliance Assistance system was
sponsored sport. Obtain individual student- reported at $18,814 when the amount
account detail for each selection and compare awarded per the university’s Banner
total aid in the institution’s student system to the system was $29,755. The student’s
student’s detail in Compliance Assistance (CA) aid was calculated as an in-state,
or the institution report that ties directly to the undergraduate student in the
NCAA Membership Financial Reporting Compliance Assistance system, but
System. Confirm information for each student the student was actually a graduate,
selected was reported accurately in either the out-of-state student.
NCAA’s CA software or entered directly into
the NCAA Membership Financial Reporting
System using the appropriate criteria.
Recalculate totals.

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 Obtain and inspect visiting institutions’ away- Since guarantee expenses were less
game settlement reports received by the than 4% of expenses at each campus,
institution during the reporting period and agree this procedure was not performed.
related expenses to the institution’s general
ledger and/or the statements. Recalculate totals.
Obtain and inspect contractual agreements
pertaining to expenses recorded by the
institution from guaranteed contests during the
reporting period. Compare and agree related
amounts expensed by the institution to the
institution’s general ledger and/or statements.
Recalculate totals.

 Obtain and inspect a listing of coaches No exceptions noted.


employed by the institution and related entities
during the reporting period. Select a sample of
coaches’ contracts that must include football
and men’s and women’s basketball from the
listing. Compare and agree the financial terms
and conditions of each selection to the related
coaching salaries, benefits, and bonuses
recorded by the institution and related entities
in the statements during the reporting period.
Obtain and inspect payroll summary registers
for the reporting year for each selection.
Compare and agree payroll summary registers
from the reporting period to the related
coaching salaries, benefits and bonuses paid by
the institution and related entities expense
recorded by the institution in the statements
during the reporting period. Compare and agree
the totals recorded to any employment contracts
executed for the sample section and recalculate
totals.

 Obtain and inspect a listing of coaches No employees were employed by third


employed by third parties during the reporting parties during the reporting period;
period. Select a sample of coaches’ contracts therefore, this step was not performed.
that must include football and men’s and
women’s basketball from the listing. Compare
and agree the financial terms and conditions of
each selection to the related coaching other
compensation and benefits paid by a third party
and recorded by the institution in the statements
during the reporting period. Obtain and inspect

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reporting period payroll summary registers for
each selection. Compare and agree related
payroll summary register to the coaching other
compensation and benefits paid by third-party
expenses recorded by the institution in the
statements during the reporting period.
Recalculate totals.

 Select a sample of support staff/administrative No exceptions noted.


personnel employed by the institution and
related entities during the reporting period.
Obtain and inspect reporting period summary
payroll registers for each selection. Compare
and agree related summary payroll register to
the related support staff/administrative salaries,
benefits and bonuses paid by the institution and
related entities expense recorded by the
institution in the statements during the reporting
period. Recalculate totals.

 Select a sample of support staff/administrative No employees were employed by third


personnel employed by third parties during the parties during the reporting period;
reporting period. Obtain and inspect reporting therefore, this step was not performed.
period payroll summary registers to the related
support staff/administrative other compensation
and benefits expense recorded by the institution
in the statements during the reporting period.
Recalculate totals.

 Select a sample of employees receiving At Knoxville, since severance


severance payments by the institution during payments were less than 4% of
the reporting period and agree each severance campus expenses, this procedure was
payment to the related termination letter or not performed. At Chattanooga and
employment contract and recalculate totals. Martin, since there were no severance
payments, this procedure was not
performed.

 Compare and agree the institution’s recruiting Since recruiting expenses were less
policies to existing institutional- and NCAA- than 4% of expenses at each campus,
related policies. Obtain general ledger detail this procedure was not performed.
and compare to the total expenses reported and
recalculate totals.

 Compare and agree the institution’s team travel No exceptions noted.


policies to existing institutional- and NCAA-
related policies. Obtain general ledger detail

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and compare to the total expenses reported and
recalculate totals.

 Obtain a listing of debt service schedules, lease No exceptions noted at Chattanooga


payments, and rental fees for athletics facilities and Martin. At Knoxville, debt
for the reporting year. Compare a sample of service payments, reported in line 34
facility payments including the top two highest of the statement, were understated by
facility payments to additional supporting $149,598.41. Interest on commercial
documentation (e.g. debt financing agreements, paper related to athletic department
leases, rental agreements). Compare amounts assets was not reported. The statement
recorded to amounts listed in the general ledger was not corrected.
detail and recalculate totals.

Additional agreed-upon procedures


 At each campus, compare and agree the sports No exceptions noted.
sponsored as reported in the NCAA
Membership Financial Reporting System to the
Calculation of Revenue Distribution
Equivalencies Report from Compliance
Assistance or equivalent supporting
equivalency calculations from the institution.
Compare current year Grants-in-Aid revenue
distribution equivalencies to prior year reported
equivalencies.

 At each campus, obtain the institution’s Sports No exceptions noted.


Sponsorship and Demographics Forms Report
for the reporting year. Validate that the
countable sports reported met the minimum
requirement as set forth in the bylaws. Once
countable sports have been confirmed, ensure
that the institution has properly reported these
sports as countable for revenue distribution
purposes within the NCAA Membership
Financial Reporting System. Compare current
year number of Sponsored Sports to prior year
reported total.

 At each campus, for Pell grants, agree the total No reportable exceptions noted.
number of Division I student-athletes who,
during the academic year, received a Pell grant
award and the total value of these Pell grants
reported in the NCAA Membership Financial
Reporting System to a report, generated out of
the institution’s financial aid records, of all
student-athlete Pell Grants. Compare current

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year Pell Grants total to prior year reported
total.

Other reporting items


 Obtain general ledger detail and compare to the These categories were not reported;
total expenses reported as excess transfers to therefore, this step was not performed.
institution or conference realignment expenses
to validate the existence of the transaction and
accuracy of recording. Recalculate totals.

 Obtain repayment schedules for all outstanding No exceptions noted.


intercollegiate athletics debt during the
reporting period. Recalculate annual maturities
(consisting of principal and interest) provided in
the schedules obtained. Agree the total annual
maturities and total outstanding athletic debt to
supporting documentation and the institution’s
general ledger, as applicable.

 Agree the total outstanding institutional debt to No exceptions noted.


supporting documentation and the institution’s
audited financial statements (if available), or
the institution’s general ledger.

 Obtain a schedule of all athletics-dedicated No exceptions noted.


endowments maintained by athletics, the
institution, and affiliated organizations. Agree
the fair value in the schedules to supporting
documentation, the general ledger, and audited
financial statements, if available.

 Agree the total fair value of institutional No exceptions noted.


endowments to supporting documentation, the
institution’s general ledger, and audited
financial statements, if available.

 Obtain a schedule of athletics-related capital No exceptions noted.


expenses made by athletics, the institution, and
affiliated organizations during the reporting
period. Obtain general ledger detail and
compare to the total expenses reported. Select
a sample of transactions to validate the
existence of the transaction and accuracy of
recording. Recalculate the totals.

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This agreed-upon procedures engagement was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. We were not engaged to
and did not conduct an examination or review, the objective of which would be the expression of
an opinion or conclusion, respectively, on the accompanying statements of revenues and expenses
of the University of Tennessee’s Intercollegiate Athletics Programs for the year ended June 30,
2019. Accordingly, we do not express such an opinion or conclusion. Had we performed
additional procedures, other matters might have come to our attention that would have been
reported to you.

This report is intended solely for the information and use of the institution’s management and is
not intended to be and should not be used by anyone other than the institution’s management.

Sincerely,

Deborah V. Loveless, CPA, Director


Division of State Audit
January 15, 2020

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The University of Tennessee at Knoxville
Department of Intercollegiate Athletics
Statement of Revenues and Expenses
For the Year Ended June 30, 2019

Revenues
1 Ticket sales $ 36,159,453
2 Direct state or other government support -
3 Student fees 1,000,000
4 Direct institutional support -
5 Less: transfers to institution (1,000,000)
6 Indirect institutional support -
6a Indirect institutional support -athletic facilities debt service, lease and rental fees -
7 Guarantees 2,960,211
8 Contributions 31,285,720
9 In-kind 2,243,214
10 Compensation and benefits provided by a third party -
11 Media rights 34,892,703
12 NCAA distributions 2,853,218
13 Conference distributions (non-media and non-bowl) 2,992,013
13a Conference distributions of bowl generated revenue 7,240,572
14 Program, novelty, parking, and concession sales 5,562,286
15 Royalties, licensing, advertisement, and sponsorships 13,544,222
16 Sports camp revenues 1,103,848
17 Athletics restricted endowment and investments income 2,389,118
18 Other operating revenue 539,325
19 Bowl revenues -
Subtotal operating revenues 143,765,903

Expenses
20 Athletic student aid 15,322,641
21 Guarantees 4,029,526
22 Coaching salaries, benefits, and bonuses paid
by the university and related entities 24,636,613
23 Coaching salaries, benefits, and bonuses paid
by a third party -
24 Support staff/administrative compensation, benefits,
and bonuses paid by the university and related entities 26,335,531
25 Support staff/administrative compensation, benefits,
and bonuses paid by a third party -
26 Severance payments 873,806
27 Recruiting 3,823,142
28 Team travel 7,856,840
29 Sports equipment, uniforms, and supplies 4,279,361
30 Game expenses 6,243,103
31 Fund raising, marketing, and promotion 6,885,311
32 Sports camp expenses 310,993
33 Spirit groups 661,182
34 Athletic facilities, debt service, leases, and rental fees 16,934,050
35 Direct overhead and administrative expenses 12,606,558
36 Indirect institutional support -
37 Medical expenses and insurance 1,924,817
38 Memberships and dues 55,016
39 Student-athlete meals (non-travel) 3,003,393
40 Other operating expenses 7,194,290
41 Bowl expenses -
Subtotal operating expenses 142,976,173

Excess (deficiency) of
revenues over (under)
expenses $ 789,730

The accompanying notes are an integral part of this statement.

Other reporting items:


50 Excess transfers to institution $ 78,000
51 Conference realignment expenses $ -
52 Total athletics related debt $ 115,093,801
53 Total institutional debt $ 716,203,498
54 Value of athletics dedicated endowments $ 48,737,420
55 Value of institutional endowments $ 657,537,065
56 Total athletics related capital expenditures $ 8,256,874

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The University of Tennessee at Chattanooga
Department of Intercollegiate Athletics
Statement of Revenues and Expenses
For the Year Ended June 30, 2019

Revenues
1 Ticket sales $ 802,826.43
2 Direct state or other government support -
3 Student fees 5,078,867.81
4 Direct institutional support 7,469,785.84
5 Less: transfers to institution -
6 Indirect institutional support -
6a Indirect institutional support -athletic facilities debt service, lease and rental fees -
7 Guarantees 631,930.00
8 Contributions 1,750,999.32
9 In-kind 202,674.25
10 Compensation and benefits provided by a third party -
11 Media rights -
12 NCAA distributions 428,635.00
13 Conference distributions (non-media and non-bowl) 50,000.00
13a Conference distributions of bowl generated revenue -
14 Program, novelty, parking, and concession sales 59,285.33
15 Royalties, licensing, advertisement, and sponsorships 779,526.76
16 Sports camp revenues 328,970.51
17 Athletics restricted endowment and investments income 118,605.00
18 Other operating revenue 491,185.66
19 Bowl revenues -
Subtotal operating revenues 18,193,291.91

Expenses
20 Athletic student aid 5,363,669.53
21 Guarantees 11,000.00
22 Coaching salaries, benefits, and bonuses paid -
by the university and related entities 4,141,487.50
23 Coaching salaries, benefits, and bonuses paid
by a third party -
24 Support staff/administrative compensation, benefits,
and bonuses paid by the university and related entities 3,336,209.01
25 Support staff/administrative compensation, benefits,
and bonuses paid by a third party -
26 Severance payments -
27 Recruiting 310,341.38
28 Team travel 912,044.47
29 Sports equipment, uniforms, and supplies 538,864.53
30 Game expenses 520,337.61
31 Fund raising, marketing, and promotion 904,168.42
32 Sports camp expenses 137,290.93
33 Spirit groups 217,247.47
34 Athletic facilities, debt service, leases, and rental fees 326,434.72
35 Direct overhead and administrative expenses 44,103.75
36 Indirect institutional support -
37 Medical expenses and insurance 1,456.49
38 Memberships and dues 338,685.47
39 Student-athlete meals (non-travel) -
40 Other operating expenses 1,089,950.63
41 Bowl expenses -
Subtotal operating expenses 18,193,291.91

Excess (deficiency) of
revenues over (under)
expenses $ -

The accompanying notes are an integral part of this statement.

Other reporting items:


50 Excess transfers to institution $ -
51 Conference realignment expenses $ -
52 Total athletics related debt $ 1,267,543.00
53 Total institutional debt $ 103,691,668.68
54 Value of athletics dedicated endowments $ 4,178,844.41
55 Value of institutional endowments $ 162,402,789.63
56 Total athletics related capital expenditures $ 141,046.52

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The University of Tennessee at Martin
Department of Intercollegiate Athletics
Statement of Revenues and Expenses
For the Year Ended June 30, 2019

Revenues
1 Ticket sales $ 150,396.00
2 Direct state or other government support -
3 Student fees 2,053,250.40
4 Direct institutional support 6,965,710.33
5 Less: transfers to institution -
6 Indirect institutional support -
6a Indirect institutional support -athletic facilities debt service, lease and rental fees 888,612.25
7 Guarantees 1,181,000.00
8 Contributions 1,083,479.04
9 In-kind 265,283.89
10 Compensation and benefits provided by a third party -
11 Media rights 156,264.44
12 NCAA distributions 667,135.00
13 Conference distributions (non-media and non-bowl) 75,514.00
13a Conference distributions of bowl generated revenue -
14 Program, novelty, parking, and concession sales 151,560.48
15 Royalties, licensing, advertisement, and sponsorships 255,783.97
16 Sports camp revenues -
17 Athletics restricted endowment and investments income 127,566.26
18 Other operating revenue -
19 Bowl revenues -
Subtotal operating revenues 14,021,556.06

Expenses
20 Athletic student aid 4,503,988.58
21 Guarantees 25,896.00
22 Coaching salaries, benefits, and bonuses paid
by the university and related entities 2,682,169.19
23 Coaching salaries, benefits, and bonuses paid
by a third party -
24 Support staff/administrative compensation, benefits,
and bonuses paid by the university and related entities 1,636,251.69
25 Support staff/administrative compensation, benefits,
and bonuses paid by a third party -
26 Severance payments -
27 Recruiting 173,304.44
28 Team travel 838,983.68
29 Sports equipment, uniforms, and supplies 1,119,178.20
30 Game expenses 208,265.75
31 Fund raising, marketing, and promotion 29,663.15
32 Sports camp expenses -
33 Spirit groups 41,782.88
34 Athletic facilities, debt service, leases, and rental fees 1,004,843.25
35 Direct overhead and administrative expenses 639,230.32
36 Indirect institutional support -
37 Medical expenses and insurance 257,623.49
38 Memberships and dues 5,137.33
39 Student-athlete meals (non-travel) 106,078.15
40 Other operating expenses 749,159.96
41 Bowl expenses -
Subtotal operating expenses 14,021,556.06

Excess (deficiency) of
revenues over (under)
expenses $ -

The accompanying notes are an integral part of this statement.

Other reporting items:


50 Excess transfers to institution $ -
51 Conference realignment expenses $ -
52 Total athletics related debt $ 4,280,587.46
53 Total institutional debt $ 58,239,808.68
54 Value of athletics dedicated endowments $ 3,492,514.70
55 Value of institutional endowments $ 37,054,004.20
56 Total athletics related capital expenditures $ 485,763.00

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THE UNIVERSITY OF TENNESSEE
INTERCOLLEGIATE ATHLETIC DEPARTMENTS
NOTES TO THE STATEMENTS OF REVENUES AND EXPENSES
FOR THE YEAR ENDED JUNE 30, 2019

NOTE 1. CAPITAL ASSETS

The intercollegiate athletic departments at Knoxville, Chattanooga, and Martin are required to
follow all University of Tennessee policies and procedures for acquiring, approving, and disposing
of capital assets as set forth by the Board of Trustees. A university purchase order must be issued
for purchases of $10,000 or more. These purchases shall be based upon the principle of
competitive bidding. Requisitioning and approving of purchases will begin in the respective
athletic department and will then be forwarded to the purchasing department for bidding and the
issuance of a purchase order.

Capital assets, which include property, plant, equipment, software, and library holdings, are
reported in the statement of net position at historical cost or at acquisition value at date of donation,
less accumulated depreciation/amortization. The costs of normal maintenance and repairs that do
not add to the value of the asset or materially extend the assets’ useful lives are not capitalized.

A capitalization threshold of $100,000 is used for buildings, land improvements, and infrastructure.
Equipment and software are capitalized when the unit acquisition cost is $5,000 or greater and the
estimated useful life is one year or more. The capitalization threshold for additions and
improvements to infrastructure and land improvements is also $100,000. The capitalization
threshold for additions and improvements to buildings is $100,000, provided that amount exceeds
20% of the book value of the building.

These assets, with the exception of land, are depreciated/amortized using the straight-line method
over the estimated useful lives of the assets, which range from 5 to 40 years.

NOTE 2. LONG-TERM DEBT

Knoxville

Long-term debt activity related to athletic department assets, for the year ended June 30, 2019,
was as follows:
Beginning Ending
Balance Additions Reductions Balance

Long-term debt:
Bonds $124,535,853.53 $ - $11,171,982.55 $113,363,870.98
Revolving credit facility 3,260,967.38 1,729,929.66 3,260,967.38 1,729,929.66
Total TSSBA
indebtedness $127,796,820.91 $1,729,929.66 $14,432,949.93 $115,093,800.64

16
THE UNIVERSITY OF TENNESSEE
INTERCOLLEGIATE ATHLETIC DEPARTMENTS
NOTES TO THE STATEMENTS OF REVENUES AND EXPENSES (CONT.)
FOR THE YEAR ENDED JUNE 30, 2019

Debt service requirements to maturity for bonds payable at June 30, 2019, for athletic related
debt, are as follows:

Year ending
June 30 Principal Interest

2020 $ 11,624,955.07 $ 5,262,284.00


2021 6,614,425.83 4,827,729.98
2022 6,902,074.48 4,495,708.62
2023 7,292,640.40 4,149,697.38
2024 6,412,409.76 3,822,508.95
2025-2029 37,328,234.64 13,677,196.90
2030-2034 25,027,345.04 5,760,943.81
2035-2039 11,261,691.06 1,180,845.02
2040 900,094.70 22,502.37
$113,363,870.98 $43,199,417.03

Chattanooga

Long-term debt activity related to athletic department assets, for the year ended June 30, 2019,
was as follows:

Beginning Ending
Balance Additions Reductions Balance

Long-term debt:
Bonds $1,389,423.00 $ - $121,880.00 $1,267,543.00
Total TSSBA indebtedness $1,389,423.00 $ - $121,880.00 $1,267,543.00

Debt service requirements to maturity for bonds payable at June 30, 2019, for athletic related
debt, are as follows:

17
THE UNIVERSITY OF TENNESSEE
INTERCOLLEGIATE ATHLETIC DEPARTMENTS
NOTES TO THE STATEMENTS OF REVENUES AND EXPENSES (CONT.)
FOR THE YEAR ENDED JUNE 30, 2019

Year ending
June 30 Principal Interest

2020 $ 124,976.00 $ 36,902.51


2021 128,886.00 33,873.85
2022 131,827.00 30,627.59
2023 135,295.00 27,137.77
2024 139,365.00 23,279.96
2025-2028 607,194.00 47,076.69
$1,267,543.00 $198,898.37

Martin

Long-term debt activity related to athletic department assets, for the year ended June 30, 2019,
was as follows:

Beginning Ending
Balance Additions Reductions Balance
Long-term debt:
Bonds $4,420,671.73 $ - $140,084.27 $4,280,587.46
Revolving credit facility 668,000.00 - 668,000.00 -
Total TSSBA indebtedness $5,088,671.73 $ - $808,084.27 $4,280,587.46

Debt service requirements to maturity for bonds payable at June 30, 2019, for athletic related
debt, are as follows:

Year ending
June 30 Principal Interest

2020 $ 144,615.82 $ 172,057.81


2021 148,874.37 167,535.57
2022 152,509.43 163,552.19
2023 151,496.41 157,457.39
2024 157,140.09 151,523.50
2025-2029 888,394.23 655,137.87
2030-2034 894,694.37 453,038.31
2035-2039 695,607.84 295,701.45
2040-2044 854,274.51 133,421.29
2045 192,980.39 4,059.34
$4,280,587.46 $2,353,484.72

18
THE UNIVERSITY OF TENNESSEE
INTERCOLLEGIATE ATHLETIC DEPARTMENTS
NOTES TO THE STATEMENTS OF REVENUES AND EXPENSES (CONT.)
FOR THE YEAR ENDED JUNE 30, 2019

NOTE 3. CONTRIBUTIONS

No single donor or small group of donors gave more than 10% of the reported contributions at
the University of Tennessee at Knoxville campus, the University of Tennessee at Chattanooga
campus, or at the University of Tennessee at Martin campus.

19
The University of Tennessee at Knoxville
Supplementary Information
Analysis of Current to Prior-Year Expenses

2019 2018
Actual Actual $ Difference % Difference
Operating revenues:
Ticket sales $ 36,159,453 $ 35,938,796 $ 220,657 0.6%
Contributions 31,285,720 34,107,827 (2,822,107) -8.3%
Media rights 34,892,703 33,480,201 1,412,502 4.2%

10% of Revenues $ 14,376,590

Operating expenses:
Athletic student aid $ 15,322,641 $ 14,530,654 $ 791,987 5.5%
Coaching salaries, benefits, and bonuses paid
by the university and related entities 24,636,613 21,843,304 2,793,309 12.8% (1)
Support staff/administrative compensation, benefits,
and bonuses paid by the university and related entities 26,335,531 25,770,210 565,321 2.2%
Athletic facilities, debt service, leases, and rental fees 16,934,050 16,877,235 56,815 0.3%

10% of Expenses $ 14,297,617

(1) The overall increase of $2,793,308 was primarily attributed to coaches' salary increases in men's basketball and football programs of $2,112,437
and $555,705, respectively.

20
The University of Tennessee at Chattanooga
Supplementary Information
Analysis of Current to Prior-Year Expenses

2019 2018
Actual Actual $ Difference % Difference
Operating revenues:
Student fees $ 5,078,867.81 $ 4,472,078.94 $ 606,788.87 13.6% (1)
Direct institutional support 7,469,785.84 8,815,327.39 (1,345,541.55) -15.3% (2)

10% of Revenues $ 1,819,329.19

Operating expenses:
Athletic student aid $ 5,363,669.53 $ 5,132,090.06 $ 231,579.47 4.5%
Coaching salaries, benefits, and bonuses paid
by the university and related entities 4,141,487.50 4,177,135.15 (35,647.65) -0.9%
Support staff/administrative compensation, benefits,
and bonuses paid by the university and related entities 3,336,209.01 3,437,888.74 (101,679.73) -3.0%

10% of Expenses $ 1,819,329.19

(1) The university began to assess athletic fees to online students in certain programs during the 2019 fiscal year.

(2) Direct institutional support for nonprogram activities decreased $673,068.84 and direct institutional support for football decreased $487,591.43. Direct
institutional support represents operating expense amounts funded by the university that were not funded by other athletic department revenues.

21
The University of Tennessee at Martin
Supplementary Information
Analysis of Current to Prior-Year Expenses

2019 2018
Actual Actual $ Difference % Difference
Operating revenues:
Student fees $ 2,053,250.40 $ 2,183,442.04 $ (130,191.64) -6.0%
Direct institutional support 6,965,710.33 6,439,772.08 525,938.25 8.2%

10% of Revenues $ 1,402,155.61

Operating expenses:
Athletic student aid $ 4,503,988.58 $ 4,249,435.65 $ 254,552.93 6.0%
Coaching salaries, benefits, and bonuses paid
by the university and related entities 2,682,169.19 2,630,662.18 51,507.01 2.0%
Support staff/administrative compensation, benefits,
and bonuses paid by the university and related entities 1,636,251.69 1,521,845.59 114,406.10 7.5%

10% of Expenses $ 1,402,155.61

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