New Mexico State University officials are trying to figure out how to restructure an athletics organization that was allowed to operate last fiscal year without an approved budget and ended the year with a $1.6 million deficit. They’re also trying to decide how to handle the debt, which has continued to grow this fiscal year.
The debt incurred by the Aggie Athletic Fund (AAF), a charitable non-profit that is similar to the NMSU Foundation, continued to grow until at least Sept. 5, when it reached more than $1.75 million. Most of the debt comes from operations of the Aggie Sports Network (ASN), an organization under AAF charged with promoting the university’s athletics programs through television, radio and sponsorships.
Even though AAF is a non-profit separate from NMSU, its budget needs the approval of NMSU, and an e-mail I’ve obtained indicates that NMSU allowed it to operate last year without such approval. Because of that, and because the relevant university administrators have either refused to be interviewed or not yet provided comment for this article, I can’t tell you whether the deficit is something for which the public university or private organization will be responsible. I’m not sure university officials have figured it out.
What I can tell you is that Rebecca Dukes, university vice president for advancement and director of the foundation, said today that officials are still trying to determine, as part of a restructuring of AAF, where to place ASN and who will be responsible for the debt. She said it wouldn’t be the foundation or the university advancement office, adding that the board of the foundation wouldn’t allow it.
“It’s not coming to me,” Dukes said. “It’s not coming to advancement and it’s not coming to the foundation.”
University President Michael Martin refused to comment for this article and said he recommended to other administrators that they do the same. Business and Finance Vice President Jennifer Taylor had university spokesman Darrell Pehr contact me to answer questions for her. Pehr has not yet answered questions I provided on Monday. Athletics Director McKinley Boston agreed on Monday to meet with me next week, then cancelled the appointment on Wednesday and referred all questions to Pehr. Senior Vice President Ben Woods, who is in charge of planning, physical resources and university relations, has not returned a call seeking comment.
The facts
Here’s what I do know:
In the e-mail,
“In this way, we can allow the AAF to begin to spend in anticipation of a full budget approval, knowing that the foundation is backing us,”
She also wrote that Woods was developing a plan to “provide video to athletics for marketing purposes,” which would “allow the transfer of operating expenses and equipment purchases off AAF/ASN’s budget,” perhaps indicating that some of the duties currently performed by ASN may be moved to a university department under Woods’ management.
A difficult reorganization
Dukes said the reorganization is part of Martin’s plan to properly align all university functions, and noted that ASN has been under the control of a charitable organization even though its mission is not charitable. She said Martin’s attempt to reorganize athletics is “courageous” because college athletics departments have “always sort of played by their own rules.” She said they are often not accustomed to true charitable fundraising and are more familiar with trade agreements with businesses.
In her e-mail to Martin,
“The fault lies with the Athletics Department, which has been unable to produce a financial plan for AAF/ASN in time for approval for the 2007-08 athletics season,” she wrote. “This failure indicates that they need to accept help, and the authority, of others.”
Documents I’ve obtained indicate that ASN had a deficit of more than $1.5 million on June 30 and almost $1.7 million on Sept. 5. Another program under AAF, the “Athletics Director PR Fund,” had a deficit on both dates of more than $519,000.
When remaining money in other AAF accounts was considered against the debt, AAF had a deficit of $1.62 million on June 30 and more than $1.75 million on Sept. 5. I don’t know whether a budget has been approved or whether the deficit continues to grow. In addition to asking whether a budget is in place, I’ve asked Pehr to explain what the Athletics Director PR Fund is and why it has such a large deficit. The documents I’ve obtained indicate that, as of Sept. 5, athletics had created a proposed budget for ASN for the current fiscal year, but do not indicate that it had been approved.
What happens now?
Dukes said she originally suggested that ASN could be moved under University Communications and Marketing Services, but its sponsorship component doesn’t really fit with the mission of that NMSU department. She said what’s now being considered is some sort of organization that is separate from the university, but not what the IRS defines as a charitable organization.
What that would mean for AAF’s deficit is unclear. I asked Dukes whether there was some sort of operating agreement between the non-profit AAF and the university that gave Taylor the budgetary authority her e-mail indicates she has over AAF, but Dukes said that and other budgetary questions should be directed elsewhere. That could be important in determining whether the debt is one that must be paid off by the university or whether AAF is responsible.
The question is also important because AAF is an organization similar to the foundation, and one of the criteria critical to AAF’s ability to legally keep donor information secret is separation between the non-profit and the university.
But the key issue, according to Dukes, is that athletics needs “a way of looking at budgeting differently.” She said many athletics departments are “not used to playing by the rules,” including “not only” IRS regulations, but also procedures for raising money, talking with donors and other issues.
She also said NMSU is ahead of the curve in trying to reorganize its athletics department to make it more efficient and effective, and said she believes other universities may begin looking to NMSU as a model once it gets through the current turmoil.
A prior version of this posting did not make clear that some of Dukes’ comments about athletics were directed in general at college athletics departments.