From Sellouts to Shortfalls: Colorado Projects $27 Million Deficit After Deion Sanders 3-9 Season

What's up everyone, I'm Joe Pompleano and this is the Joe Pom show. I hope everyone had a great weekend. For today's podcast, we're going to be talking about the University of Colorado's athletic department and more specifically, Deon Sanders potential impact on their $27 million deficit this year. Now, just three years after the University of Colorado announced Deon Sanders as its next head coach, prime times honeymoon phase in Boulder may already be coming to an end. Colorado only won one big 12 game this year, finishing the season with a three and nine record. The school's recruiting class currently ranks 75th in the country, a 40 spot drop from last year. And if that wasn't bad enough, Colorado's athletic department is now losing tens of millions of dollars, just 10 months after signing Sanders to a $54 million extension. According to US a today, Colorado's athletic department is projecting a $27 million deficit for its current fiscal year. If you add in the $11.9 million at the school's athletic department, receive from the university in institutional support and the $2.2 million generated from student fees. Colorado is actually facing a deficit of $41.1 million. The largest deficit in the 135 year history of Colorado's athletic department. Needless to say, this is a disastrous situation for Colorado. Should or Sanders and Travis Hunter left town for the NFL with the ESPN's college game day and Fox's big noon kickoff disappearing from Boulder with them. Fan attendance fell off a cliff as the team's losses started to pile up this year. And search interest on Google trends for Colorado's football team has now fallen over 90% from Deon's first season in 2023. But these numbers don't necessarily tell the whole story. While Colorado is calling out Deon's $10 million annual salary as part of the problem, a look at the school's finances tells a very different story. One that Colorado is obviously trying to get ahead of publicly. Let's start with revenue because that really isn't the problem. Despite this year's on-field struggles, Colorado's athletic department is still making a lot more money with Deon Sanders than it ever did before. Colorado's athletic department generated an average of $90.3 million annual revenue over the five years prior to COVID. The pandemic then cratered revenues, but they recovered back the baseline in 2022 before exploding in Deon's first season in 2023. Over the last few years, including this year's projections, Colorado's athletic department has generated an average of $137.8 million annual revenue. That's a 52% increase with Colorado's athletic department now bringing in an additional $47.5 million annual revenue today compared to before Deon Sanders arrival in Boulder. These annual revenue figures include all of the University of Colorado's athletic programs. However, nearly all of that growth can be attributed to the football team. Colorado's football team went from generating just $13 million in ticket sales before Deon's arrival to more than $31 million in ticket sales last year. The school's game day revenue bucket, think parking, concessions, programs, et cetera, went from $1.5 million in 2022 to over $6 million last year. Mainly due to football demand. And it's the same story with sponsorships, which have increased from just under $6 million in 2022 to $10.7 million last year. Given that the USA Today report shows Colorado's total athletic department revenue fell from 141.1 million last year to $136.7 million this year. Many people will assume the football team's poor performance has negatively impacted top line revenue. But that's not necessarily true either. Colorado's football team still averaged 50,000 fans per home game this year. And with seven home games instead of six, the school actually generated an additional $4 million in ticket revenue compared to their 2024 season. Instead, the bigger problem is that Colorado's expenses have gotten out of control and the school can't stop spending money. Colorado's athletic department went from spending an average of $88.9 million annually in the five years leading up to COVID to $163 million this fiscal year alone. So while total athletic department revenue has increased dramatically since Dion's arrival, the school has essentially sent every single dollar that income back out the door. In fact, Colorado's athletic department expenses increased 16% this year despite the school knowing revenues would likely come in softer with a projected 3% decline. Whether Colorado intended for this to happen by leaking the report or whether USA today and others did so on their own, Deon Sanders is taking the blame for this. The article quite literally says that the jump in expenses is due to one, Deon Sanders $10 million annual salary and two, the $20.5 million in direct revenue sharing payments that schools can now share with student athletes through the recent House per cent CWA settlement. The revenue sharing component is fair. Not every school will spend the maximum $20.5 million in year one. And the real number is actually a little bit smaller, probably about $600,000 less because of scholarships. But if you want to be a competitive school, especially in football, the recent settlement essentially added $20 million to your annual expenses. But I'm not sure what that has to do with Deon Sanders. Every single major program is facing the same problem. And without Deon Sanders, Colorado would be worse off. And when it comes to salary, $10 million is obviously a lot of money, especially when you're only winning three games in a season. That makes Deon Sanders one of the top five highest paid coaches in the country. And the only one making that much money that isn't expected to win a national chaperchip. But if we are being honest, Deon was making $5 million per year when he arrived at Colorado. And then Colorado asked to renegotiate his deal just two years later, agreeing to make him one of the highest paid coaches in the country, strictly because they saw how much revenue he was generating and didn't want to lose him. So no, it's not Deon Sanders or the football team's fault that Colorado's athletic department is about to post a $27 million loss. The football team generates a $20 million short plus every year while Colorado's basketball team struggles to break even and has not increased its revenue at all over the past few years. Not to mention, Colorado's women sports programs spend about $2 for every $1 they generate and the school is spending more than $26 million per year on wages, bonuses and benefits for noncoaching administrative staff nearly double the $18 million expense they had in 2022. Students, though, will be the biggest loser in my opinion. Colorado's athletic director, Rick George, who recently announced he's stepping down in June has continuously said that the school's athletic deficit will have no impact on Colorado's students or the university's academics. But that's really not true either. Colorado's athletic department was able to balance its budget in the previous fiscal year only because it received $24 million in direct institutional support from the school. The athletic department also raises student fees undergraduates used to help fund the athletic department by contributing a mandatory $28.50 per semester. But that fee increased to $90 this year, generating an additional $2.2 million annually. In simple terms, someone has to pay for the deficit. The University of Colorado can say that the money isn't coming from students or the research department. But where else would it be coming from? Money is fungible. If Colorado keeps covering the athletic department's losses, that money is not being spent elsewhere on education. And this money compounds over time. If Colorado continues to send between $10 million to $25 million to the athletic department each year, that's potentially hundreds of millions of dollars being taken away from students over a 10 year period. This is why so many schools have begun to explore alternative options. There are two schools of thought. You can either increase revenue or cut expenses. The bigger athletic department keeps spending more money on coaxing salaries and NIL initiatives to ensure they don't fall behind. But that money has to be made up elsewhere. That includes selling alcohol at home football games, renting out your stadium for concerts and even potentially raising outside capital from private equity. However, when you consider the expensive coaching buyouts, I can now set schools back and eat figures. A few million dollars in alcohol sales isn't going to solve the problem. That's why schools need to focus on cutting expenses and creating a sustainable model that can absorb the NCAA's new revenue sharing system. Some schools will eventually decide to cut non revenue generating sports teams to extend the value of football's annual profits. But that can create other problems too, such as Title IX issues. Instead, I prefer the approach of producing headcount, writing contracts to reduce buyout risk, maximizing ticket yield through dynamic pricing and upsell pathways and turning your university own real estate into a 365 day revenue engine. But at some point, Colorado has to accept that this isn't a Deon Sanders problem. It's a structural problem. The school is generating more money than ever, yet somehow bleeding cash faster than it comes in. That's a man in his ministry. And unless Colorado is willing to make difficult spending decisions, streamline its operations and build a model that withstands the financial realities of modern college football, the deficits will only grow. Deon Sanders may have brought national attention, record revenues and real momentum to Boulder. But none of that will matter if the university can't create a system capable of sustaining it. Thank you so much for listening to today's podcast. If you enjoyed it, please do me a favor and share it with a friend. Otherwise, I hope everyone has a great day and we'll talk later this week.