I hope you and your loved ones remain healthy and well. I am writing to update you on the financial challenges presented by COVID-19 on the Division of Recreation and Intercollegiate Athletics and the steps that we have taken as a Division to address these challenges. My goal is to provide transparency into the fiscal realities and uncertainties we have confronted as a community, and to thank you for your role in helping sustain Penn Athletics through these difficult times.
What has been the financial impact to date on Penn Athletics?
- The pandemic’s negative impact on many key revenue streams – including NCAA distributions, ticket sales, recreation memberships and programming, summer camps, outside rentals, corporate sponsorships, and other variable sources of funding – created less divisional revenue to allocate to varsity programming ($7.6M), on top of a reduction in University funding of about $2M
- Cost containment strategies to mitigate the revenue shortfall were quickly implemented, yet two of our largest costs – compensation ($17.3M) and facilities ($20.4M) – have remained, as the majority of employees have remained in full pay status
- Our varsity sport model is heavily reliant on annual fundraising for sport operating budgets and coaches’ salaries, and the reduction in revenue that can be spent on varsity sports has amplified this need
- In sum, reduced costs related to the cancellation of fall and winter sports and other mitigating efforts helped to reduce the blow from the significant revenue reductions, but there is no financial windfall resulting from the cancellation of fall and winter competition
What measures have been taken to address these challenges?
The Division is currently forecasting a budget deficit of $2.2 million for Fiscal Year 2021. To respond to these challenges and address this deficit, we implemented the following cost-containment measures:
- Implemented compensation cost-saving measures; including savings from a University-wide hiring freeze, no merit increases other than to the Division’s lowest-paid employees, a reduction in temporary workers, reassignment of employees, and limited furloughs ($4M)
- Reduced discretionary spending; including cuts in travel, equipment and computer replacements, non-essential supplies, and professional services ($3.4M)
- Worked with every sport and administrative unit individually to reduce projected FY21 operational budgets
- Reevaluated capital spending in light of the new environment (capital projects currently underway have continued)
- Launched Set the Future in Motion: The Final Year of the Game Onward Campaign, a one-year fundraising initiative to help us maintain the significant momentum built throughout the Game Onward Campaign
Despite many difficult circumstances over the past few months, our staff, coaches and student-athletes have charted a positive path forward and I remain so proud to lead this Division. And, most importantly, I want to thank you, our donors, for all of your continued support during this time of significant uncertainty.
Philanthropy plays a critically important role in both supporting Penn Athletics today and sustaining it into the future. Even with the uncertainty that remains today, an investment in Penn Athletics expresses both your devotion to our current student-athletes and ensures success for future Quakers. While uncertainty remains, please know we continue to provide resources to our student-athletes and we need your continued support to help make this happen while also not losing the ground we have fought so hard to gain against our peers.
If you have any questions about how you can support Penn Athletics, the Penn Champions Club team is available to help, so please reach out to them at 215-898-4717 or email firstname.lastname@example.org.
From all of us at the Division of Recreation and Intercollegiate Athletics, thank you for your commitment to Penn Athletics and our student-athletes.
Dr. M. Grace Calhoun
T. Gibbs Kane, Jr. W’69 Director of Athletics & Recreation