UT athletics department enacts layoffs, furloughs due to financial strain of COVID-19 pandemic

Horns Report

AUSTIN (KXAN) — On Tuesday, the University of Texas-Austin athletics department announced lay offs, pay cuts and furloughs in a series of “necessary” financial cuts due to the COVID-19 pandemic.

UT Athletics Director Chris Del Conte called the decisions “heartbreaking, but necessary” in his weekly Forty Acres Insider newsletter. Del Conte wrote that the department expects the cuts to amount to $13.1 million in savings for the budget.

Starting on Tuesday, Sept. 1, 35 staff members will be laid off and 35 vacant positions will be permanently eliminated, Del Conte wrote. 273 staff members will receive temporary salary cuts and 11 staff members will be furloughed with benefits, starting on Oct. 1 and extending through August 31, 2021.

Additionally, 26 contracted coaches and administrators voluntarily agreed to temporary salary reductions until August 31, 2021. The performance incentive program has also been suspended by Texas Athletics.

Temporary salary reductions are based on a marginal rate approach in the following manner: the first $50,000 of an employee’s salary will be reduced by 2.5%, the next $50,001 to $100,000 is reduced by 10% and any amount above $100,001 is reduced by 15%, according to the newsletter.

While Del Conte did not specify which coaches took a voluntary pay cut, and the university said it would not provide additional details, the salary reduction formula would result in an $891,000 reduction to head football coach Tom Herman’s $6 million annual salary.

At the start of the COVID-19 pandemic, the athletics department immediately started containment measures to lessen the financial blow of the pandemic, but “significant full-time personnel actions were still required to stabilize the financial health of the department,” Del Conte wrote. Those measures saved the department in excess of $19.9 million when compared to budgeted operating expenditures for the 2019-20 fiscal year, according to the newsletter.

To prepare for the upcoming year’s budget, Del Conte also reports the department is reducing team and overall operating expenses, making team travel regionalized and reducing capital project expenditures.

Difficult Decisions

Texas Tech Athletic Director Kirby Hocutt said he spoke to Del Conte, a close friend, throughout the budgeting process, sometimes every day.

Texas Tech announced a day earlier that 40 positions within the athletic department would be cut as part of $11 million in cuts.

Hocutt said he and Del Conte leaned on each other for help making difficult decisions about loyal, and talented, employees.

“It’s… These are not fun things to have to manage and try to lead through,” Hocutt said.

Texas A&M announced last month that $16 million would be cut from the athletic department budget because of shortfalls caused by the COVID-19 pandemic.

Long-term Impact

Forbes ranked the University of Texas football team as the second most valuable program in the country in 2019, behind only Texas A&M.

Sports economist Victor Matheson told KXAN that the largest athletic departments may have the most difficult bouncing back.

“Texas is the biggest of all of them and, therefore, they have the farthest to fall,” said Matheson, a professor at College of the Holy Cross. “A $100 million tab on your credit card is not something you pay off in one single season.”

Matheson said there’s no telling how long it will take for collegiate athletic programs to recover lost revenue from the pandemic but added that the largest programs, which are dependent on revenue from football, could struggle to maintain non-revenue generating sports.

“You are talking about trying to figure out how to plug $100 million holes,” he said.

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