Q&A: Greg McGarity on Georgia’s finances, football season scenarios, COVID-19 impact
Greg McGarity had to venture into his office inside Butts-Mehre Heritage Hall on Monday morning. Only two other people were working on his floor — one in somewhat-close proximity in the Georgia athletic director’s quarters and the other across the hallway inside the business office.
Otherwise, no one else could be found inside the athletic department’s base camp that would usually be buzzing with discussion and optimism on a Monday following the scheduled football spring game. Not quite the case this April, and McGarity yearns for face-to-face interaction. All of the employees are instructed to work from home due to the COVID-19 outbreak, so McGarity can’t visit a colleague to brainstorm or host a meeting in his office. That has all been redirected to the impersonal-yet-optimal Zoom video conference call.
“It’s an uncertain time. I think everybody has had enough,” McGarity said in a Monday morning phone interview with The Telegraph. “I’m ready to get back to our world.”
Sports are on pause, however, with no clear end in sight. Georgia has had to adjust in quick fashion and prepare for a number of scenarios where very few definitive plans can be put in place. McGarity engaged in a wide-ranging question-and-answer session on how the Bulldogs act ahead of the 2021 fiscal year, which begins July 1.
Note: This Q&A has been slightly edited for clarity and brevity.
Q: How does the role of an athletic director change during this time? What might your daily routine look like?
A: Perhaps the biggest change is our work environment. There are no expenditures other than salary, benefits and payments for ongoing construction. That’s really the only amount of work being done, aside from responsibilities our employees have while working from home. The impersonal nature is the most unusual obstacle. We’re still able to conduct our business, facilitate all of our student-athletes and are able to have staff meetings on Zoom.
Q: I am aware that Georgia makes it a priority to build its reserve fund and have money stored away. At a time like this, how does a reserve fund come into play?
Note: Georgia has $17.9 million in 2020 reserves remaining for the fiscal year, according to the February board meeting documents. There are $48.5 million available in long-term reserves and a General Endowment Fund of $36.5 million. In total, Georgia has over $102 million available in total reserve funds, but extracts enough to allow for three months of operating expenses (approximately $38 million of a $153 million budget).
A: Fiscal responsibility dates back to 1963 when Joel Eaves became athletic director, and he was very thrifty. We’ve carried forward that concept, and we aren’t doing anything different other than the Magill Society. If we didn’t have that philanthropic piece in place, we would have to take on debt, raise ticket prices or we’d have to tell (Georgia head football coach) Kirby (Smart) that we don’t have the money (for big projects). It’s allowed us to pay for football projects, and that allows us to do things in other sports that don’t lend themselves to fundraising.
They approve everything. If we were not practicing financial best practices, our board would never let us move in that direction. The athletic board has that responsibility atop the list. We also have money on hand to service our debt, and there’s a certain amount mandated by our board. We’ve been able to exceed those levels, and that’s what helps us on a rainy day. We were ready for a rainy day, but not a level 5 tornado.
Q: I know it’s all speculation at this time, but do you prepare for the delay or cancellation of the football season from an administrative standpoint?
A: Absolutely. We’re preparing for our board meeting in June, and we’ll have a finance committee conference call leading up to that. We’ll submit budget information based on the latest update. We’ll run a model with football, and one without football. It’ll be a detailed analysis of our revenue projections and expense projections. It’s hard to see what our world will look like in fiscal year 2021, but we have to proceed with or without football.
There’s no question (that football would play a big role). You have to assume that your month of April is like your month of October. From a budget standpoint, if you aren’t playing football, then that means you don’t have volleyball or soccer. If the dead period extends into the fall, then you can’t recruit. Your expenses are going to be minimal if certain activities aren’t happening on campus.
Q: When might reserve funds need to be used to a further extent?
A: In fiscal year 2021, more than likely you’ll need to use it to a certain level. We have to balance a much lower revenue stream, and we might have to estimate it without football.
Right now, there are two sources of revenue right now: (football) season-ticket sales and baseball funds. The SEC money will be affected to some degree with the NCAA payout. We know that fees will be affected, and we have our hands around how much savings we’ll have through the rest of this (fiscal) year. The expenses going out are really limited to salary, benefits, utilities, insurance and fixed expenses that we already plan for.
Note: Other expenses include scholarships (around $13 million, McGarity said), bond payments ($11 million), along with debts and other fixed costs.
Q: Is there any consideration to cutting or altering the structure of any Olympic/non-revenue sport?
A: Those are worst-case alternatives. I hate to make long-term decisions based on short-term problems. We’re eventually going to be up and running. Once you cut a sport, you can’t get it back. We’re going to get back to a normal — I’m not sure what that’s going to look like — where we’re playing football and have people in the stands. That’s going to happen, but it’s a matter of when. I hate to make a short-term decision and have it affect you for the entirety of your program, because we’ll get back to full speed.
Q: In a time of such uncertainty, does it help knowing that there are finances in the reserve fund to where Georgia isn’t scrambling for answers without sports?
A: That has given a level of assurance and allows you to sleep at night. It avoids a level of panic and uncertainty that could be problematic for those who are struggling to make ends meet in this fiscal year. I’m seeing some having to make those decisions just in order to get to June 30. Whether that’s staff reduction, in compensation or elimination of sports, you’ve seen everything occur. We know, at the end of this fiscal year, that we’re going to be OK. Every dollar that we can save this year to apply toward next year is going to help us deal with those uncertain times.
This story was originally published April 20, 2020 at 2:13 PM.