UW athletics projects $30 million in one-time expenses before Big Ten move

SEATTLE – Washington athletic director Pat Chun and longtime deputy athletic director Erin O’Connell, who also serves as chief operating officer, addressed the Washington Board of Regents Thursday, seeking approval for their 2025 athletics budget.

UW projects a $2 million operating deficit, along with almost $29.6 million of one-time nonoperating expenses before UW’s transition to the Big Ten. For context, UW athletics projected a $9.95 million profit for the 2024 financial year on May 11, 2023.

“We’re inside our last 50 days in the Pac-12 conference,” Chun said. “It’s been a long, storied history with Washington inside that conference, and it’s unfortunate. All 12 schools, as we disperse, are all challenged financially because of decisions made for the past decade.”

The Board of Regents approved the athletics budget and relief measures to help cover the nearly $30 million needed for the construction of an on-campus Big Ten Network studio, among other expenses.

“Where we’re headed is the right place,” Chun, 78 days into his tenure as Washington athletic director, said. “There is a bright future for us in the Big Ten that aligns us with similar institutions.”

Chun and O’Connell endured a tight turnaround to even assemble this budget. They’ve had to wait for schedules from the Big Ten and dealt with extreme personnel turnover.

Former athletic director Troy Dannen arrived then departed before ever giving this budget presentation. Washington has new football and men’s basketball coaches. University president Ana Mari Cauce announced she will exit after her second term as president ends in 2025 one day earlier.

The athletics department still doesn’t have a chief financial officer, thrusting O’Connell into the role temporarily, though she and Chun assured the Board of Regents a hiring is imminent.

The budget proposed by Chun and O’Connell projects Washington to make almost $165 million in revenue during the 2025 financial year, against $167.1 million in operating expenses. They expect gate revenue ($31.6 million), contributions ($36 million) and NCAA or conference distributions ($42 million) as their biggest revenue streams.

Washington will also utilize two $10 million dollar loans from the Big Ten and FOX Sports, respectively, to help it stay financially viable in 2025. The money, which is interest free, is being loaned against future distributions when Washington earns a full share of the Big Ten media rights deal in 2030. O’Connell praised Cauce and Big Ten commissioner Tony Petitti for negotiating the loans earlier this spring.

Chun and O’Connell expect Washington’s largest expenses to be coaching salaries ($58 million) and sports operating expenses ($49 million).

Outside of day-to-day operations, Washington has a series of one-time expenses because of the school’s move to the Big Ten, which will officially happen on Aug. 2. The most notable cost will be building the studio for the conference’s network.

O’Connell said the studio will be a two-story structure located inside Alaska Airlines Arena. It will contain four control rooms and give the network the ability to broadcast for linear or streaming, and will be considered a campus asset upon completion.

However, the studio isn’t the only expense related to Washington’s Big Ten move. Several of the athletics facilities needed various cable upgrades, along with filming tower maintenance, O’Connell said. The athletics department is also beginning to replace the conference logos on its facilities, including Husky Stadium, Alaska Airlines Arena and on its uniforms.

“These are ongoing things, we can’t just flip a switch,” she said. “There’s a lot that goes into this. It’s exciting, but a big lift as we go.”

To help cover these costs, Washington athletics asked for three allowances. First, it requested a $14.6 million allocation from the school’s capital assets pool with 2% interest.

Chun and O’Connell also asked for a one-year extension of the school’s financial stability plan waiver. As part of the athletics department’s loan from the university’s internal lending program to renovate Husky Stadium and Husky Baseball Field, it was required to meet certain loan covenants by specific benchmarks. If the borrower fails to reach these benchmarks, they must provide a financial stability plan (FSP).

The athletics department initially created an FSP in 2016. It exited the FSP in 2020 to return to its original covenants, then got hit by the COVID-19 pandemic which hamstrung its ability to create revenue. Its next benchmark was scheduled for June 30, 2025, but the athletics department will not be in compliance with those terms and instead sought a waiver to resume covenant compliance by June 30, 2026.

Finally, the athletics department asked to liquidate its shares in the school’s consolidated endowment fund, equaling around $17.7 million dollars. The Board of Regents approved all three requests on Thursday.

“Every school has their challenges going forward,” Chun said. “And we appreciate the board’s willingness to work with us as we work through these challenges.”