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February 17, 2014

For recruiting and finances, neutral site games a reality

Tennessee already has announced neutral-site football games on its 2015 and '16 schedules, but the school could be poised to add more as it seeks to enhance its recruiting footprint and to find relief from a local tax that UT officials believe is keeping much-needed funds from its coffers.

Tennessee pays an "Amusement Tax" (67-6-212 in state code) on all of its ticket sales for home football, men's basketball and women's basketball of 5 percent. Of that figure, 4.5 percent is allocated to the City of Knoxville while Knox County receives .5. That tax on its own has resulted in more than $3 million total in revenue dispensed to the two government entities in the past two years; the figure was $1.55 million for the 2011-12 fiscal year and climbed to $1.6 million in fiscal year '12-13, per UT.

However, concerts, lectures and other events hosted on UT's campus at Thompson-Boling Arena and other locations are not charged the entertainment tax. Tennessee has paid the "Amusement Tax" since the early 1990s on ticket sales related to hosting its football, men's and women's basketball games.

VolQuest.com reached out to both UT and Knoxville Mayor Madeline Rogero for comment, but neither party had issued an official comment as this story was published.

The Vols will open their '15 season against UAB at the Tennessee Titans' LP Field in Nashville, a game that very easily could have been an eighth home game for the Vols. UT Vice Chancellor/Director of Athletics Dave Hart believes the contest will be "revenue neutral" at worst for his athletics program and could actually recognize a greater financial windfall, he recently told VolQuest.com, based on the contract structure and incentives in the Vols' pact to play UAB in Nashville in their first game under their new eight-year Nike apparel agreement. Tennessee officials have indicated that the program recognizes net revenues of approximately $2.5 million for "buy" games such as UAB, Western Kentucky, Troy and others who only come to Knoxville with the promise of a six-figure paycheck.

Charlotte, N.C., and Atlanta, Ga., are two other possible destinations for the Vols to play neutral site games, which UT officials have indicated remain highly prioritized for recruiting purposes and brand expansion in addition to the revenue concerns.

"It's revenue neutral," Hart explained of the Nashville game. "We have looked at all of those numbers so it doesn't impact us from a revenue standpoint. It gives us a chance to get into an area that's very, very important to us."

The Nashville Sports Council has been eager to get the Vols back into the Music City, just as they did in the early 2000s to open a season against Wyoming. Tennessee also is expected to receive at least $4 million when it plays Virginia Tech at Bristol Motor Speedway early in the '16 season.

Sources have indicated that UT would like to see the entertainment tax repealed entirely but that it has met some resistance to that measure from City of Knoxville officials. One UT official told VolQuest.com that peer athletics representatives "wait for the punch line" when told the Vols' athletics programs must pay an amusement tax for hosting their own events.

Hart has publicly decried the Vols' lack of reserve funding since taking over the UT athletics helm in September 2011. He has noted repeatedly the Vols' reserves of approximately $2 million are woefully inadequate in the SEC and more in line with mid-major or lower-tier NCAA athletics programs. Tennessee has successfully paid down some of its "debt service" since Hart took over and also has gotten large seven-figure gifts from multiple donors to spur various projects, including the upcoming TV studio that's necessitated by the SEC's new network TV deal with ESPN.

The Vols, in conducting their coaching search after terminating Derek Dooley in November 2012 and to pay for other operating costs, received a waiver from the University on financial obligations that stemmed from the athletics department annually giving seven figures --- typically $6-7 million --- to its academic counterparts. Hart has said that step was a needed measure for the Vols' athletics books to balance.

The City of Knoxville earlier this month reported that it closed the '12-13 fiscal year with $10.4 million in surplus but also projected "fixed-cost" increased for the '14-15 year at approximately $11 million.


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