NJSIAA's financial problems are growing

ROBBINSVILLE, N.J. - Gary Zarrilli is a numbers guy. He knows when they don't add up.

Zarrilli, the business administrator for the New Jersey State Interscholastic Athletic Association, knows the organization that oversees high school sports in the state has lost nearly $2 million since 2006.

He knows the organization lost $263,924 during the 2010-11 school year. He knows his budget projects that the organization will lose $405,000 this school year. He knows he's working on a budget for 2012-13 that will anticipate a similar shortfall.

"This is something we worry about every single day," Zarrilli said Thursday at NJSIAA headquarters.

The NJSIAA is running out of money. The organization has posted shortfalls in six of the last seven years and almost certainly will have major losses this year and in 2012-13.

The organization has reserves of around $800,000. But given Zarrilli's projected budget losses of around $400,000 per year, the organization that comprises 433 public and nonpublic schools and monitors the participation of more than 250,000 student athletes could be tapped out in two or three years.

Then what?

"That's a good question," NJSIAA executive director Steve Timko said. "We have outstanding tournaments, we have outstanding venues, and we have outstanding attendance. And yet we keep losing money."

New Jersey state assemblyman John Burzichelli (D., Gloucester/Salem), a frequent critic of the NJSIAA, said he knows what will happen when the organization runs out of money: Oversight of high school sports will move under the auspices of the New Jersey School Boards Association.

"That's a viable option," Burzichelli said. "It can and will happen without impacting the student athletes."

This situation provides no immediate threat to championship competition for the state's student athletes. The NJSIAA has the capital to continue to operate for another couple of years.

But Zarrilli, Timko, and Burzichelli agree on one thing: The NJSIAA can't continue to run in the red.

"Is this [problem] reality? Yes," Timko said.

In hopes of increasing revenue, the NJSIAA is planning several steps:

Opening up bidding to host the individual state wrestling championships, which have been held at Boardwalk Hall in Atlantic City since 2002, as well as other popular events such as the basketball Tournament of Champions.

Expanding the football and wrestling team tournaments by 25 percent in public-school competition by creating a Group 5.

Seeking to increase corporate sponsorship from its annual level of around $350,000, an admittedly hard sell in tough economic times.

Continuing to lobby the state Department of Education to allow increased tournament ticket prices.

"It all comes down to ticket prices," said Zarrilli, who was hired in 2011 to help the NJSIAA improve its fiscal operations.

Since January 2010, the NJSIAA has been restricted by law from charging more for tickets to tournaments than tickets to regular-season events, which usually are $3 for adults and $2 for students and seniors.

The law, sponsored by Burzichelli after he said fans complained about ticket prices, allows the NJSIAA to charge more for tournament events held in non-high school facilities such as Boardwalk Hall and at college venues.

But the Department of Education sets those prices. In most cases, that department has allowed ticket prices that are a compromise between regular-season prices and the NJSIAA's requests.

At the South Jersey football championships at Rowan in December, for example, the NJSIAA was permitted to charge $5.50, $2 for students and seniors.

In its 2012 business plan, the NJSIAA noted that tournament ticket revenue declined by $299,200, or 9.7 percent, from 2010 to 2011 because of a full year of implementation of the new law.

The business plan says the decline in revenue has resulted in "serious concerns within the association about the viability of future championship events in nonrevenue generating sports, including girls' athletics."

Timko said the NJSIAA is loathe to cut championship programs and also is reluctant to increase entry fees, which are $80 for teams to participate in tournaments.

The NJSIAA derives 55 percent of its revenue from tournament ticket sales, and most of that is from sports such as boys' basketball and football as well as outdoor track. Timko says the NJSIAA needs to make a significant profit from the so-called "major" sports to fund other sports as well as its day-to-day operations.

The NJSIAA contends that ticket prices to championship events are less than to similar school-related activities such as band competitions and theater productions. The organization says that New Jersey's average price of $3 to $5 for championship football is the lowest among 51 state athletic associations in the country, according to a survey by the National Federation of State High School Associations.

Burzichelli is not swayed.

"Their problem is in their own house," Burzichelli said. "They need to cut expenses."

The NJSIAA has 14 full-time employees, including a senior staff of five directors. Timko said the organization has lowered costs by not replacing assistant director Bob Baly, who retired in 2011, and also has frozen salaries and cut back on everything from the frequency of executive committee meetings to travel to the printing costs of tournament programs.

"We've cut to the bare bones," Timko said.

The organization's financial troubles predate the drastic change in ticket prices. The NJSIAA lost $703,009 in the fiscal year ending in June 2006, and $371,616 in the fiscal year ending in June 2007. According to a State Commission of Investigations report, the NJSIAA paid former executive director Boyd Sands a $549,000 retirement package when he stepped down in January 2006.

Timko said the NJSIAA has acted to comply with many of the suggestions in the SCI report, which was issued in October 2010. But revenues have declined dramatically since the ticket-price law went into effect in January 2010.

In the fall of 2009, when the NJSIAA still was charging $6 for adults and $3 for students and seniors to tournament football games at high school sites, the organization made a profit of $359,606 on the sport ($689,837 in revenue vs. $330,231 in expenses). In the fall of 2010, the NJSIAA made a profit of $91,062 on football ($415,176 in revenue vs. $324,114 in expenses).

The state wrestling tournament, despite crowds of 10,000-plus per session for the championship weekend in Atlantic City, has been operating in the red in two of the last three years. The NJSIAA lost around $19,000 on wrestling in 2010, made around $18,000 in 2011, and lost around $18,000 in 2012 - mainly because nearly every site that hosted the 32 district championships lost money, Timko said.

Timko said he "hasn't slept in six months" because of concerns over the organization's precarious financial situation.

Zarrilli, the numbers guy, said he awoke the other night with unfavorable figures in his head.

"I was up at 3:30 in the morning thinking about this," Zarrilli said.

For a closer look at the NJSIAA shortfall, click here.

For more about NJSIAA considering a new site for state wrestling, click here.