Fayetteville Policies and Procedures  808.0 

Athletics Reserve Policy

The following policy provides an approach for maintaining reserves for adequate coverage of debt service under existing bond indentures and to provide reasonable coverage of unanticipated  expenses as described below.

The Total Cumulative Reserve Balance (“TCRB’) is a combination of reserves retained within the University (Dept of Athletics) and the Razorback Foundation. The Minimum Cumulative Reserves Balance ("MCRB") goal will be based on the following three targets:

  1. Operating Reserve
    1. Purpose: Support Operations when revenue projections are not met, unexpected expenditures occur (e.g., buyouts or coaching transition costs), or small project/interim project financing (plan to replenish must exist for projects).
    2. Target: 10% of All Operating Revenues
    3. Note: Such reserves shall be reviewed against the volatility of operating revenue sources and fixed expenditures.
  2. Debt Service Reserve
    1. Purpose: Maintain the Ability to Cover Approximately 1 Year of Debt Service Payments
    2. Target: 120% of the Average Annual Debt Service Payments
  3. Deferred Maintenance Reserve
    1. Purpose: Support the Ability to Cover Unexpected Facility and Equipment Repairs
    2. Target: $2,000,000

On occasion, decisions must be made to manage operations where reserve balances may dip below established MCRB, these decisions are broken into two types:

  1. Major Reserve Impact
    1. Definition: A decision which requires Athletics to dip below 85% of the MCRB.
    2. Action: Athletics will develop a recovery plan to reestablish MCRB. The Chancellor and Executive Vice Chancellor for Finance and Administration have the authority to approve the expenditure and the recovery plan. The intent is for reserve recovery to not exceed three years, but extreme decisions and industry changes may require longer recovery periods.
  2. Minor Reserve Impact
    1. Definition: These are decisions which Athletics may drop below the minimum requirements but within 15% of the MCRB. This will allow Athletics a mechanism to maintain operations when unexpected revenue shortfalls (ticket projects, etc.) and one-time expenditures occur. The mechanism will allow leadership to maintain the overall student-athlete experience and competition requirements planned and budgeted for.
    2. Action: Athletics shall plan to reestablish full MCRB within two years unless approval is granted from the Chancellor and Executive Vice Chancellor for Finance and Administration.

August 22, 2024