Running UO athletics as a corporation, AD

EUGENE - The athletics world at the University of Oregon continues to spin, with Pat Kilkenny at the center of it.

Baseball has been added. Wrestling will be dropped. The Mike Bellotti-coached football team went 9-4 after flirting with being No. 1, the Ernie Kent-led basketball team keeps winning. A $200 million basketball arena still is in the works. A future of self-sufficiency and profit is hanging in the balance.

The Portland Tribune sat down last week with Kilkenny, the UO's short-term athletic director, for some questions and answers about those topics and more:

Tribune: The football team, without key injuries, might have played for the national championship. How hard did you take their misfortune?

Kilkenny: I've never been a person to be so disappointed, because my expectations aren't too terribly high. Consequently, I'm not disappointed, it's just the way I manage my own psyche. We had great kids, and I loved the way our coaching staff went after their jobs this year. They deserved better than what they got.

Tribune: You and Bellotti had a handshake agreement on a new contract with a 'significant' raise. How worried were you that Bellotti might go to UCLA?

Kilkenny: I take all that stuff very seriously. I didn't come here to hire a football coach. The impact our football program has on the athletic department is significant, and that's an understatement. (Hiring a new coach) is not what I bargained for, and I didn't want to be put in that position. If I made a bad decision, I would go to my grave taking this department to a (low) level it doesn't need to be.'

Tribune: Would Bellotti make a good athletic director someday?

Kilkenny: Yeah, Mike is very much a disciplinarian. He's fair, a good listener. But he's no-nonsense and certainly has historical perspective about what the business is about. Yeah, if I were sitting (home) in San Diego and Mike was the AD, I would feel the department would be in good hands.

Tribune: Kent's basketball team continues to play well.

Kilkenny: I thoroughly like what the coaches are doing with the kids. And they got a good recruiting class. Ernie's got a number of 'adults' playing for him. They're working through some chemistry, it seems like, as the point-guard thing (with Kamyron Brown, Tajuan Porter) is so critical. I've seen this Kamyron Brown grow up. I think our coaching staff is doing a great job of taking personalities and meshing them together. Ernie's not afraid to put somebody on the bench and take a stab at changes, which are hard to do, because kids struggle with changes.

Tribune: Wrestling ends as a UO sport after this season, unless supporters can rally to the cause. What does wrestling need to do to be reinstated?

Kilkenny: They need operating capital and facilities. Their program is really efficiently run (budgeted around $650,000), and it's always been fiscally disciplined. But the new arena has no plans for locker rooms. We're not going to wrestle after this year. It's done.

Tribune: What if supporters raise the money?

Kilkenny: We'll have to figure out facilities, and we need capital resources to go after facilities. If somehow money were raised, and I have no reason to believe it's going to happen, there might be a way we could come back to the (UO) rec center for another year (for practice). They could compete in Mac Court, but not practice there.

Tribune: So, it's a long shot for wrestling?

Kilkenny: Uh, yeah, it would be really difficult to see a scenario where they could come up with the capital they need.

Tribune: Give us a baseball stadium update.

Kilkenny: We have enough money to do the first phase - a playing surface, dugouts, temporary and some permanent seating, a fence, a video board. We have about $4 million or $5 million through donations. The first generation will be functional, utilitarian in nature; the second version, after two years, will be nice, and it'll probably be the best facility in the Pac-10. (A location hasn't been named, but next to Autzen Stadium remains one possibility).

Tribune: You've had quite an outpouring of support.

Kilkenny: Yeah, that's the only way baseball can happen. It has to be a focused fundraising effort. It couldn't take away from other fundraising efforts.

Tribune: You say the baseball budget is around $1.2 million. Are you overextending yourself on baseball?

Kilkenny: No, because, honestly, if we don't have the money, we'll make the same hard decisions again (budget cuts). There has been incredible support early on for baseball, not only emotional, but financial support.

Tribune: Is it exciting for the Ducks to be adding baseball?

Kilkenny: For sure, and I absolutely guarantee you we intend for it to be a revenue sport. We went to 20 baseball schools, (UO officials) Joe Giansante, Renee Baumgartner and I and some construction experts. They looked at baseball aspects, and I'm sitting there talking with business managers, 'How do you guys make money?' There's a lot of schools making money in the baseball business. They sell tickets. Advertising opportunities, skyboxes.

We actually have a pretty creative model that we're going to roll out, partnering with the Eugene Emeralds, which will give us another income stream. Another element to that relates to leveraging the facility. It's all about cash flow and capitalizing on facilities. There are other revenue opportunities that I can't talk about, but it gets us there to make it a revenue sport.

Tribune: But fans have to catch on, too.

Kilkenny: That's why we hired one of the best coaches in America (George Horton, for about $400,000 per year). We have to compete and compete right away. By the second year, if you listen to him talk, we're going to Omaha a week from Wednesday. He's great, great for Oregon. No doubt, he's competitive.

Tribune: Tickets won't be too spendy?

Kilkenny: It'll be a baseball model -seats extremely affordable. We'll do box and club seating. There'll be four or five price points.

Tribune: You have only $200,000 in profit from a $47 million athletic budget?

Kilkenny: This place is very fragile, but we're not getting a nickel from the state or the academic mission, either.

Tribune: Are you worried about the margin between revenues and expenses?

Kilkenny: It's a little about strategy related to the arena and the legacy fund. At some point, we might expand Autzen again. We've sold all our inventory - tickets for football and basketball - and we're raising our prices again. But at some point, we have to create new inventory and revenue, which the new arena will do both.

We've been in the business a long darn time. I know people think I'm Johnny-come-lately, which I am, but we have a fabulous staff, along with other great resources, and we're able to formulate good strategies. And you have to have good coaches and facilities if you want to be in this business.

Tribune: You have Phil Knight's $100 million as a financial backstop, and you want $150 million generated all together for cushion. Will you get the $200 million in state bonds to build the arena, despite criticism from the UO senate about poor planning?

Kilkenny: Even in a conservative-case scenario, it virtually pays for itself, sans $1 million or $2 million. Given other unrestricted money from the Duck Athletic Fund, we're very comfortable we can meet our obligations. We'll know (about bonds) in the next few months. But I see some optimism. We'll continue to work with the university senate, because we didn't do a good job of communicating our objectives. There are income areas they don't understand. It's all financial.

Tribune: Will tickets be expensive?

Kilkenny: There will be $15 to $18 tickets. But we have to get after corporate America, who want premium seatings, and make them pay market price. Because we put a heck of a product out. It's entertaining and competitive.

Tribune: The arena was supposed to cost less than $200 million. …

Kilkenny: Inflation. Construction costs are going down because of the economic cycle we're in, but inflation on construction has doubled or tripled every inflation rate for structural steel and concrete, all going up 5 percent to 9 percent.

I'd like to break ground after the Olympic Trials, but that's a little ambitious.

Tribune: Speaking of which, the Olympic Trials will be here this summer and in 2012, as well as the USA Outdoor Track and Field Championships in 2009 and 2011.

Kilkenny: What Vin Lananna and the Oregon Track Club have done is nothing short of extraordinary and amazing. It's great for the community, university and state. It looks like we're back to where we once were in track and field.

Tribune: You still like your job? You don't have to be doing this.

Kilkenny: I like it as long as I feel we're making progress. I take my job very seriously. I'm financially one of the luckiest guys in the world. But you have pride, and you want to be the best you can be. I also work with great people.

Tribune: And you're obviously running the athletic department as a business enterprise.

Kilkenny: I don't know any other way to do it. I have a tremendous staff that can deal with the nuances of the business. I've never had a problem with empowerment or delegation.

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