The Minnesota State High School League was on pace to operate well into the black — to the tune of about $600,000 — during the 2020-21 school year, the league noted during the Monday, June 1, virtual MSHSL Board of Directors meeting.
The league is now taking preliminary looks at cost-cutting measures in preparation for what could be a monetary nightmare. The League, a nonprofit organization, typically operates with about a $9 million annual budget, MSHSL executive director Erich Martens laid out Monday. That budget covers everything from services to tournaments to insurance.
A massive chunk of that yearly revenue — more than $7 million — comes from tournaments, in the form of ticket sales, broadcast contracts and sponsorships. Matter said ticket revenue alone accounts for 60 percent of the League’s yearly revenue. Tournaments only cost the league about $3.5 million to run, leaving $3.5 million to help fund the rest of the league’s expenditures.
Now what happens if some of those tournaments cannot take place because of coronavirus concerns? Looking at the fall season, Matter called football, soccer and volleyball some of the League’s “large-revenue-producing activities.” Those sports generate about $1.1 million in “net-positive revenue.”
“Trying to project that positive $600,000 … if we had a normal year,” Matter said, “could reverse itself quite quickly to be more than a $1 million deficit.” If the MSHSL has no state tournament revenue, it is left with less than $2 million to work with, which largely stems from school registration fees.
The numbers get worse if the MSHSL is able holds state tournaments without fans. At that point, the MSHSL incurs many of the same usual tournaments costs — facilities, officials, awards — but little of the revenue.
Without the League’s primary source of revenue, how would it begin to cover its roughly $5.5 million in annual non-tournament related expenses?