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Monday, April 4, 2011

No clue

Colonel Mustard says "Get a clue and know your audience before you hang yourself"

Even after the chancellor of the Nevada System of Higher Education (NSHE) apologized for past hyperbole on budget cuts, University of Nevada - Las Vegas (UNLV) President Neal Smatreks continues to prove he really has no clue (I blame it on him being a Longhorn).

On Thursday March 31st, Smatresk presented yet another "doom and gloom" scenario of what would happen if his university faced further budget cuts. But this time the presentation was to executives of Nevada's casino industry.

According to Dave Berns one casino exec said “You can’t argue gloom and doom. People don’t want to hear it right now, not when hundreds of thousands remain out of work or have had their hours cut.”

This casino exec is right in more ways than one. Let me explain why in further detail.

Looking at NSHE spending figures I've obtained from Regent Ron Knecht, I see that NSHE collected $1.659 billion in revenue in 2008 (less special projects and capital projects) and $1.609 billion in revenue in 2011. After adjusting for inflation the decline was a mere $96 million or 5.9 percent of total annual revenue.

For UNLV the decline less severe with revenues falling $20 million or 3.7 percent between 2008 and 2011 (capital improvement plan excluded). That may seem like a lot but UNLV seems no worse off than they were in 2006 or 2007...ah the good old days.
 *Excludes capital project and special project revenues

Looking at the gaming revenues from the Casinos from year to year you can see that gaming wins declined 8.4 percent between June 2008 and March 2011. That is higher than NSHE and UNLV! But the situation gets even worse when you realize gaming took their biggest hit between 2007 and 2008.

*Source: Nevada Gaming and Control Board: year to date estimates are from June in previous year to March of current  year (allowing most recent available to be compared with past year-to-date data).

Going back to the 2007 data we see gaming revenues have dropped 20.9 percent. But now what about NSHE and UNLV?  NSHE's inflation adjusted revenue drop was 1.1 percent between 2007 and 2011 while UNLV saw revenues fall 0.2 percent between 2007 and 2011.

In other words, casino executives are not a sympathetic audience to caterwaul about "devastating" revenue declines, especially since NSHE and UNLV didn't take any real revenue declines until 2009-10 when everyone was already well into the recession. While NSHE officials were busy complaining and overstating budget cuts, Casino exec were busy trying to keep their business afloat, people employed, and customers happy with less money than in years before.

Ultimately, UNLV and NSHE have demonstrated more complaining than innovating and people, not just casino execs, are getting tired of hearing about it. 

I admit this is an apples to oranges comparison because casinos have other sources of revenues such as sales, food and live entertainment, but I'm willing to bet that even after including these other revenues they have still seen a larger drop in revenues than Nevada's universities.

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