KNOXVILLE, Tenn. (WVLT) -- The University of Tennessee's Athletics Dept. faces a new battle, off the court and off the field, this time it's financial.

The Athletics Dept. released a report showing tough financial times. Last year, it ended nearly $4 million in the red, so the department dipped into its reserves. Those reserves - now less than $2 million.

The big question - Why?

Leaders at UT say there's a laundry list of reasons including: historic agreements made by prior leaders for things like scholarships and fellowships. Plus, the department is paying millions of dollars to former football, baseball, and men's basketball coaches. Another huge hit comes from building and improving athletic facilities. The department is dealing with $200 million in debt because of that. And here's something we can all relate to - fixed costs, utilities that continue to rise each year. Plus, leaders at UT say the Athletics Dept. is the most heavily taxed. In fact, it paid $4.6 million in taxes last year.

Of course, AD Dave Hart and Chancellor Jimmy Cheek are already working on how to fix this financial issues.

So what's their strategy?

First, consolidate and restructure to eliminate duplicate expenses - some of this is already done when multiple jobs were cut earlier this year.

Second, send all of the money from UT's participation in the Southeastern Conference directly to the athletics department.

Third, re-evaluate the non-athletic scholarships funded by the athletics department.

Fourth, allocate more money from licensing revenues to athletics.

Finally, find a better way to transfer money from athletics to the campus.