I don't think anyone knows, since we haven't seen the details of the agreement or contract.
But if you make a guarantee to someone, then you have to pay it whether you collected the $$ or not.
And here are a few more points.....that help the understanding ...
First...the official response by Rick Giles of the Gazelle Group to the story about Virginia losing so much money:
http://www.roanoke.com/sports/etc/wb/156511
Giles says the story was not fair and balanced, and his response suggests that in calculating their losses, they even included some long-term financing figures for the John Paul Arena, costs that are "a sunk cost and is incurred whether the building has a basketball game or is dark." In other words...they kinda made up some figures to pad their apparent losses!!
Also this article recalls that Virginia's relationship with the Gazelle group goes back to an "ill fated" game in the 2000 Black Coaches Association Tournament that was canceled and never played, and yet UVa still had to pay the guarantee to the Gazelle group. I suspect, therefore, UVa is a little less than open and up front on their feeling about all this since there clearly is a past that ties into this.
http://www.roanoke.com/sports/uvabasketball/wb/156219