Will be interesting to follow the arms races in college athletics when it comes to facilities and coaching salaries in the coming years. This pandemic is about to halt the increase in spending (and taking on debt) at a number of conferences. Most notably, the conferences playing the most limited football schedule, and without fans of any kind (the B1G and PAC).
Interestingly, those two conferences are those that have fueled their athletic budgets and facility projects with the most debt in recent years. There are going to be some hard conversations about cuts and restructures inside a lot of these athletic departments in the next 12-24 months. Here's a list of well-known athletic departments who have annual debt service requirements on their debt that exceed $10MM. For reference, even with all nearly $200MM we've spent in the last 8 years on facilities, our debt service is relatively minor at just $5MM a year. We've done the prudent thing, and mostly stuck to spending what we could effectively fundraise.
Nebraska - $12MM
Minnesota - $16MM
Iowa - $12MM
Purdue - $12MM
Ohio State - $17MM
Penn State - $15MM
Cal - $19MM
Washington - $15MM
Also, 9 of the Top 15 largest debtors in college athletics (some listed above) reside in the Big 10 and PAC. The only school in the Big 12 that is in the Top 15 is OU.
While the levels of debt service above ours don't seem that significant, now think about the budget shortfalls some of these places are going to have. Penn State already announced a fundraising campaign to try and counteract what is seen as a $75MM budget deficit this year. To put that number into perspective, our projected budget shortfall based on what ADGT has told people as recently as this week, is closer to $10MM. Ohio State is readying for a $100MM shortfall. Whatever those schools can't fundraise to fill the gap, they'll have to borrow, and raise their annual debt service payments further.
This is one of those times, it doesn't pay to be a big boy in intercollegiate athletics. Some of these "rich" departments, aren't going to feel very rich over the next 12-24 months. As a result, I think we're going to see a halting of some of these massive increases in coaching salaries and facilities projects.
Lastly......Iowa is going to have a HARD time buying out Ferentz AND paying up for his replacement in this environment.
Interestingly, those two conferences are those that have fueled their athletic budgets and facility projects with the most debt in recent years. There are going to be some hard conversations about cuts and restructures inside a lot of these athletic departments in the next 12-24 months. Here's a list of well-known athletic departments who have annual debt service requirements on their debt that exceed $10MM. For reference, even with all nearly $200MM we've spent in the last 8 years on facilities, our debt service is relatively minor at just $5MM a year. We've done the prudent thing, and mostly stuck to spending what we could effectively fundraise.
Nebraska - $12MM
Minnesota - $16MM
Iowa - $12MM
Purdue - $12MM
Ohio State - $17MM
Penn State - $15MM
Cal - $19MM
Washington - $15MM
Also, 9 of the Top 15 largest debtors in college athletics (some listed above) reside in the Big 10 and PAC. The only school in the Big 12 that is in the Top 15 is OU.
While the levels of debt service above ours don't seem that significant, now think about the budget shortfalls some of these places are going to have. Penn State already announced a fundraising campaign to try and counteract what is seen as a $75MM budget deficit this year. To put that number into perspective, our projected budget shortfall based on what ADGT has told people as recently as this week, is closer to $10MM. Ohio State is readying for a $100MM shortfall. Whatever those schools can't fundraise to fill the gap, they'll have to borrow, and raise their annual debt service payments further.
This is one of those times, it doesn't pay to be a big boy in intercollegiate athletics. Some of these "rich" departments, aren't going to feel very rich over the next 12-24 months. As a result, I think we're going to see a halting of some of these massive increases in coaching salaries and facilities projects.
Lastly......Iowa is going to have a HARD time buying out Ferentz AND paying up for his replacement in this environment.
