Most Athletic Department Debt

[Claude G]

All I can say is wow!!!

 

 

[Spaztecs]

Daaaamn.

CSU and SDSU throwing cash around like they're a P4.

[Beaver-Poke]

This is sort of misleading. 

Most of us go into major debt when we take out a mortgage to buy a house. If you're buying a house in excess of $600k or so (pretty common on the West Coast), you're going to have a huge mortgage, which of course is debt. But you gradually pay it off monthly and are nowhere near in danger of being underwater financially.

The debt service in this graph is similar, most campus construction projects require 30-year bonds. So, Ohio State might owe $330 M (I think they have stadium upgrade/basketball arena costs) but they can easily cover the annual debt service and are nowhere near in danger of being underwater. 

Now, CSU, Cal and SDSU might be in trouble some because they don't have anywhere near the annual revenue Ohio State and some of the other heavy hitters do. Cal is a trainwreck.

The state must have helped ASU pay off its debt service. No way did they have that much surplus on hand to simply pay everything off. 

[Headbutt]

On 5/25/2024 at 12:40 PM, Beaver-Poke said:

This is sort of misleading. 

Most of us go into major debt when we take out a mortgage to buy a house. If you're buying a house in excess of $600k or so (pretty common on the West Coast), you're going to have a huge mortgage, which of course is debt. But you gradually pay it off monthly and are nowhere near in danger of being underwater financially.

The debt service in this graph is similar, most campus construction projects require 30-year bonds. So, Ohio State might owe $330 M (I think they have stadium upgrade/basketball arena costs) but they can easily cover the annual debt service and are nowhere near in danger of being underwater. 

Now, CSU, Cal and SDSU might be in trouble some because they don't have anywhere near the annual revenue Ohio State and some of the other heavy hitters do. Cal is a trainwreck.

The state must have helped ASU pay off its debt service. No way did they have that much surplus on hand to simply pay everything off. 

I can't speak for Cal, but CSU and SDSU had solid financial plans in place prior to beginning construction.  SDSU will be leasing to MLS (part of the plan) to build a cushion for hard times paying the bond if they should arise.  CSU raised more than a third of the cost of the stadium through private donations and that money is held in reserve for tough times.  So far, via attendance, concessions, and sponsorships Canvas stadium still runs in the black.

You're 100% right, facilities debt doesn't usually reflect the overall financial health of an athletic department.  It is just one element.

[Beaver-Poke]

ASU simply engaged in voodoo economics to make its athletic department debt disappear.

Michael Crow said that ASU “eliminated” the debt owed to it by its athletic department—listed by Sportico at more than $300 million—as a key element of its restructuring. Not entirely clear whether the debt was entirely forgiven or dealt with in another manner: “What's happened in the past was athletics was considered a separate thing, called an auxiliary enterprise. It's not an auxiliary enterprise anymore. It's in the core of the enterprise of ASU itself. We've changed the financial model that's going to allow our athletic department to focus on victory and success of our student-athletes academically and athletically. The rest of our university is going to worry about the rest of our financial issues." “We're going to have an opportunity for the athletic department to not be burdened by trying to carry the totality of all of its fixed costs. The rest of the university didn't have fixed costs that it had to worry about but the athletic department did. We've restructured that entirely."

 

(2) Chris Karpman on X: "Michael Crow said that ASU “eliminated” the debt owed to it by its athletic department—listed by Sportico at more than $300 million—as a key element of its restructuring. Not entirely clear whether the debt was entirely forgiven or dealt with in another manner: “What's happened" / X

[roughrider]

On 5/25/2024 at 12:40 PM, Beaver-Poke said:

This is sort of misleading. 

Most of us go into major debt when we take out a mortgage to buy a house. If you're buying a house in excess of $600k or so (pretty common on the West Coast), you're going to have a huge mortgage, which of course is debt. But you gradually pay it off monthly and are nowhere near in danger of being underwater financially.

The debt service in this graph is similar, most campus construction projects require 30-year bonds. So, Ohio State might owe $330 M (I think they have stadium upgrade/basketball arena costs) but they can easily cover the annual debt service and are nowhere near in danger of being underwater. 

Now, CSU, Cal and SDSU might be in trouble some because they don't have anywhere near the annual revenue Ohio State and some of the other heavy hitters do. Cal is a trainwreck.

The state must have helped ASU pay off its debt service. No way did they have that much surplus on hand to simply pay everything off. 

Add Wazzu to the short list of uh oh's on that list.   All the others are fine.  Locked and loaded to go deeper in debt too.

[madmartigan]

On 5/25/2024 at 12:40 PM, Beaver-Poke said:

This is sort of misleading. 

Most of us go into major debt when we take out a mortgage to buy a house. If you're buying a house in excess of $600k or so (pretty common on the West Coast), you're going to have a huge mortgage, which of course is debt. But you gradually pay it off monthly and are nowhere near in danger of being underwater financially.

The debt service in this graph is similar, most campus construction projects require 30-year bonds. So, Ohio State might owe $330 M (I think they have stadium upgrade/basketball arena costs) but they can easily cover the annual debt service and are nowhere near in danger of being underwater. 

Now, CSU, Cal and SDSU might be in trouble some because they don't have anywhere near the annual revenue Ohio State and some of the other heavy hitters do. Cal is a trainwreck.

The state must have helped ASU pay off its debt service. No way did they have that much surplus on hand to simply pay everything off. 

You mean that an analysis of a University's financial situation based on one variable is not complete? This tweet is fairly useless as a tool for measuring an ADs financial success- you are spot on. 

[RebelAlliance]

On 5/26/2024 at 1:10 PM, Beaver-Poke said:

ASU simply engaged in voodoo economics to make its athletic department debt disappear.

Michael Crow said that ASU “eliminated” the debt owed to it by its athletic department—listed by Sportico at more than $300 million—as a key element of its restructuring. Not entirely clear whether the debt was entirely forgiven or dealt with in another manner: “What's happened in the past was athletics was considered a separate thing, called an auxiliary enterprise. It's not an auxiliary enterprise anymore. It's in the core of the enterprise of ASU itself. We've changed the financial model that's going to allow our athletic department to focus on victory and success of our student-athletes academically and athletically. The rest of our university is going to worry about the rest of our financial issues." “We're going to have an opportunity for the athletic department to not be burdened by trying to carry the totality of all of its fixed costs. The rest of the university didn't have fixed costs that it had to worry about but the athletic department did. We've restructured that entirely."

 

(2) Chris Karpman on X: "Michael Crow said that ASU “eliminated” the debt owed to it by its athletic department—listed by Sportico at more than $300 million—as a key element of its restructuring. Not entirely clear whether the debt was entirely forgiven or dealt with in another manner: “What's happened" / X

So, essentially ASU just gave its athletic department the largest subsidy in the history of college sports.  Perhaps the AAU might want to reconsider their decision..  

[smithy]

Tony Altimore's back of envelope calculations at it again. Didn't Oregon State just do a renovation at Reser last year?..wonder what their debt service is, since it is not listed. And what about the oop's calculation from Arizona?

[Dealwit]

That's what happens when you build a shinny new stadium or an extensive renovation.  Hoping you get into a power conference.

[Claude G]

On 5/26/2024 at 1:29 PM, smithy said:

Tony Altimore's back of envelope calculations at it again. Didn't Oregon State just do a renovation at Reser last year?..wonder what their debt service is, since it is not listed. And what about the oop's calculation from Arizona?

Reser Stadium has a bond debt of $45 million that must be paid back over a 35 year period.  It's not as bad as Cal.  

[Slapdad]

On 5/26/2024 at 1:16 PM, madmartigan said:

You mean that an analysis of a University's financial situation based on one variable is not complete? This tweet is fairly useless as a tool for measuring an ADs financial success- you are spot on. 

CSU reported a $28.2M athletics deficit in 2022 and haven't had much success with their expensive FB coach hires....I'd say CSU isn't in great shape, financially speaking. And even though RSF gave the facepalm reaction to Dealwit's post, his post isn't untrue. The money put into stadiums hasn't translated to higher attendance and more money to this point. 

 

[RSF]

On 5/27/2024 at 1:26 PM, Slapdad said:

CSU reported a $28.2M athletics deficit in 2022 and haven't had much success with their expensive FB coach hires....I'd say CSU isn't in great shape, financially speaking. And even though RSF gave the facepalm reaction to Dealwit's post, his post isn't untrue. The money put into stadiums hasn't translated to higher attendance and more money to this point. 

 

It is when you consider most of that top 25 is not trying to get into a power conference (they're already there).  What Beaver-Poke said was 100% correct.  And most do translate into more money because most schools service the debt on these facilities with pledged private donations.

[Beach Bully]

 

unlike viejas, which is owned by the student association, snapdragon is owned by the university And athletics.  

SDSU is making money off the rental income from the stadium for NWSL, MLS, pro rugby, pro lacrosse, concerts, motocross, international soccer matches, international lacrosse & rugby.

 Altimore didn’t know how much profit they were making, but did state they are making a profit.  SDSU had athletic revenue of 104m, more than enough to pay stadium debt

 

[Slapdad]

On 5/27/2024 at 1:34 PM, RSF said:

It is when you consider most of that top 25 is not trying to get into a power conference (they're already there).  What Beaver-Poke said was 100% correct.  And most do translate into more money because most schools service the debt on these facilities with pledged private donations.

I think most understood that the comment was as it pertains to the three MWC schools on that list (and Wazzu). Most on that list are schools with deep pockets....and then you have three MWC schools who have AD debt outpacing schools like Florida State, Miami, Notre Dame, Stanford and USD, which is pretty foolish. 

[Beaver-Poke]

On 5/26/2024 at 1:29 PM, smithy said:

Tony Altimore's back of envelope calculations at it again. Didn't Oregon State just do a renovation at Reser last year?..wonder what their debt service is, since it is not listed. And what about the oop's calculation from Arizona?

OSU's stadium upgrade was paid, in a large part, by private donations; they had a $50m lead gift and raised almost $90 million overall. I think the debt service is less than $3 million per year.

The total project also included a new university health center, which is leased at about $750k per year by the local health/hospital monopoly, and a welcome center that admissions will use year-round as the jumping-off point for university tours that doubles as high-end donor space on game days. 

[Wyobraska]

On 5/27/2024 at 12:43 PM, Slapdad said:

I think most understood that the comment was as it pertains to the three MWC schools on that list (and Wazzu). Most on that list are schools with deep pockets....and then you have three MWC schools who have AD debt outpacing schools like Florida State, Miami, Notre Dame, Stanford and USD, which is pretty foolish. 

What did you want CSU and SDSU to do with their stadium situations before they built new ones?

[Headbutt]

On 5/27/2024 at 4:52 PM, Wyobraska said:

What did you want CSU and SDSU to do with their stadium situations before they built new ones?

SDSU no longer had a stadium.  The cost of deferred maintenance and bringing CSU's off campus stadium up to code was $80 million more than the cost of building a new one on campus.  These were smart decisions.  They did incur debt, but it wasn't stupid debt.

[Wyobraska]

On 5/27/2024 at 5:36 PM, Headbutt said:

SDSU no longer had a stadium.  The cost of deferred maintenance and bringing CSU's off campus stadium up to code was $80 million more than the cost of building a new one on campus.  These were smart decisions.  They did incur debt, but it wasn't stupid debt.

Exactly.  Not building a new stadium for either school would have been foolish.  

[Slapdad]

On 5/27/2024 at 6:47 PM, Wyobraska said:

Exactly.  Not building a new stadium for either school would have been foolish.  

There are options between building a $220M/$310M stadium and not having one. Houston built their stadium for $128M three years earlier while Tulane and S. Alabama built theirs for about $75M three years earlier as well. Time will tell if it was worth it or not for CSU, but a lot of debt combined with athletic departments that are underperforming, financially speaking, isn't a  great combination, as former CSU AD Joe Parker can attest.