Ryan Glasspiegel
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Earlier this week, Pac-12 players banded together and make demands for a season — many of them reasonable, but also money demands that would not work with Title IX. At the same time, there is some uncertainty over whether there will be a full or partial season, or no season at all due to the pandemic. Under those circumstances, Jon Wilner of the Mercury News reports that the conference is preparing a loan program that could total nearly a billion dollars for schools whose budgets get ravaged by less football revenue.
Wilner reports that the loans would be available for as much as $83 million for each school — which means a total of $996 million, if all schools exercised them — at a 3.75 percent interest rate for 10 years. However, Wilner adds: “Multiple sources indicated that not every school would make use of the loan, and some would seek substantially less than the maximum allowable. If the Pac-12 plays a full football season, the plan could be pushed aside entirely.”
Football drives a majority of the revenue for all of the schools in the conference, with tens of millions of dollars each year from attendance and television. If schools were to face the shortfall all at once, their budgeting decisions would require a bloodbath for other sports. A 10-year loan would ease how dramatic that bloodshed would be, but in all likelihood not eliminate the need for cuts. Even if a full season is played this year, there will be losses from ticket sales. You can go on down the line with what happens with TV if any games are missed, and then what happens if all of them are.
I’m not going to pretend to know the finances of every Pac12 school, but I do know that the cost to attend my alma mater, Arizona, is now about $30K a year for in-state students. When I went there 25 years ago, it was about $1,000-2,000. Yes, it was 25 years ago, but nothing else in my life has increased in cost that much over the same period of time.
So my ultimate question is, where is all of that tuition money going? Because all major universities also have grants and endowments for income. I find it very hard to believe that the revenue from football would suddenly cause an $83 million gap in their income. And using Arizona again as an example, their endowment is reportedly over $1 billion. Seems like they could cover $83 million for one year. Compare that to Stanford, who has a $27 billion endowment, Cal’s is $21 billion, USC is $5 billion, and on and on.
Again, not a finance guy, but this seems like when you get hit with a sudden bill. If you can cover it with your savings, you don’t take out a second mortgage
Nice. I went to U of A as an out of stater 20 years ago and it was $5,000. What a deal, now! This university cost is out of control. Rainy day funds are meant to be used when the rainy day comes. You use it, then get back to building it back up as soon as possible. You don’t take out a loan when you can easily cover the rainy day with cash.
I am a bit back and forth on these demands, bit some of the money demands the players are making would destroy almost every other college sport as it is now played. Maybe that is a good thimg?
I’d also be interested to see how this is impacting the NCAA organization. Doing some brief reading on their financial structure I see that a vast majority of their revenue comes from the men’s basketball tourney each year (close to 1 billion). A smaller percentage comes from ticket sales to other sports tourneys (football, baseball, etc). They haul in well over a billion per year in revenue and the disperse over half back out to member institutions.
I’m no expert on sports business but I would think that is totally obliterated in 2020. Those funds that typically go to schools will also be impacted. At the end of the day these programs are not going to have hardly any revenue coming in whatsoever, which means the conferences won’t either. Unless schools dip into endowments to keep athletic programs afloat I’m not sure how this can continue as is with no fans reduced televised events through end of the year.
Good story. I’m interested in what other conferences and the ncaa as a whole are doing as well.
I think this fallout all traces back to Democrats and media politicizing covid to disrupt Trump’s re-election, rather than looking at and making decisions based on the real data. Everyone has been purposefully scared to death about the covid boogeyman now, which has all but paralyzed our economy. Those who are scared are pretty much useless at this point to be able to make rational decisions. At some point we will all feel the pain if something doesn’t change in state government policy.