First, this is not a thread intended to pile on the former B12 or on Iowa State. I'd like an honest discussion. No more ridiculous claims about TV viewership in 2020. No more hurling of insults back and forth. Yes, this was, is, and always will be The Hawkeye State, and the nation has seen that Iowa is very much in a different league than ISU in sports and academics. Debate on that point is closed. But I know enough people who have attended ISU and so I'm curious about how things can proceed for Iowa State and Cyclone Nation, even if that Nation isn't nearly national enough to add value to any of the P4 national conferences.
Below are the aspects of the issue that ISU faces, good and bad, and I did my level best to find the good:
1. Debt Load, Debt-to Revenue ratios, and the possible one-time $50M payout from OU and UT
Cyclone fans continue to wave this windfall as something they could have brought to a major conference, and as a strength. Let's unpack this number.
Just before the C19 pandemic brought this country to its knees, ISU took out $60M in bonds for upgrades to JT stadium, as part of an $80M series of renovations. (Iowa completed $90M additions to Kinnick in 2019, but only $30M from bonds. See articles linked below for sources).
As the Board of Regents (BOR) will continue to face budgetary constraints - and as the economy faces a truly Great Depression once the Fed stops pumping trillions of funny money into corporate coffers, which is where most of it is going - and cannot give special treatment to ISU versus UI and UNI, won't they insist that ISU pays its own way?
C19 also caused a huge hit to the ISU athletic department's budget. Not as bad as expected, but bad.
"Hawkeye income was $35.8 million above expectations and Cyclone income was $15 million better than anticipated" says The Gazette about a month ago, based on numbers reported to the BOR.
Iowa had to borrow $50M from the main campus to finance its deficit, cut several sports, and took more losses due to cancelling half its season and allowing no fans into Kinnick, and a loss of millions from a cancelled bowl game when Missouri pulled out, but the strong ticket sales for 2021, ahead of this point in 2019, and all 9000 student season ticket packages sold out, are making up for the deficit. That $50M loan was issued before the $35.8M actual revised revenue above expectations, so the AD expects to repay this temporary loan by 2022, as current ticket sales and other revenues are ahead of 2019 (see articles below for sources).
Iowa's revenues were $152M in 2019 and the above article quotes the AD in saying that 2021 revenues are expected to match that, with expenses lower.
ISU's revenues are expected to be $98M this year.
The University of Iowa's $55M new football facility that opened at Iowa seven years back was funded mostly through PRIVATE DONATIONS, and the rest from regular AD revenues. NO LOANS. NO TAX DOLLARS. Impressive.
Here is the source on the above.
So over the last decade, both ISU and Iowa upgraded their facilities.
Iowa spent over $145M and borrowed $30M
ISU spent $80M and borrowed $60M.
Those debt to revenue ratios at ISU just don't look real good, and it's gonna get worse with a much diminished B12.
2. New TV deal for B10 in 2023 expected to top expanded SEC
The SEC is expected to ink a $3B deal for the next five years, topping what the B10 signed six years ago valued at $2.6B, which was significantly ahead of even the SEC at the time. But the B10 will get a new deal in 2023 that's expected to top the SEC as did the current B10 contract. No conferences can compete with the B10 and SEC in terms of TV revenue.
No one knows what the deal would be, but based on trends, each B10 school is likely to see tens of millions of additional revenue per year starting with the new deal.
The new - or even expanded - B12 is expected to lose at least 50% of TV revenues after OU and UT leave.
The new B10 TV contract - sweetened with the significantly increased TV revenues expected resulting from the B10, P10, and ACC alliance - ensures Iowa's position long-term, and puts in some peril any institutions that are left out.
3. ISU and Stevens Auditorium - $20M in deferred maintenance
Pollard has expressed his frustration with the looming needs for renovations at Stevens.
Stevens Auditorium faces $20M in deferred maintenance alone, not to speak of the need for major upgrades. No, maintenance isn't really an upgrade. That white elephant is hanging onto the athletic department's budget. Right now, only plans exist to address the growing needs at Stevens.
4. Jack Trice renovations
Kinnick just completed a $90M renovation in 2019, mostly financed through major donations and the regular AD budget, but only $30M through bonds.
ISU's $80M project - stadium, walkway, other athletic buildings - was financed with $60M in bonds (article linked above). That's a disturbingly high ratio of bonds relative to donations and revenue-based financing. An ominous sign that has grown more ominous with the B12 falling apart.
5. ISU fan donations
The above article cites 2020 donations to ISU athletics topping $10M. But recognizing that ISU needed to borrow $30M more than Iowa for stadium and related facility upgrades, it seems that the ISU fanbase just doesn't have nearly as deep pockets as Iowa.
6. Diminished NIL opportunities for ISU athletes in all sports relative to B10 and SEC
Although I listed this last, it might just prove to be the most important relative to quality of the product on the field for ISU going forward, relative to Iowa and the big boys.
This SI article lays it out. With so many more eyeballs on the B10 and SEC going forward, especially after the alliance between B10/P10/ACC, top athletes are going to want to play on the biggest media stages, reaping the benefits of NIL. "No one really understands NIL going forward" is a good point, but the one most obvious point is that NIL earnings for individual athletes depend on the size of their following, and the larger the following, the more the eyeballs, the bigger the league media contracts and exposure of their programs, the higher the payout to them.
The upshot: NIL might just become the determinant for an ever-increasing gap between the big boys - B10 and SEC - and the hangers-on in the P4 (P10 and ACC), and even more so, from the left-outs.
So I'm sure I'm missing stuff, and I'm sure others will add on, but I see some looming questions for ISU going forward:
It seems clear that the $50M possible one-time payout to ISU is already $30M more than spoken for, with $60M in bonds for recent JT renovations, and the need for $20M in deferred maintenance to Stevens.
1. How does ISU manage its debt burden long-term?
2. How does ISU pay top dollar to retain or attract top coaching?
3. How does ISU budget for the loss of tens of millions in TV revenue starting in 2023 (or 2024?) when the current B12 contract expires?
4. What are ISU's prospects as an institution, relegated to a lower tier of an athletic and academic conference?
Again - please let's just have a fact-based, rational discussion. No insults. No gloating. I'm actually curious as a resident of Iowa what the picture is likely to be like in the short, medium, and long-term for ISU and for ISU relative to Iowa.
Below are the aspects of the issue that ISU faces, good and bad, and I did my level best to find the good:
1. Debt Load, Debt-to Revenue ratios, and the possible one-time $50M payout from OU and UT
Cyclone fans continue to wave this windfall as something they could have brought to a major conference, and as a strength. Let's unpack this number.
Just before the C19 pandemic brought this country to its knees, ISU took out $60M in bonds for upgrades to JT stadium, as part of an $80M series of renovations. (Iowa completed $90M additions to Kinnick in 2019, but only $30M from bonds. See articles linked below for sources).
As the Board of Regents (BOR) will continue to face budgetary constraints - and as the economy faces a truly Great Depression once the Fed stops pumping trillions of funny money into corporate coffers, which is where most of it is going - and cannot give special treatment to ISU versus UI and UNI, won't they insist that ISU pays its own way?
C19 also caused a huge hit to the ISU athletic department's budget. Not as bad as expected, but bad.
"Hawkeye income was $35.8 million above expectations and Cyclone income was $15 million better than anticipated" says The Gazette about a month ago, based on numbers reported to the BOR.
Iowa had to borrow $50M from the main campus to finance its deficit, cut several sports, and took more losses due to cancelling half its season and allowing no fans into Kinnick, and a loss of millions from a cancelled bowl game when Missouri pulled out, but the strong ticket sales for 2021, ahead of this point in 2019, and all 9000 student season ticket packages sold out, are making up for the deficit. That $50M loan was issued before the $35.8M actual revised revenue above expectations, so the AD expects to repay this temporary loan by 2022, as current ticket sales and other revenues are ahead of 2019 (see articles below for sources).
Iowa's revenues were $152M in 2019 and the above article quotes the AD in saying that 2021 revenues are expected to match that, with expenses lower.
ISU's revenues are expected to be $98M this year.
The University of Iowa's $55M new football facility that opened at Iowa seven years back was funded mostly through PRIVATE DONATIONS, and the rest from regular AD revenues. NO LOANS. NO TAX DOLLARS. Impressive.
Here is the source on the above.
So over the last decade, both ISU and Iowa upgraded their facilities.
Iowa spent over $145M and borrowed $30M
ISU spent $80M and borrowed $60M.
Those debt to revenue ratios at ISU just don't look real good, and it's gonna get worse with a much diminished B12.
If I were a parent of a recruit, or a recruit him or herself,
I'd be quite wary about which horse I'm betting on and why.
I'd be quite wary about which horse I'm betting on and why.
2. New TV deal for B10 in 2023 expected to top expanded SEC
The SEC is expected to ink a $3B deal for the next five years, topping what the B10 signed six years ago valued at $2.6B, which was significantly ahead of even the SEC at the time. But the B10 will get a new deal in 2023 that's expected to top the SEC as did the current B10 contract. No conferences can compete with the B10 and SEC in terms of TV revenue.
No one knows what the deal would be, but based on trends, each B10 school is likely to see tens of millions of additional revenue per year starting with the new deal.
The new - or even expanded - B12 is expected to lose at least 50% of TV revenues after OU and UT leave.
The new B10 TV contract - sweetened with the significantly increased TV revenues expected resulting from the B10, P10, and ACC alliance - ensures Iowa's position long-term, and puts in some peril any institutions that are left out.
3. ISU and Stevens Auditorium - $20M in deferred maintenance
Pollard has expressed his frustration with the looming needs for renovations at Stevens.
Stevens Auditorium faces $20M in deferred maintenance alone, not to speak of the need for major upgrades. No, maintenance isn't really an upgrade. That white elephant is hanging onto the athletic department's budget. Right now, only plans exist to address the growing needs at Stevens.
4. Jack Trice renovations
Kinnick just completed a $90M renovation in 2019, mostly financed through major donations and the regular AD budget, but only $30M through bonds.
ISU's $80M project - stadium, walkway, other athletic buildings - was financed with $60M in bonds (article linked above). That's a disturbingly high ratio of bonds relative to donations and revenue-based financing. An ominous sign that has grown more ominous with the B12 falling apart.
5. ISU fan donations
The above article cites 2020 donations to ISU athletics topping $10M. But recognizing that ISU needed to borrow $30M more than Iowa for stadium and related facility upgrades, it seems that the ISU fanbase just doesn't have nearly as deep pockets as Iowa.
6. Diminished NIL opportunities for ISU athletes in all sports relative to B10 and SEC
Although I listed this last, it might just prove to be the most important relative to quality of the product on the field for ISU going forward, relative to Iowa and the big boys.
This SI article lays it out. With so many more eyeballs on the B10 and SEC going forward, especially after the alliance between B10/P10/ACC, top athletes are going to want to play on the biggest media stages, reaping the benefits of NIL. "No one really understands NIL going forward" is a good point, but the one most obvious point is that NIL earnings for individual athletes depend on the size of their following, and the larger the following, the more the eyeballs, the bigger the league media contracts and exposure of their programs, the higher the payout to them.
The upshot: NIL might just become the determinant for an ever-increasing gap between the big boys - B10 and SEC - and the hangers-on in the P4 (P10 and ACC), and even more so, from the left-outs.
So I'm sure I'm missing stuff, and I'm sure others will add on, but I see some looming questions for ISU going forward:
It seems clear that the $50M possible one-time payout to ISU is already $30M more than spoken for, with $60M in bonds for recent JT renovations, and the need for $20M in deferred maintenance to Stevens.
1. How does ISU manage its debt burden long-term?
2. How does ISU pay top dollar to retain or attract top coaching?
3. How does ISU budget for the loss of tens of millions in TV revenue starting in 2023 (or 2024?) when the current B12 contract expires?
4. What are ISU's prospects as an institution, relegated to a lower tier of an athletic and academic conference?
Again - please let's just have a fact-based, rational discussion. No insults. No gloating. I'm actually curious as a resident of Iowa what the picture is likely to be like in the short, medium, and long-term for ISU and for ISU relative to Iowa.
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