Catch-22s for ISU? Debt load, revenue gaps, NIL and recruiting

[DavidGraeberBullSheetJobs]

Annual debt service is relevant, but not giving the whole picture renders a single line item, without any context, without any terms, almost meaningless. Apples to oranges comparison for sure. Let's just give all available facts, and have a rational, objective discussion.

My point was also the capacity of fan bases to fund improvements. Iowa's ability to fully-fund a $55M major facility upgrade a few years back without borrowing a dime is a case in point.

Iowa's revenues will jump dramatically once the new B10 TV contract is negotiated, since the B10/P10/ACC alliance makes them even more attractive nationally than the expanded SEC. Anyway, the B10's TV contract was larger than the SEC's the last time around. Zero chance a diminished B12 (even if adding the Cinci's and Houston's of the world) will generate more TV revenue than currently with OU and UT.

Any way you look at it, the FB and athletic programs, as well as the universities in general, seem to be on very different trajectories, based on the events of the last two months.

LC, you are right that this is sure to affect recruiting, as well as retention of top-flight coaches.

 

[Lone Clone]

For sure — and to be fair, Campbell has proven how loyal he is beyond a reasonable doubt. I just think this will *really* test that.

He swallowed approximately $1 million in reduced pay last year without a public murmur. Ten percent salary reduction and no bonus for playing in the league title game and a NY6 bowl. At least, that's my understanding. That isn't a guy who is going to jump to another school just because it pays more. But there are other considerations.

I don't know the man, but my impression is that I will be surprised if ISU has a great season this year and he leaves. He strikes me as the kind of guy who would like to prove it wasn't a one-time wonder.

But that might be wishful thinking on my part.

 

[Lone Clone]

Annual debt service is relevant, but not giving the whole picture renders a single line item, without any context, without any terms, almost meaningless. Apples to oranges comparison for sure. Let's just give all available facts, and have a rational, objective discussion.

My point was also the capacity of fan bases to fund improvements. Iowa's ability to fully-fund a $55M major facility upgrade a few years back without borrowing a dime is a case in point.

Iowa's revenues will jump dramatically once the new B10 TV contract is negotiated, since the B10/P10/ACC alliance makes them even more attractive nationally than the expanded SEC. Anyway, the B10's TV contract was larger than the SEC's the last time around. Zero chance a diminished B12 (even if adding the Cinci's and Houston's of the world) will generate more TV revenue than currently with OU and UT.

Any way you look at it, the FB and athletic programs, as well as the universities in general, seem to be on very different trajectories, based on the events of the last two months.

LC, you are right that this is sure to affect recruiting, as well as retention of top-flight coaches.

You appear to be under a misconception. Kudos to Iowa for being flush, but Iowa's financial situation is totally irrelevant to the subject of the thread. I, and I think just about everybody else, am perfectly willing to accept that Iowa is in a much stronger financial position than ISU. But so what? This thread is about ISU's money woes, to the extent such woes exist.

That being the case, the annual ISU debt service obligation is not just not "meaningless," it is the whole point. Or a big part of the whole point.

If you want to get into a pissing match with irrelevancies, I would point out that one of the two schools, when faced with the spectre of reduced revenue due to the pandemic, cut spending and made other accommodations. The other school immediately borrowed $50 million from the general university funds. What does this mean? Not a ****ing thing, except that the bean counters at the two places took different approaches.

 

[Psyclone]

That is absolutely wrong. He is very specific in what he says...which is why some of the posters here can't understand him. In your example, he went out of his way to AVOID claiming the house was orange. You and others made an incorrect assumption and ran with it.

I appreciate the comments. I try to post facts from the most reputable source I can find. It takes time to dig up all this information from trustworthy sources. It can be a frustrating exercise especially when numbers from what you would believe to be two trustworthy sources don't perfectly match. The attacks on me are generally unwarranted but I do recognize I have an ISU icon on my posts, so that is to be expected.

I try to refrain from making comments on data that I do not have because I am often surprised by what I find. I have just recently captured the last six years of actuals from the BoR fiscal reports and started to enter it in a spreadsheet so it's easy to see changes from year to year for a school. It will be less easy to compare line-items between the schools because they don't always use consistent breakdown in the reports. But the bottom line income and expenses numbers are what they are. Everything should be rolled up in those totals no matter what bucket they were entered in.

 

[doughuddl2]

1. I'm not going to respond to the last graf because I'm not in the camp that thinks the BiG is an option.
2. I think the $38.8 million a year is not just media rights, but the total conference payout, which would include bowl revenue, NCAA tournament revenue, et.
3. My understanding is that there are three financial issues related to OU and UT departing the conference.
(a) There is a penalty for not giving 18 months notice. That doesn't apply.
(b) Each departing team is obligated to pay the conference an amount equal to what it received for the previous two years. That's roughly $40 million a year each, or a total of $160 million to be split 8 ways.
(c) The Big XII owns the Tier 1 and Tier 2 media rights for both Texas and Oklahoma through the 2024-25 season. In other words, if Texas hosts Alabama in November of 2024, the Big XII has the rights to televise it.

I could be wrong about any of that; moreover, it's highly unlikely (IMHO) that the lawyers won't be busy negotiating to adjust those numbers.

My point is NOT that the departure of the two teams isn't a big deal. It is, and it poses a major financial challenge to ISU in the long run. My point is that the world isn't going to end the day after tomorrow. ISU has several years before the financial pinch hits.

I'd welcome comments and corrections from serious posters who are informed of the facts. The rest of you guys can do whatever you want;; it's your board.

Is B in the ESPN contract or in the B12 by-laws? I could see ESPN forgive it or reduce it as they are probably behind the move to the SEC.

 

[DavidGraeberBullSheetJobs]

You appear to be under a misconception. Kudos to Iowa for being flush, but Iowa's financial situation is totally irrelevant to the subject of the thread. I, and I think just about everybody else, am perfectly willing to accept that Iowa is in a much stronger financial position than ISU. But so what? This thread is about ISU's money woes, to the extent such woes exist.

That being the case, the annual ISU debt service obligation is not just not "meaningless," it is the whole point. Or a big part of the whole point.

If you want to get into a pissing match with irrelevancies, I would point out that one of the two schools, when faced with the spectre of reduced revenue due to the pandemic, cut spending and made other accommodations. The other school immediately borrowed $50 million from the general university funds. What does this mean? Not a ****ing thing, except that the bean counters at the two places took different approaches.

Look, let's please just be honest.

It's been a while, but I spent a couple summers as an undergrad working on the audit team at Arthur Andersen and Ernst & Young, before I dropped my accounting major out of drool-inducing boredom. I've spent many years as an entrepreneur since then. Find me one person who has taken a single accounting class in community college, like our brilliant governor who recently finished her undergrad degree in "general studies" at ISU, attending online, and not one will look at a single line item and attempt to draw conclusions from it.

You say you have six years of financials. Why six? Because you didn't want to include the $55M new football facility for Iowa that was financed entirely through donations and revenues, since that opened in 2014?

Analyzing a Statement of Cash Flows without an Income Statement or a Balance Sheet, is limited.

I pointed out the radically different ratios of debt to revenues for ISU vs Iowa for recent athletic facility upgrades.

Iowa's $145M in facility upgrades relative to $30M in debt is a good ratio: 20%
ISU's $80M in upgrades relative to $60M in debt is terrible: 75%. Especially now considering the shaky revenue picture with the B12 disintegrating.

Anyone in middle school can understand the above and understand that these two financial situations are radically different.

If you have "access" and you are putting together a "spreadsheet", be a grown-up and stop cherry-picking "data".

 

[DavidGraeberBullSheetJobs]

One more small but very big thing, quite indicative of the state of the Iowa athletic department.

ISU just played Iowa Women's Soccer at Iowa's brand new, beautiful $3M facility, constructed during a pandemic, completed a couple weeks ago.

It was entirely funded through donations. They're raising an additional million dollars to fully-fund maintenance of the facility into the future.

Sound familiar? That's how Iowa does things: strong fan support, big donations, strong financial future. That's why Iowa's among the handful of leaders in the B10 in terms of revenue and valuation for their FB program.

Iowa won 2-1, and the winning goal was scored by Courtney Powell, who transferred from ISU to Iowa, and whose father died of Covid. Deeply inspiring and moving story here from yesterday's paper.

She dedicated her senior season at Iowa to her father.

 

[paednoch23]

I appreciate the comments. I try to post facts from the most reputable source I can find. It takes time to dig up all this information from trustworthy sources. It can be a frustrating exercise especially when numbers from what you would believe to be two trustworthy sources don't perfectly match. The attacks on me are generally unwarranted but I do recognize I have an ISU icon on my posts, so that is to be expected.

I try to refrain from making comments on data that I do not have because I am often surprised by what I find. I have just recently captured the last six years of actuals from the BoR fiscal reports and started to enter it in a spreadsheet so it's easy to see changes from year to year for a school. It will be less easy to compare line-items between the schools because they don't always use consistent breakdown in the reports. But the bottom line income and expenses numbers are what they are. Everything should be rolled up in those totals no matter what bucket they were entered in.

Cant, you just take two numbers to compare? Percentage-wise what is Iowa State's Current Debt Load vs Iowa's. I see somebody posted here that ISU has a 75% debt ratio to Iowa's 20%. If that info is true I find the ISU situation terrifying. I wonder how much asset property ISU owns. They may have to sell to pay for their soon to be half empty stadium upgrades.

 

[paednoch23]

Sound familiar? That's how Iowa does things: strong fan support, big donations, strong financial future. That's why Iowa's among the handful of leaders in the B10 in terms of revenue and valuation for their FB program.

I firmly believe in the little brother mentality with Iowa State. We have hordes of ISU fans in our state who grew up and went to college in the 80s-90s and 2000s. That whole experience was in the shadow of a successful Iowa football program. They witnessed the first-hand success of their neighbors and friends who were Iowa fans. They saw what fun success in football brought and they wanted it. They might not have wanted to be "just like Iowa" but they certainly wanted the success they witnessed. Instead of earning that success, they tried to buy it. Buying it worked to some extent, but they bought it on credit and now they have their tit in a ringer. It isn't gonna be good for them.

 

[DavidGraeberBullSheetJobs]

Since the $20M of deferred maintenance to Stevens Auditorium at ISU was discussed earlier, a facility that's being managed - including budgetarily - by the ISU Athletic Department, thought I'd share some video of what's going on at Hancher in Iowa City, a state-of-the-art facility which will only need minor upgrades in a couple decades.

Second year for Hancher Illuminated, an interactive set of light installations and music. The ticketed event drew a couple thousand attendees over the weekend. Hundreds of students too.

It was sold out.

Check out the video and photos.

The 50-year old Stevens Auditorium did get an award from the Iowa branch of the American Institute of Architecture, as Lone Clone pointed out.

But the $132M Hancher Auditorium got the American Architectural Award, the nation's highest award for design, in 2018.

Be sure to include the above in your spreadsheet, Psyclone.

 

[SchwartzUndGold]

1. I'm not going to respond to the last graf because I'm not in the camp that thinks the BiG is an option.
2. I think the $38.8 million a year is not just media rights, but the total conference payout, which would include bowl revenue, NCAA tournament revenue, et.
3. My understanding is that there are three financial issues related to OU and UT departing the conference.
(a) There is a penalty for not giving 18 months notice. That doesn't apply.
(b) Each departing team is obligated to pay the conference an amount equal to what it received for the previous two years. That's roughly $40 million a year each, or a total of $160 million to be split 8 ways.
(c) The Big XII owns the Tier 1 and Tier 2 media rights for both Texas and Oklahoma through the 2024-25 season. In other words, if Texas hosts Alabama in November of 2024, the Big XII has the rights to televise it.

I could be wrong about any of that; moreover, it's highly unlikely (IMHO) that the lawyers won't be busy negotiating to adjust those numbers.

My point is NOT that the departure of the two teams isn't a big deal. It is, and it poses a major financial challenge to ISU in the long run. My point is that the world isn't going to end the day after tomorrow. ISU has several years before the financial pinch hits.

I'd welcome comments and corrections from serious posters who are informed of the facts. The rest of you guys can do whatever you want;; it's your board.

I just thought it would be interesting to estimate the potential windfall would mean over the remaining 3 FYs of the BIG 12 GOR. Using your $40M * 2 = $80M/FY then ISU would get and additional $800K/FY over what I calculated. RE: Your part (b)> Wouldn't it be $240M not $160M? (($40*2)*3)=$240. $240M divided 8 way= $30M or $10M/FY per each remaining 8 member. It was my guess that the exit method would be a gradual disbursement with the remaining 8 members getting the Texas and Oklahoma shares spread out over the last three FY's.

With television rights wouldn't ESPN/Disney be the broadcaster of the TX vs ALA game anyway? If so ownership rights does not seem to matter.

 

[HawkeyeLaker]

But that might be wishful thinking on my part.

I'm thinking you might be right.

 

[Psyclone]

Cant, you just take two numbers to compare? Percentage-wise what is Iowa State's Current Debt Load vs Iowa's. I see somebody posted here that ISU has a 75% debt ratio to Iowa's 20%. If that info is true I find the ISU situation terrifying. I wonder how much asset property ISU owns. They may have to sell to pay for their soon to be half empty stadium upgrades.

Although I haven't found a report on total debt for each school, I have posted the annual expense for servicing that debt. I understand there is more to it than that, but debt service is a major piece of it.

I may go looking for reports on total debt when I finish with my look at recent fiscal reports.

 

[Psyclone]

You say you have six years of financials. Why six? Because you didn't want to include the $55M new football facility for Iowa that was financed entirely through donations and revenues, since that opened in 2014?

I stopped at six years because that seemed like plenty of history. Believe me I had no awareness of the Iowa football facility or the year it hit the books. The BoR data goes back to 2000 and I may eventually add that to my spreadsheet, but I believe going back that far will introduce inconsistencies in the line-items used and thus makes analysis of trends for a given line-item impossible.

You may not believe this but I don't have a hidden agenda in looking at these reports.

 

[HawkIDrummer]

He swallowed approximately $1 million in reduced pay last year without a public murmur. Ten percent salary reduction and no bonus for playing in the league title game and a NY6 bowl. At least, that's my understanding. That isn't a guy who is going to jump to another school just because it pays more. But there are other considerations.

I don't know the man, but my impression is that I will be surprised if ISU has a great season this year and he leaves. He strikes me as the kind of guy who would like to prove it wasn't a one-time wonder.

But that might be wishful thinking on my part.

MC does look to be the loyal type. Much as I'd love to hate on him, he comes across as a pretty decent guy. (not a goober like Walden, a sleaze like Criner, carpetbagger like Chizek or a high school cheerleader like Rhoads).

That said, he's at 5 years+. Many guys would feel like they've honored their committment with that kind of tenure. I don't see him moving for anything less than a marquee job (which Nebraska isn't) but the uncertain future of ISU's conference certainly shifts things a bit. He would seem to be in "sell" mode more than he might have been a few months ago.

 

[Lone Clone]

I appreciate the comments. I try to post facts from the most reputable source I can find. It takes time to dig up all this information from trustworthy sources. It can be a frustrating exercise especially when numbers from what you would believe to be two trustworthy sources don't perfectly match. The attacks on me are generally unwarranted but I do recognize I have an ISU icon on my posts, so that is to be expected.

I try to refrain from making comments on data that I do not have because I am often surprised by what I find. I have just recently captured the last six years of actuals from the BoR fiscal reports and started to enter it in a spreadsheet so it's easy to see changes from year to year for a school. It will be less easy to compare line-items between the schools because they don't always use consistent breakdown in the reports. But the bottom line income and expenses numbers are what they are. Everything should be rolled up in those totals no matter what bucket they were entered in.

Over the years I've had personal relationships with three members of the BOR (not all at the same time), and I expressed frustration to all of them that the universities don't use the same methods/form of financial reporting. They all agreed with me but said the Regents don't want to micromanage and tell the accounts what to do, which makes sense.

 

[Lone Clone]

Is B is the ESPN contract or in the B12 by-laws? I could see ESPN forgive it or reduce it as they are probably behind the move to the SEC.

B is in the conference bylaws.

 

[paednoch23]

I stopped at six years because that seemed like plenty of history. Believe me I had no awareness of the Iowa football facility or the year it hit the books. The BoR data goes back to 2010 and I may eventually add that to my spreadsheet, but I believe going back that far will introduce inconsistencies in the line-items used and thus makes analysis of trends for a given line-item impossible.

You may not believe this but I don't have a hidden agenda in looking at these reports.

I'm sorry I asked. You are talking out of your backside. You are comparing Iowa to Iowa State because Iowa State fans always seem to use Iowa as their reference point. Go over to cyclone fanatic and see the BIG 12 expansion threads and notice how they typically don't go more than 3 posts before someone drags their envy towards Iowa into the discussion. Iowa has nothing to do with the demise of ISU. However, Iowa will benefit tremendously.

 

[Lone Clone]

I just thought it would be interesting to estimate the potential windfall would mean over the remaining 3 FYs of the BIG 12 GOR. Using your $40M * 2 = $80M/FY then ISU would get and additional $800K/FY over what I calculated. RE: Your part (b)> Wouldn't it be $240M not $160M? (($40*2)*3)=$240. $240M divided 8 way= $30M or $10M/FY per each remaining 8 member. It was my guess that the exit method would be a gradual disbursement with the remaining 8 members getting the Texas and Oklahoma shares spread out over the last three FY's.

With television rights wouldn't ESPN/Disney be the broadcaster of the TX vs ALA game anyway? If so ownership rights does not seem to matter.

Taking last things first, the school that holds the rights to a game gets paid. In this case, that money would go to the Big XII.

As to the earlier comments, I'm thinking slowly this morning, so bear with me. And I repeat that I may misunderstand the situation. Here is my understanding.

Assuming OU and UT get $40 million a year each from the conference, they would have to pay the league $80 million each as penalty for leaving. As I understand it, that's separate from everything else. That's $160 million, or $20 million apiece for the 8 other league members. It is fair and accurate to characterize that as a one-time, short-term windfall.

Meanwhile, for the next three years -- through the 2024-25 season -- ISU's revenues will be consistent to what they've been receiving. The faucet doesn't stop producing water when the gardener announces plans to shut it off. It stops when the faucet actually is shut off. In this case, after the 2024-25 season with the departure of OU and UT.

Now, I don't think anyone believes the two will actually stay in the conference that long. But we don't know yet what the lawyers will do. (I am ignoring the possibility of the league suing anybody).

Bottom line is that in the long run, this is almost certainly bad for Iowa State financially. All other things being equal, ISU will be getting significantly less money from the conference after the two schools actually leave. But in the short run, ISU might actually get more.

Again, I am NOT denying that the departure of the two big dogs is a serious blow to ISU.

 

[Lone Clone]

Since the $20M of deferred maintenance to Stevens Auditorium at ISU was discussed earlier, a facility that's being managed - including budgetarily - by the ISU Athletic Department, thought I'd share some video of what's going on at Hancher in Iowa City, a state-of-the-art facility which will only need minor upgrades in a couple decades.

Second year for Hancher Illuminated, an interactive set of light installations and music. The ticketed event drew a couple thousand attendees over the weekend. Hundreds of students too.

It was sold out.

Check out the video and photos.

The 50-year old Stevens Auditorium did get an award from the Iowa branch of the American Institute of Architecture, as Lone Clone pointed out.

But the $132M Hancher Auditorium got the American Architectural Award, the nation's highest award for design, in 2018.

Be sure to include the above in your spreadsheet, Psyclone.

You continue to turn this into a discussion of Iowa's program.

 

[DavidGraeberBullSheetJobs]

You continue to turn this into a discussion of Iowa's program.

I'm comparing. ISU's AD must manage Stevens. Iowa's AD doesn't manage Hancher. And you brought up the architecture awards, so I found out about Hancher's. That's what makes discussions interesting. I learn stuff from people, and share what I dig up.

I'm also comparing because both ISU and Iowa are forced to operate under the same Board of Regents, and forced to continue to get inadequate funding from the state.

All over the world, government and the business sector know that there is a huge ROI from funding universities.

Silicon Valley is there because Cal-Berkeley and Stanford are there, two of the three top computer science programs in the world.

Boston's Route 128 (the silicon valley of the east cost) is there because of MIT and Harvard etc.

Here in Iowa, though, we've got a majority of state reps and senators who distrust science and tech, who disparage "elitist" education, and cut budgets from the very researchers and professors and staff and students who drive the economy. Economic suicide.

 

[DavidGraeberBullSheetJobs]

Since we're talking money, debt, budgets, sports, and universities...

Here's a report from the Federal Reserve Bank of Boston, showing that there is huge fiscal impact from public funding of higher education, and especially making that education accessible and affordable.

Even if sports is a business, higher education isn't. Creativity comes not just from STEM or business, but from out-of-the-box thinking, challenging received wisdom, questioning ideologies. Even Steve Jobs, in his famous 2005 commencement address at Stanford, credits a calligraphy class he audited at liberal Reed College as the inspiration for Apple Computers - from the simple user interfaces to the sleek design aesthetic.

Whether gender studies or genomics, there is irreplaceably great value in higher education, and the highest value in free or almost free education, as it is done most everywhere else in the world. We are falling behind economically because we are cutting budgets to universities and because we're creating millions of debt peons with student loans.

Most sane, objective people see the huge ROI for funding education, even heartless, predatory bankers like this guy, see source here:

"In a global environment in which prospects for economic growth now depend importantly on a
country’s capacity to develop and apply new technologies, our universities are envied around
the world. If we are to remain preeminent in transforming knowledge into economic value, the
U.S. system of higher education must remain the world’s leader in generating scientific and
technological breakthroughs and in preparing workers to meet the evolving demand for skilled
labor."
Alan Greenspan
Chairman, U.S. Federal Reserve, 2004

ISU's FB and athletics program will continue to suffer financially as the B12 implodes, but that means the Board of Regents and the Legislature must step up and increase funding to ALL education - K-12 to community colleges to the three Regents universities if we want a strong future in the state of Iowa.

 

[Psyclone]

I'm sorry I asked. You are talking out of your backside. You are comparing Iowa to Iowa State because Iowa State fans always seem to use Iowa as their reference point. Go over to cyclone fanatic and see the BIG 12 expansion threads and notice how they typically don't go more than 3 posts before someone drags their envy towards Iowa into the discussion. Iowa has nothing to do with the demise of ISU. However, Iowa will benefit tremendously.

I don't frequent the CF message boards, but is it really any different than it is here?

I first posted data on this board because of statements that were made that I didn't think were right, or in some cases knew them to be wrong. It motivated me to go find the actual data.

One of the biggest issues that is not unique to this board is that people don't recognize that widely publicized conference distributions figures include revenue from more sources than just the media deal. I suppose it's a harmless mistake until one analyzes what life is like if the media deal gets reduced. It's also a mistake to compare the media deal for one school to the conference distributions for another.

Let's take a look at the hot topic of the impact of a potential loss of media revenue from OU and UT leaving the Big 12. Iowa State's 2022 budget expects a conference distribution of over $40 million. The media revenue portion of that is somewhere in the range of $20 million. (To be specific the 13 year Big 12 media deal averages $20 million per school per year, but those payouts may have started lower and increased each year. I don't have the exact numbers by year.) But the point is that a portion of that $20 million or so representing media revenue is the part that is at risk pending the next contract after the current one expires in 2025.

 

[Lone Clone]

I'm comparing. ISU's AD must manage Stevens. Iowa's AD doesn't manage Hancher. And you brought up the architecture awards, so I found out about Hancher's. That's what makes discussions interesting. I learn stuff from people, and share what I dig up.

I'm also comparing because both ISU and Iowa are forced to operate under the same Board of Regents, and forced to continue to get inadequate funding from the state.

All over the world, government and the business sector know that there is a huge ROI from funding universities.

Silicon Valley is there because Cal-Berkeley and Stanford are there, two of the three top computer science programs in the world.

Boston's Route 128 (the silicon valley of the east cost) is there because of MIT and Harvard etc.

Here in Iowa, though, we've got a majority of state reps and senators who distrust science and tech, who disparage "elitist" education, and cut budgets from the very researchers and professors and staff and students who drive the economy. Economic suicide.

My point is that we're getting further and further away from the purported subject of the thread, which is the effect on ISU athletics of OU and UT leaving the Big XII.

To the extent that subject involves management of Stephens, as Psyclone has pointed out, we (those of us participating in this thread) don't know the nature of the relationship between the ISU athletics department and the auditorium, Management duties do not necessarily equate to financial responsibility. In fact, it is highly unlikely the AD would have agreed to take over management if doing so would make the AD liable for millions of dollars worth of deferred maintenance. It just wouldn't happen.

ISU just announced that its most recent fund drive had achieved its goal ahead of schedule, reaching a little over $1.5 billion from donors. I don't know the details, but I wouldn't be shocked to learn that some of the money is going to deferred maintenance.

 

[DavidGraeberBullSheetJobs]

My point is that we're getting further and further away from the purported subject of the thread, which is the effect on ISU athletics of OU and UT leaving the Big XII.

To the extent that subject involves management of Stephens, as Psyclone has pointed out, we (those of us participating in this thread) don't know the nature of the relationship between the ISU athletics department and the auditorium, Management duties do not necessarily equate to financial responsibility. In fact, it is highly unlikely the AD would have agreed to take over management if doing so would make the AD liable for millions of dollars worth of deferred maintenance. It just wouldn't happen.

ISU just announced that its most recent fund drive had achieved its goal ahead of schedule, reaching a little over $1.5 billion from donors. I don't know the details, but I wouldn't be shocked to learn that some of the money is going to deferred maintenance.

Impressive results from the fundraising drive.

Iowa hasn't announced a major new campaign in the last five years, to my knowledge. Soon would be the time to do it, before the economy implodes. The last campaign, which finished in late 2016, raised $2B.

The subject isn't just the effects of B12 implosion, but mostly the choices ISU AD and university administration have made in recent years to take on so much debt relative to revenues, especially donations.

Generally, though, earmarked gifts, such as for a soccer complex at Iowa or a pedestrian bridge near Jack Trice, are announced separately and ongoing to keep momentum during major capital campaigns, so if nothing was announced for Stevens or to pay down the $60M borrowed for athletic upgrades, it either means that the donations are still tentative, or they're still aggressively seeking donations. But if this campaign has wound up and more than achieved its goal, that means the donors are tapped out for the time being, most likely.

Pretty hard to raise funds during a pandemic, I'm guessing, even though the ultra wealthy have made out like bandits.

 

[paednoch23]

I don't frequent the CF message boards, but is it really any different than it is here?

Yes, it is different here. Iowa State is not our reference point. We don't envy them and we don't have the little brother complex like them. So yes, it is different.

 

[Hwk-I-St8]

Taking last things first, the school that holds the rights to a game gets paid. In this case, that money would go to the Big XII.

As to the earlier comments, I'm thinking slowly this morning, so bear with me. And I repeat that I may misunderstand the situation. Here is my understanding.

Assuming OU and UT get $40 million a year each from the conference, they would have to pay the league $80 million each as penalty for leaving. As I understand it, that's separate from everything else. That's $160 million, or $20 million apiece for the 8 other league members. It is fair and accurate to characterize that as a one-time, short-term windfall.

Meanwhile, for the next three years -- through the 2024-25 season -- ISU's revenues will be consistent to what they've been receiving. The faucet doesn't stop producing water when the gardener announces plans to shut it off. It stops when the faucet actually is shut off. In this case, after the 2024-25 season with the departure of OU and UT.

Now, I don't think anyone believes the two will actually stay in the conference that long. But we don't know yet what the lawyers will do. (I am ignoring the possibility of the league suing anybody).

Bottom line is that in the long run, this is almost certainly bad for Iowa State financially. All other things being equal, ISU will be getting significantly less money from the conference after the two schools actually leave. But in the short run, ISU might actually get more.

Again, I am NOT denying that the departure of the two big dogs is a serious blow to ISU.

I could be wrong, but what's the point of a buy out if it doesn't buy you out. You're saying they pay the buy out but still don't get their rights. If that's true, they'll hang out and wait until 2025. At that point they pay nothing, but the B12 is in a bind.

TX and ok hold the cards here. They can't lose....ride out their contract and step into the SEC.

 

[doughuddl2]

Taking last things first, the school that holds the rights to a game gets paid. In this case, that money would go to the Big XII.

As to the earlier comments, I'm thinking slowly this morning, so bear with me. And I repeat that I may misunderstand the situation. Here is my understanding.

Assuming OU and UT get $40 million a year each from the conference, they would have to pay the league $80 million each as penalty for leaving. As I understand it, that's separate from everything else. That's $160 million, or $20 million apiece for the 8 other league members. It is fair and accurate to characterize that as a one-time, short-term windfall.

Meanwhile, for the next three years -- through the 2024-25 season -- ISU's revenues will be consistent to what they've been receiving. The faucet doesn't stop producing water when the gardener announces plans to shut it off. It stops when the faucet actually is shut off. In this case, after the 2024-25 season with the departure of OU and UT.

Now, I don't think anyone believes the two will actually stay in the conference that long. But we don't know yet what the lawyers will do. (I am ignoring the possibility of the league suing anybody).

Bottom line is that in the long run, this is almost certainly bad for Iowa State financially. All other things being equal, ISU will be getting significantly less money from the conference after the two schools actually leave. But in the short run, ISU might actually get more.

Again, I am NOT denying that the departure of the two big dogs is a serious blow to ISU.

I don't think the revenue can be guaranteed through 2024-25. The 18 month notice ends December 2022 which is a good guess they will leave. Probably after NCAA tournament in March. ESPN would have the right to renegotiate the contract in 2023 with the 2 schools leaving. What if they decide not to and drop the B12 just to spite Bowlsby because of his initial threats. Or if they do it will be less for all schools.

 

[Lone Clone]

I could be wrong, but what's the point of a buy out if it doesn't buy you out. You're saying they pay the buy out but still don't get their rights. If that's true, they'll hang out and wait until 2025. At that point they pay nothing, but the B12 is in a bind.

TX and ok hold the cards here. They can't lose....ride out their contract and step into the SEC.

Even if they wait until 2025, they retain their rights but still owe the withdrawal penalty of two years' disbursements....the number we've been approximating here at $80 million per team. But that's chump change for Texas, and I wouldn't be surprised to see ESPN take on some of it.

 

[Lone Clone]

Impressive results from the fundraising drive.

Iowa hasn't announced a major new campaign in the last five years, to my knowledge. Soon would be the time to do it, before the economy implodes. The last campaign, which finished in late 2016, raised $2B.

The subject isn't just the effects of B12 implosion, but mostly the choices ISU AD and university administration have made in recent years to take on so much debt relative to revenues, especially donations.

Generally, though, earmarked gifts, such as for a soccer complex at Iowa or a pedestrian bridge near Jack Trice, are announced separately and ongoing to keep momentum during major capital campaigns, so if nothing was announced for Stevens or to pay down the $60M borrowed for athletic upgrades, it either means that the donations are still tentative, or they're still aggressively seeking donations. But if this campaign has wound up and more than achieved its goal, that means the donors are tapped out for the time being, most likely.

Pretty hard to raise funds during a pandemic, I'm guessing, even though the ultra wealthy have made out like bandits.

The campaign ended ahead of schedule, but had been extended with a bigger goal -- the $1.5 billion -- when the original goal was reached early.

The fundraising campaign doesn't include funds raised for athletics, like the pedestrian bridge. It wouldn't cover the debt service, as those were revenue bonds.

It may well cover renovations to Stephens. About $300 million is earmarked for "facilities," which includes a pretty wide variety of possibilities. I think it's safe to say that the athletics department won't be stuck with funding the non-athletics facilities.

 

[Lone Clone]

I don't think the revenue can be guaranteed through 2024-25. The 18 month notice ends December 2022 which is a good guess they will leave. Probably after NCAA tournament in March. ESPN would have the right to renegotiate the contract in 2023 with the 2 schools leaving. What if they decide not to and drop the B12 just to spite Bowlsby because of his initial threats. Or if they do it will be less for all schools.

Where did you read that ESPN can renegotiate? I hadn't seen that anywhere.

 

[Slappy Pappy]

Where did you read that ESPN can renegotiate? I hadn't seen that anywhere.

I'm sure the contract very specifically included all schools, especially TX and Ok. Of course they will cancel/renegotiate if those schools aren't there

 

[Slappy Pappy]

I don't frequent the CF message boards, but is it really any different than it is here?

I first posted data on this board because of statements that were made that I didn't think were right, or in some cases knew them to be wrong. It motivated me to go find the actual data.

One of the biggest issues that is not unique to this board is that people don't recognize that widely publicized conference distributions figures include revenue from more sources than just the media deal. I suppose it's a harmless mistake until one analyzes what life is like if the media deal gets reduced. It's also a mistake to compare the media deal for one school to the conference distributions for another.

Let's take a look at the hot topic of the impact of a potential loss of media revenue from OU and UT leaving the Big 12. Iowa State's 2022 budget expects a conference distribution of over $40 million. The media revenue portion of that is somewhere in the range of $20 million. (To be specific the 13 year Big 12 media deal averages $20 million per school per year, but those payouts may have started lower and increased each year. I don't have the exact numbers by year.) But the point is that a portion of that $20 million or so representing media revenue is the part that is at risk pending the next contract after the current one expires in 2025.

The B12 gets a lot more money from the NCAA as part of the bowl system/playoff/NY6 as a P5 conference compared to G5 schools. I believe same goes for BB tournament money. How much, not sure. But that is gone along with Tx and Ok. The B12 won't be P5 no matter which G5 schools they add.

 

[cidhawkeye]

For athletic department funding I would say ISU is closer to the norm and Iowa on the side of being the exception in comparison to their peers.

 

[Psyclone]

The B12 gets a lot more money from the NCAA as part of the bowl system/playoff/NY6 as a P5 conference compared to G5 schools. I believe same goes for BB tournament money. How much, not sure. But that is gone along with Tx and Ok. The B12 won't be P5 no matter which G5 schools they add.

NCAA tournament money is based on a point system related to games played until the finals. It may not have much impact replacing Texas and Oklahoma with new teams that have proven success in the tournament. There are some good basketball schools on the short list of possible expansion candidates.

I don't think we will know if the Big 12 retains P5 status, or even if that remains a thing. It should still be far ahead of the best G5 conference, especially if it expands by taking their best teams. There could be some impact on bowl games, but the only ones that really generate revenue are the NY6/CFP games. Most of the others are break even at best. If the Big 12 no longer gets a big share of the playoff pool and if the Sugar Bowl ties with the Big 12 are severed and no equivalent bowl replaces it, that would hurt.

 

[Slappy Pappy]

NCAA tournament money is based on a point system related to games played until the finals. It may not have much impact replacing Texas and Oklahoma with new teams that have proven success in the tournament. There are some good basketball schools on the short list of possible expansion candidates.

I don't think we will know if the Big 12 retains P5 status, or even if that remains a thing. It should still be far ahead of the best G5 conference, especially if it expands by taking their best teams. There could be some impact on bowl games, but the only ones that really generate revenue are the NY6/CFP games. Most of the others are break even at best. If the Big 12 no longer gets a big share of the playoff pool and if the Sugar Bowl ties with the Big 12 are severed and no equivalent bowl replaces it, that would hurt.

You're going to those big bowl game contracts. You know the top 3 or 4 signed up for the chance at Ok or Tx. I don't know where you guys think the other $18m of the $38m that's not media rights comes from, but most of it is going away as well. P5 status means eyeballs. You lose 60%+ of your ratings without Tx & Ok. 20% of your teams are taking the majority if your viewership along with them. And that is going to cascade down to every other source of conference revenue and income. All $38m is tied to ratings and viewership. In 5 years the B12 will be lucky to be able to disperse even $15m per school, and only fall further and further behind as they get sidelined in bowl/playoff and tv slot matchups over time. Pollard said it himself. Without Tx and Ok, we're the Mountain West.

 

[Lone Clone]

I'm sure the contract very specifically included all schools, especially TX and Ok. Of course they will cancel/renegotiate if those schools aren't there

I haven't seen it mentioned anywhere, and I've read a LOT of analyses of the situation. When it is mentioned, the suggestion is that it requires 10 conference members. I have not seen anyone else suggest the contract is based on Oklahoma and Texas remaining members.

But even if it is, the point is moot because they will remain members through the duration of the ESPN contract, anyway.

 

[Lone Clone]

For athletic department funding I would say ISU is closer to the norm and Iowa on the side of being the exception in comparison to their peers.

ISU revenues for 2019 were $95,411,884. The median for FBS schools was 70,406,613. Iowa was $151,976,026.

 

[Slappy Pappy]

I haven't seen it mentioned anywhere, and I've read a LOT of analyses of the situation. When it is mentioned, the suggestion is that it requires 10 conference members. I have not seen anyone else suggest the contract is based on Oklahoma and Texas remaining members.

But even if it is, the point is moot because they will remain members through the duration of the ESPN contract, anyway.

Yeah....no. I am definitely "suggesting" that Espn would only sign a contract for that much money on the guarantee that Tx and Ok were part of it. Those two schools are the only ratings value in the whole conference, why would they say "any 10" schools? That's absurd. Same goes with the contract for the championship game. It will lose the majority of its value once Tx and Ok are gone. No one paying that money for a TCU-KSU game. AAC/MWC disbursements are something like $6m per team. I'd imagine that initially, the B12 would get twice that, and then decline over time as they are left out of the national conversation.

 

[cidhawkeye]

ISU revenues for 2019 were $95,411,884. The median for FBS schools was 70,406,613. Iowa was $151,976,026.

I should have clarified a little more. Instead of funding maybe financed would be a better term. Iowa tends to be fairly fiscally conservative on their projects. The proposed wrestling facility would be a solid example. Other schools tend to operate utilizing more leverage. As far as funding goes ISU appears closer to the median than it is to Iowa.