Hawkeye Athletics hasn’t made much of a dent in paying back the $50 million it borrowed from the main University of Iowa campus during the height of the pandemic, leaving $47.6 million outstanding on the 2021 loan — even as contributions from the Big Ten Athletics Conference to its budget continue to climb.
Although UI Athletics paid $3 million back to the main campus in 2022, $1.5 million in 2023 and $1.5 million this year, the loan’s 2.5 percent interest rate has swallowed up most of those payments — shaving just $2.3 million off the principal to date, according to UI Chief Financial Officer Terry Johnson.
“So of the $1.5 million, $1.2 million went to fund the interest expense that was charged to Athletics in FY24,” Johnson told the Iowa Board of Regents in November about the department’s 2024 payment. “Therefore, the balance of about $300,000 was applied toward the loan.”
When the main campus agreed to loan UI Athletics $50 million from its cash reserves in early 2021, the department was projecting a $75 million deficit for the budget year from expected pandemic-related losses — which also caused it to cut three men’s sports: tennis, gymnastics, and swimming and diving.
Later that summer, UI Athletics — which calls itself a “self-sustaining auxiliary enterprise” that “receives no general university support” — ended the budget year with a less-severe deficit of $45 million. And the following year in fiscal 2022, the department topped its projected revenue rebound by nearly $10 million — setting a new income record of $126.8 million.
The department has set revenue records every year since thanks, in part, to higher football, wrestling and women’s basketball ticket sales and boosts in conference support — although some of the income increases have been due to “reserve fund transfers” to pay court settlements, legal fees and “staff transition costs.”
UI Athletics’ current fiscal 2025 budget projects another revenue record, reaching $150.5 million thanks to conference contributions topping $75.2 million — a 22 percent increase over last year; 37 percent increase over 2019; and 140 percent increase over the $31.3 million it got from the Big Ten a decade ago in 2015.
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“Most primary revenue sources are anticipated to increase in FY 2024,” according to a recent summary of the UI Athletics budget.
Given that budget picture, Regent David Barker said of the department’s loan payments to date, “That sounds like a slow amortization schedule.”
“So far, yes,” Johnson acknowledged, noting terms of the loan require it to be paid off within 15 years and its interest rate to be repriced every five.
“We were expecting starting in fiscal 2026 for conference revenues and things like that to increase,” he said. “So I’m anticipating that Athletics will be in a position to pay off more of the loan at a faster rate.”
Adding a caveat that “there are a few things going on also in Athletics that will temper that a little bit,” Johnson said he’s urging a faster payback schedule.
“Bottom line, they’re interested — and I’m very interested — in paying this off as quickly as possible,” Johnson said.
“That’s what I wanted to hear,” Regents President Sherry Bates said.
In addition to the pandemic loan, UI Athletics owed $155.6 million in revenue bond principal balances, as of June 30, 2023, according to an independent accountant’s report. The bonds were issued in 2015, 2017, 2018 and 2021 for improvements to Kinnick Stadium and Carver-Hawkeye Arena.
The department additionally owed $10.3 million on two 2020 facility leases, according to the report.
And, campus officials confirmed, it owes $21.3 million on two previous facilities-related loans from the main campus — separate from the 2021 loan — both of which have a 2 percent interest rate and no fixed repayment schedule.
“Projects are paid by the university on an ongoing basis and the department makes payments as funds are available from operations,” according to the auditor’s report.
UI officials told The Gazette they don’t have “documentation or written agreements” for those institutional loans that helped support facility projects like the new marching band practice facility, field hockey grandstand and football operations building.
“When a capital project is identified and approved, construction may begin before all funding is available from committed sources,” spokesman Chris Brewer said. “So, the university provides departments a line of credit as needed for small projects, charging interest.”
UI Athletics has borrowed $17.5 million on one line of credit and has repaid $6.7 million to date — with $10.8 million outstanding. On the other — which has supported things like the new wrestling training facility and gymnastics/spirit squad facility — the campus owes $10.5 million.
Officials didn’t say how much has been borrowed on that line of credit total over the years but reported making payments of $14.4 million in 2023 and $9.6 million in fiscal 2024.
In total, per the 2023 auditors report, UI Athletics had $235.1 million in outstanding debt.
www.thegazette.com
Although UI Athletics paid $3 million back to the main campus in 2022, $1.5 million in 2023 and $1.5 million this year, the loan’s 2.5 percent interest rate has swallowed up most of those payments — shaving just $2.3 million off the principal to date, according to UI Chief Financial Officer Terry Johnson.
“So of the $1.5 million, $1.2 million went to fund the interest expense that was charged to Athletics in FY24,” Johnson told the Iowa Board of Regents in November about the department’s 2024 payment. “Therefore, the balance of about $300,000 was applied toward the loan.”
When the main campus agreed to loan UI Athletics $50 million from its cash reserves in early 2021, the department was projecting a $75 million deficit for the budget year from expected pandemic-related losses — which also caused it to cut three men’s sports: tennis, gymnastics, and swimming and diving.
Later that summer, UI Athletics — which calls itself a “self-sustaining auxiliary enterprise” that “receives no general university support” — ended the budget year with a less-severe deficit of $45 million. And the following year in fiscal 2022, the department topped its projected revenue rebound by nearly $10 million — setting a new income record of $126.8 million.
The department has set revenue records every year since thanks, in part, to higher football, wrestling and women’s basketball ticket sales and boosts in conference support — although some of the income increases have been due to “reserve fund transfers” to pay court settlements, legal fees and “staff transition costs.”
UI Athletics’ current fiscal 2025 budget projects another revenue record, reaching $150.5 million thanks to conference contributions topping $75.2 million — a 22 percent increase over last year; 37 percent increase over 2019; and 140 percent increase over the $31.3 million it got from the Big Ten a decade ago in 2015.
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“Most primary revenue sources are anticipated to increase in FY 2024,” according to a recent summary of the UI Athletics budget.
Given that budget picture, Regent David Barker said of the department’s loan payments to date, “That sounds like a slow amortization schedule.”
“So far, yes,” Johnson acknowledged, noting terms of the loan require it to be paid off within 15 years and its interest rate to be repriced every five.
“We were expecting starting in fiscal 2026 for conference revenues and things like that to increase,” he said. “So I’m anticipating that Athletics will be in a position to pay off more of the loan at a faster rate.”
Adding a caveat that “there are a few things going on also in Athletics that will temper that a little bit,” Johnson said he’s urging a faster payback schedule.
“Bottom line, they’re interested — and I’m very interested — in paying this off as quickly as possible,” Johnson said.
“That’s what I wanted to hear,” Regents President Sherry Bates said.
Line of credit
In addition to the pandemic loan, UI Athletics owed $155.6 million in revenue bond principal balances, as of June 30, 2023, according to an independent accountant’s report. The bonds were issued in 2015, 2017, 2018 and 2021 for improvements to Kinnick Stadium and Carver-Hawkeye Arena.
The department additionally owed $10.3 million on two 2020 facility leases, according to the report.
And, campus officials confirmed, it owes $21.3 million on two previous facilities-related loans from the main campus — separate from the 2021 loan — both of which have a 2 percent interest rate and no fixed repayment schedule.
“Projects are paid by the university on an ongoing basis and the department makes payments as funds are available from operations,” according to the auditor’s report.
UI officials told The Gazette they don’t have “documentation or written agreements” for those institutional loans that helped support facility projects like the new marching band practice facility, field hockey grandstand and football operations building.
“When a capital project is identified and approved, construction may begin before all funding is available from committed sources,” spokesman Chris Brewer said. “So, the university provides departments a line of credit as needed for small projects, charging interest.”
UI Athletics has borrowed $17.5 million on one line of credit and has repaid $6.7 million to date — with $10.8 million outstanding. On the other — which has supported things like the new wrestling training facility and gymnastics/spirit squad facility — the campus owes $10.5 million.
Officials didn’t say how much has been borrowed on that line of credit total over the years but reported making payments of $14.4 million in 2023 and $9.6 million in fiscal 2024.
In total, per the 2023 auditors report, UI Athletics had $235.1 million in outstanding debt.
UI ‘very interested’ in athletics paying back $50M loan ‘as quickly as possible’
Hawkeye Athletics hasn’t made much of a dent in paying back the $50 million it borrowed from the main University of Iowa campus during the height of COVID, leaving $47.6 million outstanding on the 2021 loan – even as contributions from the Big Ten Athletics Conference have continued to climb.
www.thegazette.com
