This article discusses the current situation with the Athletic department debt, and the benefits and risks associated with the current situation. This article also discusses how student-athletes can cope with the increased debt payments, as well as the College’s ability to borrow more money to meet shortfalls.
Athletic department debt
If you’re an athletics fan, you know that the cost of running a college athletics program is staggering. Cal athletics recently completed one of the most expensive stadium renovations in college history, but now the athletic department is facing mounting debt. It has more debt than any other college sports program in the country, and it plans to finish the current fiscal year in the red. The Chancellor’s Task Force on Intercollegiate Athletics is reviewing the department’s finances to make recommendations for the future. The Mercury News reported that one-third of Cal’s sports programs could be cut, while an administrative overhaul could reduce costs and increase athletic funding.
The athletic department’s budget is still facing ongoing deficits, with the athletic department projecting a deficit of more than $60 million in the next fiscal year. The budget deficit is due in large part to COVID-19 testing and safety protocols, as well as the ban on fans attending games. According to a document obtained by NJ Advance Media, athletics has incurred an operating budget deficit of more than $50 million in the last three fiscal years.
Dead money paid to coaches
ESPN recently published an investigation on dead money paid to coaches and athletes by college athletic departments. They analyzed financial records from 130 FBS schools over an 11-year period. They found that the NCAA paid $533.6 million to coaches and athletes in football, men’s basketball, and women’s basketball.
According to the study, some coaches receive checks from multiple schools, like Auburn football coach Gus Malzahn. He also receives another $2.3 million a year from the University of Central Florida. While big-name universities usually pay coaches just a few hundred thousand dollars as university employees, millions are added to their total compensation thanks to media rights and apparel deals.
Student-athletes’ ability to absorb increased debt payments
Recently, Bloomberg Businessweek published a report that detailed the growing debt crisis in college sports. According to the report, the University of California at Berkeley may have to reduce the number of intercollegiate sports teams because the athletic department had $445 million in debt last year. The study also identified Michigan as among the ten largest athletic departments in terms of debt.
The university has 900 student-athletes and 350 coaches, and runs 31 teams. The university uses a $100 million donation from alumnus Stephen Ross to keep the athletic program running. While it’s not a great deal, it does provide the university with millions of dollars a year. Some basketball players and football players even become household names during their seasons.
Colleges’ ability to borrow more money to cover shortfalls
Colleges’ borrowing habits have been on the decline since 2011-12. Their share and average amount of federal student loans have decreased. By 2017-18, 30 percent of undergraduates borrowed money from federal sources. Their average loan was nearly two thousand dollars in 2009-10 but had fallen to around one thousand dollars by 2017-18. This trend may be due to a recovering economy and an increased labor market.
However, the federal government has not given colleges enough money to cover these shortfalls. While Congress has provided additional money to college systems in recent years, they still expect to need another $97 billion to cover shortfalls. Congress should make sure that federal loans to colleges flow through state systems, limiting federal money to for-profit institutions and requiring states to reinvest in their public higher education systems. Congress should also establish a formula for aid awards based on total head count or full-time equivalent enrollment.
Athletic departments’ ability to Trade Lines For Sale At Personaltradelines refinance debt
Athletic departments have a variety of options to pay off debt and keep athletics programs afloat, but they are often limited by debt service ratios and interest rates. In addition to paying off existing debt, athletic departments may also take on new debt to improve their facilities, which can add up to a substantial amount over time.
To avoid running into problems, athletic departments need to understand the ins and outs of their Trade Lines For Sale At Personaltradelines finances. For example, the Louisville athletic department reported $140 million in revenue last year, but spent $62 million on salaries, bonuses and buyouts for football coaches. Consequently, the athletic department could be facing a coaching change in the near future.