University of Iowa failed to finalize athletic loan terms, interest rate
Iowa fans state âGo Hawksâ and âAmerica Needs Famersâ at Kinnick Stadium ahead of Iowa’s game against Northwestern on October 15, 2011. (The Gazette)
IOWA CITY – Although the University of Iowa Athletics is due to repay a $ 50 million loan from the main campus in 10 to 15 years, the IU finance office has not finalized loan documents outlining the terms , the payment schedule or the interest rate.
The IU chief financial officer is waiting until the end of the budget year on June 30 to clarify the loan – as it will depend on the exact sports deficit, which had been projected at nearly $ 75 million in September before a semblance of fall. the football season has come to fruition. Fall football – albeit without fans inside Kinnick Stadium – mitigated the losses.
“The amount of the expected loan is $ 50 million,” according to unemployment insurance spokesperson Anne Bassett. “But that will be finalized in discussions with athletics.”
The athletics department at Iowa State University – which like UI is generally self-sufficient and not dependent on state funds – also needed a loan from its main campus this fiscal year to help managing losses from COVID-19, according to ISU spokeswoman Angie Hunt.
ISU Athletics plans to repay the $ 6 million borrowed from its campus by June 30, the end of the fiscal year.
âThe department is still forecasting a deficit of approximately $ 25 million for FY21 and will cover that deficit using current fund balances from the athletics department,â Hunt said.
The UI and ISU athletics imposed economy measures in fiscal year 2020, delaying the need for campus loans until 2021. The persistence of COVID-19 this year has made deficits inevitable , although Hunt said the ISU amount could change based on total winter sports revenue and conference revenue sharing from media deals and the NCAA.
At Iowa’s other public university, the University of Northern Iowa, the athletics department has never been self-governing and receives campus contributions every year.
In fiscal year 2020, UNI provided sport operations and scholarships with a total of $ 4.7 million, or 35% of UNI Athletics’ total revenue and approximately $ 60,000 more than planned. UNI’s current budget allocates a total of $ 4.5 million to athletics.
None of the three institutions reported income from this academic year’s winter and fall football, basketball and pandemic seasons – although September IU projections did not. expected no income from football, $ 900,000 from basketball and $ 200,000 from wrestling.
UI’s budgeted revenue for 2021 was a 75% drop from its 2020 budget for basketball, a 67% drop for wrestling, and a 100% drop for football. Meanwhile, the UI planned to spend $ 23.9 million on football this year, $ 7.4 million on basketball and $ 2.1 million on wrestling.
In September, the ISU did not budget any revenue from ticket sales for that year – although it did end up welcoming some fans to the Jack Trice Stadium for home football matches. UNI predicted sharp declines in income, but like others budgeted, only measured declines in spending on sport were predicted.
The largest annual expenses for campus athletic departments include salaries and benefits for coaches and staff; payments to visiting teams; meals and travel; recruitment; and scholarships, according to NCAA reports.
Unemployment insurance officials said they had no choice but to lend athletics tens of millions to cover the deficit as Iowa law prohibits state agencies to finance an operating deficit from the outside.
Although the UI informed its board of directors of the loan, officials said, the final decision came at the discretion of outgoing UI President Bruce Harreld.
The UI is pulling the tens of millions of dollars to cover athletics from the equivalent of a savings account in its âtotal operating fundsâ. The university reported $ 1.6 billion in total operating funds in November, according to documents from the board of trustees and UI chief financial officer Terry Johnson.
âThe university and its departments use these funds whenever an unexpected event occurs requiring payment in cash,â according to Johnson.
Comments: (319) 339-3158; [email protected]