New A.D. will have full slate of projects
Investments in future of athletics clear from fundraising activity, debt
Kansas University’s next athletics director will be coming into a department with new and expanded facilities developed during Lew Perkins’ seven-year tenure on campus.
And raising money to pay off those bills will be a priority, just as it is today.
“We want to continue fundraising … (and) swinging the pendulum forward,” said Sean Lester, interim athletics director, on the radio this past week.
Kansas Athletics Inc., the not-for-profit athletics organization at Kansas University, reported $93.67 million in total liabilities for the 2008-2009 year, up nearly 55 percent from a year earlier.
The bulk of the increase: More than $32 million in bonds sold to finance construction and remodeling projects at Allen Fieldhouse, the Horejsi Family Athletic Center, the Wagnon Student Athlete Center/ Parrott Athletic Center and vicinity.
Those bonds are in addition to the $17.8 million the department borrowed in 2004, to refinance the remainder of $27.2 million in bonds that had been issued six years earlier for upgrades at Memorial Stadium and the fieldhouse.
In all, those two bond issues leave Kansas Athletics responsible for paying about $3.3 million a year for principal and interest through the year 2033.
The department is up-to-date on its payments, backed by the operations and assets held by Kansas Athletics, said Jim MacMurray, vice president for finance at the Kansas Development Finance Authority, which issued the bonds and has served as an intermediary between the department and its bond holders.
And whoever ends up leading the athletics department will be responsible for seeing that the ongoing performance remains strong on the financial scoreboard, through whatever challenges and opportunities arise.
“It’s a business,” MacMurray said. “They’re going to have to operate it to basically pay the bonds. A lot of things can happen over 25 years.”
Among developments during the past year, after the department filed its latest audited financial statements and other documents with the IRS:
• The department cut a $3 million check to Mark Mangino, satisfying the financial portion of a settlement for him to leave as KU football coach a year after leading the team to an Orange Bowl title.
• Perkins himself retired Sept. 7, cutting short previous plans to stay on the job for another year. KU said that Perkins would receive a $600,000 retention bonus that Perkins would have received by staying on the job until next June, and that Perkins would be receiving about $2 million from KU after the Sept. 7 announcement — all of it from Kansas Athletics, not taxpayer sources.
Pledging to pay
Susan Wachter, the department’s chief financial officer, said private donations were being used to cover bond payments. Debt for the Anderson Family Football Complex — a project whose planning was taking shape just before Perkins’ tenure — was financed in part by a $6.5 million loan from the KU Endowment Association and backed by pledges and contributions from donors.
Athletics paid back endowment for the bridge loan, and athletics continues to collect on pledges.
“I’m on plan and on target,” said Dana Anderson, whose family’s name is on the complex and is paying about $400,000 this year. “Haven’t missed a beat.”
While some donations haven’t always come in as planned — the department previously has acknowledged that Thomas Kivisto, for one, had been behind on at least some of his contributions — the project’s bills have been paid going forward.
The department can turn to reserve funds or other sources to make ends meet, Wachter said.
“You go get it where you’ve got the funds to do it,” she said.
The department’s long-term debt ranks sixth among athletics departments in the Big 12 Conference, said Jim Marchiony, an associate athletics director. And the department has no plans to stop pushing forward on initiatives to bolster KU fields and other sites for athletes and fans.
The department still has plans to build a Gridiron Club on the east side of Memorial Stadium, locate an “Olympic Village” for nonrevenue sports — including soccer, softball, and track and field — southwest of Allen Fieldhouse, and provide millions of dollars to the chancellor’s office for use in academic and other areas as she sees fit.
The Gridiron Club originally had been sold as a project slated to be open this fall and to be financed solely by club memberships bought by donors. At last check, the effort had generated about $4 million.
“We’re having discussions, both internally and with donors and people with vested interests in Kansas Athletics, and we’re keeping those projects alive,” Marchiony said. “We’re talking about all of it because the Gridiron Club can make all of the rest of it happen.”
While the club and its associated projects have no specific timeline, he said, “we want to do it as soon as we can, but we’re not going to do it without the funding.”
Overall donation levels remain strong among alumni and friends, Marchiony said, and contributions are coming in at least as strong as last year.
“Kansas Athletics has very loyal and generous donors,” he said.
Investments in new, expanded and refurbished athletics venues have been and will continue to be essential in the world of intercollegiate athletics, Marchiony said. The recent rumblings of conference reorganization only reconfirmed that spending money at Memorial Stadium, Allen Fieldhouse and other KU venues was paying off.
“What we needed to do, and what we always need to do, is put Kansas Athletics in a position where we can compete on a national level and in the Big 12,” Marchiony said. “And these renovations have done that.”
It’s important for the Big 12 to remain strong, he said, and for KU to remain strong in the conference it needs to good coaches, student-athletes and facilities.
“It’s very important to position Kansas as a leader in intercollegiate athletics,” he said.
Dale Seuferling, president of the Endowment Association, acknowledged that Kansas Athletics has worked to improve its assets through upgrades to venues and related work. Such moves are decided by the department, one that is slated to get a new leader in the coming months.
The association last year held $47.6 million in deposits for Kansas Athletics.
“You have to make a conscious decision about making an investment in the future and determine what is needed to build success,” Seuferling said.