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Archive for Saturday, October 29, 2011

KU athletics department says $58.8 million debt ‘manageable’

October 29, 2011

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According to documents from Kansas Athletics Inc. and an interview with its chief financial officer, the athletics department owes about $58.8 million in debt as of the end of the 2011 fiscal year, which ended June 30.

Susan Wachter, Kansas Athletics’ chief financial officer, said the debt was “all very manageable.”

“The debt’s there, but it’s not something we can’t manage,” she said.

Jim Marchiony, associate athletic director, said the debt shouldn’t affect the other athletics operations.

“As long as it stays manageable, it will not and should not hamper us in any way,” he said.

During the last fiscal year, Kansas Athletics spent about $2.5 million on payments toward its debt, according to its financial statements. In addition to these payments, Kansas Athletics is also putting some money aside for a contractual obligation for men’s basketball coach Bill Self, who will be due a $2.1 million retention bonus from his contract in 2013. That payment — similar to retention bonuses for former athletic director Lew Perkins — will be tax-free for Self, so Kansas Athletics will likely pay Self an amount similar to the $3.59 million in gross bonus pay it paid to Perkins in 2009. Wachter said Kansas Athletics is aware of the coming payments and has been setting money aside to cover it.

Here’s a breakdown of where the department still owes money and when it should fall off the books:

Facilities Revenue Bonds: $44,255,000

This category encompasses most of KU’s current debt load. Wachter said the bonds are paying off two major projects:

  • Renovation to the football stadium undertaken while Bob Frederick was the athletic director.
  • Major renovations done to Allen Fieldhouse, which were completed in 2009.

Wachter said Kansas Athletics was able to refinance the football stadium debt at a lower interest rate in 2004.

Kansas Athletics paid about $1.2 million as a debt payment for the projects in the 2010 fiscal year. Wachter said the football stadium debt is set to be retired by the 2023 fiscal year, and the Allen Fieldhouse renovations should be paid off by the 2033 fiscal year.

Notes payable on Anderson Football Complex: $6 million

Wachter said Kansas Athletics will owe $6 million to help pay for the Anderson Football Complex, but, because of the way the debt is structured, the entire $6 million will be due in one lump-sum payment in 2017.

The Anderson Football Complex was completed in time for the 2008 football season. Most of the funding for the project came from private donations from Dana and Sue Anderson, former basketball team captain Tom Kivisto and his family, and other donations.

Contributions payable to the university: $4,727,489

Kansas Athletics has an agreement with KU to pay for some of the debt associated with the Ambler Student Recreation Fitness Center, Wachter said. The athletics department’s payments supported the building of new gyms in the building.

The athletics department paid $465,000 to the university last year, and its total obligation is scheduled to be paid by June 2020, Wachter said.

Long-term debt on Jayhawks Tennis Facility: $2,537,973

The athletics department spent $3.1 million in 2010 to purchase the First Serve Tennis Center at 5200 Clinton Parkway from Mike Elwell.

Kansas Athletics paid $61,040 on the debt associated with the purchase last year and is scheduled to have it paid off by June 2015.

Capital lease obligation for Allen Fieldhouse video board: $1,245,317

Kansas Athletics paid just more than $571,000 toward the debt on the video board last year, and the entire debt is scheduled to be paid by the 2013 fiscal year.

Comments

pepper_bar 3 years ago

For anyone who still wonders why KU is stuck in the Big 12 and couldn't afford an exit fee when realignment chaos was in full swing...

Robert Rauktis 3 years ago

"That payment — similar to retention bonuses for former athletic director Lew Perkins — will be tax-free for Self, so Kansas Athletics will likely pay Self an amount similar to the $3.59 million in gross bonus pay it paid to Perkins in 2009."

That sure buys a lot of cigars and he wasn't even the coach on the hot seat. What a rascal!

hawksfanatic 3 years ago

Is this the story that preps us for the "no buyout" argument?

Cary Bowlin 3 years ago

No wonder banks will not loan money to common folks...they have loaned it out to the "must have it all", regardless.

Carol Bowen 3 years ago

At one time, the funding scheme for college sports probably made sense. I get that the BB coach is very good at finding new recruits and grooming them into star players. TV has become a "major player" throwing more money into the mix. There was an increase in ticket prices, the ticket scam, and now a $58.8 million manageable debt. Funding KU Sports has become a monster that in no way relates to education.

Somehow, I suspect that our tax money laid the foundation. I thought we were providing a postsecondary education to students. How do KU student athletes benefit from KU Sports? I don't know what troubles me more, to see so much money changing hands using student athletes or that KU Sports is a nonprofit organization which is non-taxable.

TopJayhawk 3 years ago

For the hundereth time. No school money is used. KU athletics also paid to provide student gyms. Reading comprehension anyone?
And a good sports dept. increases enrollment, and then the greedy administrators from the academic side can and do raise tuition.

Please just stay home and read that overpriced textbook you love so much if you don't like it.

Carol Bowen 3 years ago

No need to get sarcastic. You misread my post. I did not say school money is used. However, KU Sports uses students, the KU name, and KU real estate. The other point can be summed up more eloquently by the Knight Commission on Intercollegiate Athletics:

"Restoring the Balance: Dollars, Values, and the Future of College Sports" (2010) This report aims to set forth reforms that are achievable and that, if implemented, will create a foundation upon which future reforms can build. Our blueprint for restoring educational values and priorities begins with strengthening accountability for athletics programs in three ways: requiring greater transparency and the reporting of better measures to compare athletics spending to academic spending; rewarding practices that make academic values a priority; treating college athletes as students first and foremost -- not as professionals.

KEITHMILES05 3 years ago

Why has the 44 million football stadium debt been refinanced only once in 2004? Do they not know interest rates are much,much, much lower now? Who the hell is in charge of this stuff?

Getaroom 3 years ago

So an entire nation is spending beyond it's means, but this 58 million debt is manageable is it? This is simply another example of "it's all about the money". TV revenues, regional wars about who's team is jumping to another region is only about the money. Most of this jumping around is ONLY about revenue, because so many of the schools who are bundling do not even have geography in common anymore. And mind you this is not about higher education at all so never get college athletics scholarships confused with an academic education. It is about making stars out of what are most often talented street kids and feeding them into the entertainment world and using them/their names to grow profits for the institution associated. Suppose that breeds some rule breaking surrounding student athletes getting paid for entertaining spectators? How is it that we get what we deserve? Corruption and greed in, corruption and greed out. And don't we all feel sorry for players like Latrell Sprewell having a hard time feeding his family on a mere potential 38 million contract. Bohoo! Go ahead commissioner - drop the entire season of NBA basketball games. Maybe fathers will go shoot hoops with their kids again instead of stuffing their ever growing bellies with Dorritos and cheese dip and pooching out their lips with those big fat cigars.

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