Michigan Athletics in serious debt
- Thread starter Tuco Salamanca
- Start date
And their debt service is doing nothing but increasing, salaries will continue to rise and revenue will plateau at some point because Espn and Fox Sports continue to hemmorage. Their credit rating and reputation will only help to a point.
And their $9.7 billion endowment.
Cal- Berkeley has a $4 billion endowment but their athletic department is in tough financial shape.
Because their budget sucks. PAC12 network isn't in great shape and their poor attendance is in decline. Cal and Michigans programs are hardly comparable.
800,000 surplus is cutting hairs pretty thin. Clearly they are expecting growth in their brand, which they have seen in Harbaugh's first two years. Sustainable growth in college sports is way harder these days. I think they're putting the wagon a little ahead of the horse
Outside of aiding in a good credit rating, the endowment is irrelevent in this discussion was my point.
Does anyone know where Nebraska's long term debt stands? How did the athletic department's last fiscal year end? Finally, is 2017 the year Nebraska receives a full share of revenue from the conference? Thanks
Athletic Department Year Total Debt Outstanding on Athletic Facilities
University of Michigan 2013 $228,405,000
University of Minnesota-Twin Cities 2013 $213,240,000
The Ohio State University 2013 $169,342,000
University of Iowa 2013 $145,575,000
University of Wisconsin-Madison 2013 $124,779,662
Purdue University 2013 $124,175,000
University of Illinois at Urbana-Champaign 2013 $108,987,901
Michigan State University 2013 $82,200,000
Indiana University-Bloomington 2013 $52,123,117
Pennsylvania State University 2013 $48,383,590
University of Nebraska-Lincoln 2013 $28,335,000
I believe that we become fully vested in the BIG on July 1 and receive a full share of revenues from that point forward. We will not receive full share of 2016 revenues distributed in 2017.
Good stuff, thanks. I will assume that at the end of the fiscal year that the Athletic Department was in the BLACK. I can't believe that the Athletic Department has so little debt with the East addition and the new soccer and tennis center. With a full share all debt could be eliminated. What will they do when receiving a full share and no debt?
Ellobo, we passed the hat at work. I've got a cool $47.50 headed your way..
That is a surpluss that includes the annual payments on the debt. The debt is from a massive infrastructure overhaul across all athletic facilities in the past decade. It is mostly done and again paying off the debt is a part of the budget. Doing an overhaul like that will not be needed for a long time. There is a reason the Michigan AD still has a AAA bond rating. Michigan's AD takes no money from the state or general fund and is in position to adjust and keep a balanced budget.
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anon_umk0ifu6vj6zi
Guest
Man. What's that like? I wish NU was that awesome.
The debt service is about to increase substantially to about $20 million annually in 2019 before leveling off to $16 million annually from 2022-2036, assuming there is no new debt obtained.
Crain's Detroit Business also had a detailed article.
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anon_umk0ifu6vj6zi
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But Mythigan does it better... because the mythigan man says so!
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anon_umk0ifu6vj6zi
Guest
I don't wanna shock anyone, but plunking down $30 million because you owe $30 million and you have $31 million is not the best way to pay that off.
Are we all familiar with why you invest rather than pay off your 30-year mortgage if you have a good interest rate? If you can average a 7% return on the investments and you pay 4.25% on your mortgage, you make more money by not paying off the mortgage early.
Are we all familiar with why you invest rather than pay off your 30-year mortgage if you have a good interest rate? If you can average a 7% return on the investments and you pay 4.25% on your mortgage, you make more money by not paying off the mortgage early.
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anon_umk0ifu6vj6zi
Guest
Says the mythigan fan who hangs out on a Nebraska board. Oh, the irony.
Or I can take the amount of the P/I that I would pay for 30 years, making 2.75% net, and put it in an investment making 7% and make up the difference in 19.5 years
After 30 years a $200,000 investment making a net 2.75% will net you approx $457k. Take the $900 monthly P/I and invest it monthly for the same 30 years at the full 7% and you have $1.1 million.
The only thing you gain, by having debt, is access to your cash.
No you said you make more money by not paying the debt off.
If you and I each start out with $200,000.
You go with a $200,000 investment and a mortgage and I go with paying cash for the house and I just invest the amount you pay in P/I on a monthly basis. At the end of the 30 years you will not have more money than I do.
This confirms the way we bought into BTN was the right way to go. Maryland has huge financial problems for the athletic department - Big10 had to loan them money to make it work (with conference payouts reduced to pay the bills for years). Nice job running a tight financial ship 'skers!
