Iowa public university athletic budgets swell

IOWA CITY — University of Iowa Athletics, in the fiscal year that just ended, beat budget expectations by $11.4 million — reaching a record $140.4 million in total income, above the $140.3 million mark the program projected to reach for the current budget year.

But that $140.4 million income total for the 2023 budget year — matched by the same operating expense total — comes with an asterisk, in that a portion of the overage came from “a reserve fund transfer for legal settlements,” according to a report going before the Board of Regents meeting this week at the University of Northern Iowa.

On the expense side, UI Athletics spent $6.8 million more than expected on “administrative and general expenses“ — in part — because of ”legal settlements.“

In March, UI Athletics paid $4.2 million to settle a discrimination lawsuit that 12 former football players filed against the department and its coaches. That $4.2 million is about twice the amount UI Athletics had planned to spend when it agreed to the deal — expecting the state would cover $2 million of the total.

“After listening to the concerns of Iowans, and in consultation with Board of Regents leadership, I have determined that the University of Iowa Department of Athletics will reimburse the state general fund for the $2 million due to the recent settlement,” UI President Barbara Wilson said in a statement at the time.

Given reserve funds are not part of the UI Athletics operational budget — but the department still had to pull in $4.2 million to cover the agreement — UI Athletics operating income swelled while its reserves dropped to $2 million, according to regents spokesman Josh Lehman.

UI Athletics did generate more revenue than expected in some categories — like for women’s basketball, which was budgeted to bring in $350,000 but instead made $1.2 million. Men’s football generated $23.8 million, more than $1 million more than the $22.8 million expected; men’s basketball brought in $3.5 million, above the budgeted $3.2 million; and men’s wrestling tallied $1.2 million, topping the $750,000 expectation.

UI Athletics got $2.8 million more than planned from the Big Ten Conference — but $2.7 million less than expected from donors.

UI Athletics loan

Hawkeye Athletics — although it didn’t plan to — also ended up paying $1.5 million back to the main campus last year on a $50 million loan it borrowed during the height of COVID-19, when then-UI Athletic Director Gary Barta cited such steep operating losses that he needed to cut four sports, including men’s swimming, tennis and gymnastics.

Since that time, UI Athletics budgets consistently have outperformed expectations. UI Chief Financial Officer Terry Johnson told regents Wednesday he met with Barta about the department’s plan not to pay back any portion of the loan in 2023.

“They were intending to not make a payment in fiscal ‘23, but I sat down with Gary Barta, the athletic director … to talk about things,” Johnson said. “And after those conversations, they committed to making $1.5 million payment.”

To date, it has paid back $4.5 million on that loan. Starting next year, according to Johnson, payments likely will go up. “ I anticipate at least that they will start making larger contributions or payments toward that outstanding debt,” he said.

To the question of how long UI Athletics — which touts itself as self-sustaining and not reliant on the main campus for financial support — will take to pay back the loan, Johnson said it has 15 years. “I'm going to keep pressure, as long as I'm in my role, to get it paid sooner rather than later,” he said. “That's in their best interest as well. The interest rate gets repriced every five years.”

ISU, UNI

Iowa State University Athletics, which earlier this year also projected record-breaking revenue in the current budget year, nearly reached that expectation in fiscal 2023 — like the UI — bringing in $110.1 million, or nearly $4 million over the $106.2 million budget and just shy of the 2024 projection of $111.5 million.

All of ISU’s major sports made more in ticket revenue than expected, and the department generated more income from a bump in football parking permit prices.

UNI Athletics saw its income materialize just above expectations — reaching $15.5 million, which also is above the $14.8 million UNI expects to make in the current budget.

But most of UNI’s income increase was a $1 million bump in support from the general campus — with the larger university giving its athletics department $4.3 million, instead of the planned $3.3 million.

Tuition revenue

Other areas of the comprehensive university budgets show tuition revenue topped expectations at the UI — but came in below budget at ISU and UNI, generating about $64.9 million instead of the expected $66.9 million.

“Higher indirect cost reimbursements from additional grant funding and investment income partially offset the shortage in tuition revenue,” according to a UNI portion of the budget report, noting resident student tuition comprised 84 percent of gross tuition revenue and non-resident tuition accounted for the remaining 16 percent.

“Expenditure adjustments made throughout the year offset the revenue shortfall,” which reached nearly $1 million for UNI. It maintained a balanced budget by spending nearly $6.8 million less than planned on salaries.

ISU’s total revenue came in $1.2 million below budget because its revenue from tuition was $5.6 million under expectations. Given those shortages and other pressures, ISU spent $36.3 million more than it made and $35.1 million more than it planned — largely due to higher salary expenses.

“Higher medical claims since the beginning of the pandemic have negatively impacted the fringe benefit pool over the last few years,” according to the budget report. “ISU made a supplemental contribution to replenish the pool during FY 2023, which contributed to salary and fringe benefit costs exceeding the budget."

Meanwhile, the UI brought in $15 million more in total revenue due in large part to the $12.3 million in tuition revenue than planned.

“Higher than projected enrollments and higher percentage of non-resident students resulted in additional tuition revenue,” according to the UI portion of the budget report. “Tuition revenue generated from resident students comprised 43 percent of the total, with 57 percent coming from nonresidents.”

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