116 3rd St SE
Cedar Rapids, Iowa 52401
IOWA CITY — It’s no secret COVID-19 was going to have a major impact on Iowa’s finances.
Athletics director Gary Barta first projected the deficit to be about $74.8 million. Thanks to a partial football season, cost-cutting and other factors, it ended up being $44.7 million, per a July 2021 Board of Regents report.
Iowa’s latest NCAA financial report, which uses different metrics to measure Iowa’s budget, similarly indicated a $42 million deficit.
It was the first fiscal year fully affected by the COVID-19 pandemic. The department had a $5.7 million surplus in 2018-19, the last fiscal year unaffected by COVID-19, and a $3.5 million shortfall in 2019-20, according to the NCAA financial reports.
“We’re obviously hoping it’s a one-time hit,” said Greg Davies, the athletics department’s chief finance officer.
Almost seven months into the 2021-22 fiscal year, Davies’ hopes appear to have good odds of coming to fruition.
“We’re bouncing back,” deputy athletics director Matt Henderson said.
The 2021-22 operating budget — $117 million — is about the size of the one in 2017-18, Henderson and Davies said, but that comes with an if.
“We wouldn't anticipate seeing those deficits caused by the pandemic (in future years), but it's contingent on being able to play the games,” Henderson said. “And the television, ticketing and donations — those not being interrupted. Fortunately so far, we’re not seeing that here.”
Despite COVID-19 cases reaching record-high levels in Iowa earlier this month, Iowa has seen minimal pandemic-induced disruptions this season.
The only COVID-19 shutdown on campus happened to women’s basketball in November. Outbreaks among opposing teams have led to schedule changes for some Iowa programs, though.
The continued spread of the virus hasn’t deterred many fans, either.
Kinnick Stadium was at or above 95 percent capacity for four of five Big Ten home games.
Iowa men’s basketball sold out its Jan. 22 game against Penn State although some of the 8 p.m. weeknight tipoffs have been far from full.
Women’s basketball attendance is slightly below the 2018-19 and 2019-20 averages, but remains at a high enough level to likely be in the top 15 nationally by the end of the season.
How to pay for the $40-plus million shortfall
The athletics department used its $50 million loan from the university to cover its 2020-21 deficit, Davies said, while its reserve funds offset the much smaller 2019-20 deficit.
Davies said the department has 15 years to pay back the loan to the university.
“Depending on how things go over the foreseeable future here, that’ll be planned for in our budgets,” Davies said.
High cost for no games
Whether a game was completely canceled or simply without fans in 2020-21, it came at a steep cost.
The athletics department that brought in $152 million in operating revenue in 2018-19 only had $74.8 million in 2020-21, per its NCAA financial reports.
Much of the loss in 2020-21 revenue stemmed from two areas — ticket sales and donations.
Iowa’s ticket sales were down 99.3 percent from pre-pandemic levels as the athletics department heavily capped attendance to ensure social distancing.
Donations, meanwhile, were down 65.4 percent. Those two are connected.
Like at many other high-major college athletics programs, the Hawkeyes receive a large portion of their donations through minimum contribution levels for season-ticket holders.
A football season-ticket holder with seats on the 50-yard-line, for example, must donate at least $600 per seat annually. For fans who did donate, Iowa allowed them to use their donations for the 2021-22 season.
“You basically went through a year where you didn't have ticket revenue and donations as normal,” Henderson said.
In a “normal” year, tickets and donations would be the second and third largest sources of income for the athletics department behind only media rights.
Importance of football
Having at least a shortened football season in 2020 “helped mitigate some of the deficit,” Henderson said.
Had the 2020 football season not happened — that was the Big Ten’s initial decision in Aug. 2020 before changing course a couple months later — that drop in revenue would’ve been even more pronounced.
“It’s no secret that football is a significant revenue-driver for our program,” Henderson said.
Football was the only team on campus to operate with a profit in 2020-21 and accounted for the majority of the department’s revenue.
The albeit-delayed football season, along with the basketball and wrestling seasons to a lesser extent, helped the department bring in $36.4 million, about $8.7 million below the pre-pandemic mark.
“That could have been a lot worse if we didn't have a football season or the basketball seasons,” Davies said.
Iowa cut its operating costs by $29.5 million between the 2019 and 2021 fiscal years.
The department eliminated 40 positions and instituted furloughs and one-time pay cuts in 2020 to reduce costs. The university saved $4.3 million in support staff compensation, based on the last two NCAA reports, although coaches’ compensation increased slightly.
Other costs were unavoidable during the pandemic. Iowa paid $24.5 million in facility debt services payments. Much of that comes from two major renovations to Kinnick and one to Carver-Hawkeye Arena.
“We also have a handful of other smaller projects that are in there,” Davies said.
While the debt counts as an expense on the 2020-21 financial report, some of the revenue might arrive in a different reporting year.
“We have donations come in under a certain time frame on pledges, but obviously we have to pay the contractor,” Davies said.
Without that expense, the $42 million deficit, based on the NCAA’s way of measuring it, would’ve been about $17.5 million instead.
Unlike some of the areas of the department’s finances that are dependent on COVID-19, the facility-related debt is certainly predictable.
“We know what we're going to pay each year for the next 20, 25 years,” Davies said.
Comments: (319) 398-8394; email@example.com