Hawkeye Athletics has paid back $3 million of $50 million loan

AMES — The traditionally self-sustaining University of Iowa Athletics Department — a year after taking a $50 million loan from the main campus amid massive COVID-19 losses — has paid back $3 million to date, administrators told the Board of Regents on Wednesday.

An agreement for the loan, signed June 30, 2021, allows UI Athletics 15 years to pay back the money. The interest rate — which is to be repriced every five years, not to exceed 5 percent — is 2.5 percent for the first five years.

“There are no penalties for paying it off early, and the athletic department has objectives to do so,” UI Senior Vice President for Finance and Operations Rod Lehnertz told the Board of Regents on Wednesday, in response to a regent question.

He said UI Athletics will make payments on the loan annually.

“We have already executed the first payment on that. It was in the amount of $3 million,” Lehnertz said. “The amounts will move up in future years.”

Lehnertz said UI Athletics still is “within the challenges” of COVID — which, among other things, decimated ticket sales for Iowa’s most profitable sports of football and basketball.

“Each year we will reevaluate and continue toward the 15-year pay off,” Lehnertz said. “And, as I mentioned, the athletic department intends to pay that off early if they're able.”

The question came up amid the board’s discussion of its campuses’ fiscal 2023 budgets — in which both UI Athletics and Iowa State University Athletics project their most lucrative years to date.

A year after UI Athletics reported a $42.9 million deficit and ISU Athletics said it spent $17 million more than it made, both are expecting big rebounds.

UI Athletics’ fiscal 2023 budget has it generating nearly $129 million in revenue — about $12 million, or 10 percent, more than in the budget year that ended June 30. Iowa State projects $106.2 million in revenue this budget year, marking the program’s first time over $100 million in revenue.

When The Gazette asked UI Athletics last week how much it has paid back on its $50 million loan, UI Athletics spokesman Steve Roe said, “We are still processing the closing of FY22.”

“The final FY22 financial information, including payments by Athletics on our FY21 operating loan from the university, will be included in our FY22 comprehensive fiscal report,” Roe said, noting that typically goes to the board in the fall. “Future payments will be determined at an annual meeting between the university (chief financial officer) and Athletics, as stated in the loan agreement.”

Regent Sherry Bates on Wednesday asked whether UI Athletics will include those loan payments as a line item in their budgets going forward. Lehnertz said it would.

“We'll make sure that it's recorded as a part of their annual budget delivered to us from the athletic department,” Lehnertz said. “It can certainly be either footnoted or called out as a line item.”

Vanessa Miller covers higher education for The Gazette.

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