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IOWA CITY — Although University of Iowa Athletics will be expected to pay back a $50 million loan from the main campus in 10 to 15 years, the UI financial office hasn’t finalized loan documents spelling out terms, a payment schedule or interest rate.
The UI chief financial officer is waiting until the end of the budget year June 30 to draw up specifics on the loan — as it will depend on the exact athletics deficit, which had been projected at nearly $75 million in September before some semblance of a fall football season materialized. Fall football — albeit without fans inside Kinnick Stadium — mitigated losses.
“The projected loan amount is $50 million,” according to UI spokeswoman Anne Bassett. “But it will be finalized in discussions with athletics.”
Iowa State University’s Department of Athletics — which, like at the UI typically is self-sustaining and not dependent on state appropriations — also needed a loan from its main campus this budget year to help manage COVID-19 losses, according to ISU spokeswoman Angie Hunt.
ISU Athletics plans to pay back the $6 million it borrowed from its campus by June 30, the end of the fiscal year.
“The department still projects incurring a FY21 deficit of approximately $25 million and will cover that shortfall using current athletics department fund balances,” Hunt said.
Both UI and ISU athletics imposed cost-saving measures in the 2020 budget year, delaying the need for campus loans until 2021. COVID-19’s persistence this year made deficits unavoidable, although Hunt said ISU’s amount could change depending on total revenue from winter sports and conference revenue sharing from media agreements and the NCAA.
At Iowa’s other public university, the University of Northern Iowa, the athletics department never has been self-sustaining and has gotten campus contributions annually.
In the 2020 budget year, UNI provided for athletics operations and scholarships a total $4.7 million — representing 35 percent of UNI Athletics’ total income and about $60,000 more than budgeted. UNI’s current budget spends a total $4.5 million on athletics.
None of the three institutions have reported revenue from this academic year’s pandemic-repressed football, basketball and wrestling winter and fall seasons — although UI’s September projections anticipated no football income, $900,000 from basketball, and $200,000 from wrestling.
UI’s 2021 budgeted income represented a 75 percent drop from its 2020 budget for basketball, a 67 percent drop for wrestling and a 100 percent drop for football. Meanwhile, the UI planned to spend $23.9 million on football this year, $7.4 million on basketball and $2.1 million on wrestling.
ISU in September budgeted no ticket sales income for this year — although it did end up welcoming some fans into Jack Trice Stadium for home football games. UNI predicted big income drops, but like the others budgeted only measured decreases in spending for the sports.
The largest annual expenses for the campus’ athletics departments include coach and staff salaries and benefits; payments to visiting teams; meals and travel; recruiting; and scholarships, according to NCAA reports.
UI officials said they had no choice but to loan athletics tens of millions to cover the deficit, as Iowa law prohibits state agencies from externally financing an operating deficit.
Although UI informed its governing Board of Regents about the loan, officials said, the final decision came at outgoing UI President Bruce Harreld’s discretion.
The UI is pulling the tens of millions to cover athletics from the equivalent of a savings account within its “total operating funds.” The university in November reported $1.6 billion in total operating funds, according to board documents and UI Chief Financial Officer Terry Johnson.
“The university and its departments utilize these funds whenever an unexpected event occurs requiring a cash payment,” according to Johnson.
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