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‘Unsustainable’: How Rutgers athletics quietly racked up $265M in debt
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Just a rehash of the same disinformation.The Daily Targum
The Daily Targum is where you can find Rutgers University's campus news, Scarlet Knights sports coverage, features, opinions and breaking news for New Brunswick, New Jersey
We had all those same sports before the B1G. We are clearly investing significantly more in them now to keep pace with our new peers (as we always should have, but were too cheap to do). But these programs were already big money losers before the B1G. While the B1G did up the ante from a cost perspective, it also benefited many of those same sports as well with greater levels of interest, competition, etc. I think it is disingenuous to say the reason our non-revenue sports lose money is because of being in the B1G. Many would argue, quite literally, that the non-revenue sports lose money because they don't bring in much, if any, revenue. That is generally not a great business model, whether you are in the B1G or not.
Well my thinking was, the reason we accepted was because of the football aspect. We certainly didn't join because of volleyball, baseball, soccer, etc.
Now there is the academic aspect, the research opportunities and such which I wasn't considering here but is not insignificant. Now, what is that worth and how should that be accounted for? I'm not sure.
As per why we got the invite. Again not something I was considering above, but the driving force there I think was the B1G's desire to get into the NYC market. I think that does go beyond Football, but is Football and B-ball are the dominant forces. Don't know how relevant that is to this discussion though.
This is my point, we are investing more in those sport because of being in the B1G. And if you want to go earlier then that, the same happened when we joined the Big East. We could very easily play a local schedule, with little travel, with lower paid coaching staff's in these sports.
Now is there value in having high level sports teams that don't generate, and thus lose, money? Is that something a University, especially a State University, should support? I can see an argument for that, but you also have to ask, "to what level?".
I think the article, and some of the reaction, highlights that we've crossed that level in the minds of some, and we wouldn't be at those levels if we didn't join the Big Ten, and we wouldn't have joined the Big Ten if not for football.
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I think it has more to do with Covid, and the lack of fan revenues which came with it, making an already glaring headline all the more gaudy.
But we do seem to get this same story year after year.
The issue has always been a revenue problem, and primarily a conference payout problem. When we were in the Big East and later the American, our conference payouts were 4x less than the B1G and 2x less than the ACC, so for decades we didn't build any new facilities or really invest in winning or much of anything to improve the athletics dept and compete with our P5 peers. Then, to further compound the problem, the B1G gave us a horrible 6 year buy in that has us getting less than everyone and paying more than MD and Nebraska combined to join, all because it's based on our prior crappy conference payout, despite the fact that we delivered more than enough in increased carriage fees to cover a full payout from day 1. Once in the B1G, we finally had to start investing in winning and the athletics dept, so we're building facilities and spending to support that. Had we gotten a full B1G share from day 1, the phantom $86M loan from Rutgers and $24M loan from B1G would not have been. Holloway needs to wipe it out and so should the B1G.
That’s possible. But the timing is very suspicious. The pandemic-related revenue loss in 2020 could’ve been reported long ago.
And again, the article‘s curious lack of objective presentation, the deliberate filtering of certain important facts that have been raised in this thread, and the emphasis on “facts” that are misleading clearly makes it an attack piece versus an public service announcement.
Ya, I didn't read it, and I wouldn't be surprised at all if it was slanted in that direction, however I think the State University's athletics dept losing money is and has been news worthy.
What's the reasoning as to why Holloway should forgive the loan?
Or the Big Ten for that matter? If the idea is joining the conference will provide significant financial benefit for Rutgers in the long run, why do they need to additionally support our transition from small time to big time?
All I can say is that article and implications might be made mute, if Rutgers football moves up to being considered one of the top programs.
If that happens the booster bandwagon will be filled with deep pocketed boosters wanting to be part of the program and major NYC metro area corporations wanting to be affiliated with RU .
As it stands now RU is doing what other football schools are doing, spending on the program trying to make it the type that draws in a fan-base that will give freely and have corporate powers want their company part of a winning RU FB program
Last time articles like this were being made into a problem was when Schiano was building a winner and the media nit picked every dollar being spent in the effort to make RU FB a point of pride for RU Alumni and thel ocal media cried foil ( which some national outlets pickled up) over spending to make RU Stadium big enough to seat expcted crowds and possibly give the Big 10 something to look at as a plus instead of thinking RU Stadium wasn't big enough for a B1G program
If that happens the booster bandwagon will be filled with deep pocketed boosters wanting to be part of the program and major NYC metro area corporations wanting to be affiliated with RU .
As it stands now RU is doing what other football schools are doing, spending on the program trying to make it the type that draws in a fan-base that will give freely and have corporate powers want their company part of a winning RU FB program
Last time articles like this were being made into a problem was when Schiano was building a winner and the media nit picked every dollar being spent in the effort to make RU FB a point of pride for RU Alumni and thel ocal media cried foil ( which some national outlets pickled up) over spending to make RU Stadium big enough to seat expcted crowds and possibly give the Big 10 something to look at as a plus instead of thinking RU Stadium wasn't big enough for a B1G program
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Additionally support? The University doesn't require each department to take out loans for operating expenses. Instead, those are part of the budget and allocation, so this should be too. It was a sham to force these as loans. As for the B1G, they should because we more than paid our fair share by generating increased carriage fees, and the disparate buy in amounts for us, Nebraska and MD were arbitrary. Why do Nebraska and MD pay considerably less than we do to get in? Aren't we buying an equal share of the same thing? We're paying like $30M+ more per year than they are. MD got a $20M-$30M "travel subsidy" on top of its already 2x-2.5x higher payout due to being in the ACC, yet we got nothing. It's absurd.
New Jersey's New State Motto:
"Where we eat our own."
"Where we eat our own."
and that's why I think the media slants stories like that. they are not serving the Rutgers family.. which is, after all, THE STATE UNIVERSITY that provides all kinds of services to the state.. especially turning disadvantaged students into future taxpayers.. the media serves themselves.. they provide for the audience they serve.
Two reasons for RU: 1.) to just clean up the accounting once and for all.
Barchi ran a revenue center model where every operating unit outside some centralized functions was responsible for their own revenues & expenses.
While that model forces some accountability it had 2 big problems at Rutgers. 1.) It made investment and capital expenditures in growing and new initiatives very expensive unless you could wrangle big grants or donors. And we all know how paltry RU giving is. 2.) It negatively impacted growth areas by turning internal investments into loans or central overhead that needed to be covered by "revenues" (tuition dollars, fees, fannies in seats etc.) and it starved departments that were historically considered top programs nationally or internationally, but were not in fields that had possibilities for big grant support.
For instance, Rutgers has typically had much much stronger humanities programs (History, English, Philosophy, etc.) than other Big Publics and on par with the Ivys in some instances. But under Barchi the humanities were starved.
The humanities at RU like athletics brings certain reputational advantages (obviously very different types and scales) and Barchi's model did not account for "brand" or "investment." To be fair he was dealing with a huge merger with the medical school that brought its own debt and financial issues.
2 ) By forgiving the AD "loans" or reclassifing direct and indirect institutional support, Holloway can wipe the slate clean and it gets rid of stories and attacks like these.
Holloway may also be moving to manage the University holistically rather than by cost center.
Which makes sense if you want to build and strengthen and grow and leverage existing strengths while building up average or underperforming programs like the RU Ad and engineering for instance (nothing wrong with engineering! It's just not as strong vis a vis our peers as other departments & programs).
I think we both would agree that getting into the B1G was the best thing to ever happen to RU athletics. Full stop. Joining was a negotiation. Nebraska is a blue blooded football program. They were in the B12 when the negotiations to join the B1G occurred. Maryland has a strong athletics program and was safely in the ACC. We all know the position Rutgers was in. The low revenue American where every program would jump if offered a better spot. We can't ignore these facts. The B1G was a lifeboat for RU. Why would they give us the same deal? Would Purdue and Iowa sign off on something like that? If Notre Dame were to join tomorrow, should they get the same deal as Nebraska? Of course not.
The loans from the B1G (which apparently Maryland has as well) are just a shift in timing of revenue streams. They could just as easily have been classified as revenues. We got more earlier in exchange for less in the later years. Not sure that there was even an interest rate ascribed to them. If your employer contracted with you to pay you more in 2021 and 2022 but less in 2023 and 2024, would you have taken out a loan? No, you would report the increased 2021 and 2022 income on your tax return as income.
Finally, our non-revenue sports have blossomed since entering the B1G. We have spent more money but that has not been wasted. They are winning and getting ranked. Positive marketing for the University. Not wasted by any means.
The reason would be "the BIG Ten conference considers all members equal" and not just out for money.
But that's clearly not the case.
Why would every school have to pay a different fee to join the same conference?
That isn't very "equal".
At least the Big 12 was public about some members being more important than others.
I've gone over this before but the BIG Ten gives new members a terrible entry model that give them little chance of competing.
The concept of "well you currently make X so you are going to make X for the next 7 years" gives no benefit to the incoming team for any increases in conference revenue. Like happened with the 2017 deal
https://www.chicagotribune.com/sports/college/ct-big-ten-espn-fox-sports-20170724-story.html
Every other negotiation of buying an "equal" piece goes: the piece is valued at Y. For the next 7 years your equal share payout will be reduced and that balance will go towards paying down Y.
If the payout increases more than expected, the new partner gets a benefit of paying off Y quicker.
You really think money isn't the driving force behind expansion? The facts are that Northwestern is not the equal of Ohio State on the athletic field (and Ohio State is not the equal of Northwestern in the classroom). Of course it's not the case. "Every other negotiation" is a ludicrous argument. Every negotiation is unique. The facts are that Rutgers had no viable alternative. Could they have negotiated better terms if the ACC was actively trying to add them? Yes. Could they have played hard ball and threatened to walk away? Mighty risky considering that would have made RU the equivalent of UConn. Do you think UConn would jump at the deal RU got? Of course they would.
Rutgers was the BEST available option at the time for the BIG.
Obviously other schools were better options overall (ND) - but clearly unavailable at that time.
I would argue Rutgers may have been the ONLY option for the BIG at that time (considering the alternatives).
If Rutgers turned them down - would they have immediately invited UConn? Laughable.
How much money would they lose inviting UConn over Rutgers?
The BIG (a group of elite universities who wanted to expand for more money) evaluated all possible options and determined Rutgers was the best option for them to all make MORE money than they would without Rutgers.
Did the BIG have other options? Sure. But they were all worse options.
That is where Rutgers leverage was to negotiate a more equitable deal.
Even a simple "if the new TV deal with Rutgers increases payouts, let us benefit from the payouts" would have helped immensely.
If Rutgers was going to cost them money (not increase the overall pie to justify an additional slice) - they wouldn't have invited Rutgers.
If some other school would have made them more money than Rutgers - they would have invited that school.
If we're to believe some reports of Delany's plan, he wanted Rutgers and then pulled in Maryland as RU's dance partner. The announcements were then made in reverse order with MD first, RU next. Intentionally it would seem.
You are misreading or not understanding. I never said that the B1G would "immediately invite UConn". I wrote that UConn would have jumped at the offer RU got. Read what I write and try to comprehend.
Rutgers was a big risk for the B1G and many members were not keen on the idea. Delaney had to sell it. The risk being that Rutgers takes the money, doesn't re-invest, and is a perennial bottom fisher in the conference. Every dollar paid to Rutgers was one less dollar available for payout to existing members. One option you don't consider is that the B1G doesn't expand. If Rutgers was such an overwhelming choice, why did they take Nebraska first? Or not invite RU 20 years ago? You make it seem so simple but there were huge risks involved.
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I think we should leave the best academic-Athletic conference and now that there are openings in the AAC, we should beg them to let us back in. I can’t wait for those much anticipated basketball games with Tulane and football games with SMU. Better yet, let’s bring Fred Gruninger back and The State University of New Jersey, the number 50 university in the world,in a state with NINE million people and endless athletic talent can rejoin the Atlantic Ten with rinky dink schools like URI, GW, and Saint Bonaventure. For football, let’s go back to playing football powerhouses like Colgate, Maine, and Richmond. Expenses now under control. Of course there would be some little issues like no TV money, no bowl games, no corporate money, and almost no ticket revenue since hardly anyone will care and tickets will go back to $ 8 .
Good post. Do you have a sense of what kind of resistance to such loan forgiveness there might be, either within the RU boards, within the university as a whole, or externally?
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I read what you wrote about UConn and not sure the relevance.
Temple would jump at the same offer. So would Memphis. Or 100 other schools.
So?
It's not up to the school to just accept - it's up to the BIG to extend an offer in the first place.
Yes, Rutgers was a risk. Every financial decision has risk.
For every "risk" you mentioned, the "reward" outweighed it and the invite was extended.
Clearly the BIG considered not expanding.
I would bet if Rutgers did not accept - the BIG would not have expanded at all because the other options (UConn etc.) were significantly worse.
But they decided more money could be made with Rutgers than without Rutgers.
And also make more money with Rutgers instead of any other available option (including no expansion)
BIG future payouts (without Rutgers) = X
BIG future payout (with Rutgers) = Y
Obviously Y > X since they voted to invite Rutgers.
Crapping all over RU will never be a political winner in NJ.
First of all, there are a ton of RU alums here. And the most politically engaged of them are younger and far more supportive of athletics.
Of the 54k there would be in the stadium when the program is at its top, what % are registered to vote in NJ? I think it'd be 75%+.
And people who would be opposed, your fans of the Cult, SHU, Sadexuse, whatever, simply are not organized in such a manner to be oppositional. And RU 1000 is probably less than 1000 people.
When you look at Murphy, he a significant if not the MAIN factor in getting Schiano here in the first place. He wears RU gear all the time, We're a long way from calling Mike Brey to get advice on shutting the RAC down. These whiners don't have any political heft behind them.
What these articles are very simple. "Look at me" from Killingsworth, Eberight, the usual dopes in the local media who think if you repeat the same thing over and over it's a scandal. I don't know, not like there's a pandemic or flood recovery to report on, I suppose, so let's rant and rave about the same article that has been written every year since Mulcahey was here.
These idiots don't even take into account the B1G contract and the 50-60M a year it gives RU.
It's pretty easy math. When you take the B1G contract plus fans back in seats this year, this article goes up in smoke. It's one last gasp for attention from media outlets trying to get clicks. It's like TikTok for 50 year olds. Going nowhere, will be of no consequence in November and less so in the next few years.
First of all, there are a ton of RU alums here. And the most politically engaged of them are younger and far more supportive of athletics.
Of the 54k there would be in the stadium when the program is at its top, what % are registered to vote in NJ? I think it'd be 75%+.
And people who would be opposed, your fans of the Cult, SHU, Sadexuse, whatever, simply are not organized in such a manner to be oppositional. And RU 1000 is probably less than 1000 people.
When you look at Murphy, he a significant if not the MAIN factor in getting Schiano here in the first place. He wears RU gear all the time, We're a long way from calling Mike Brey to get advice on shutting the RAC down. These whiners don't have any political heft behind them.
What these articles are very simple. "Look at me" from Killingsworth, Eberight, the usual dopes in the local media who think if you repeat the same thing over and over it's a scandal. I don't know, not like there's a pandemic or flood recovery to report on, I suppose, so let's rant and rave about the same article that has been written every year since Mulcahey was here.
These idiots don't even take into account the B1G contract and the 50-60M a year it gives RU.
It's pretty easy math. When you take the B1G contract plus fans back in seats this year, this article goes up in smoke. It's one last gasp for attention from media outlets trying to get clicks. It's like TikTok for 50 year olds. Going nowhere, will be of no consequence in November and less so in the next few years.
Nebraska went 1st because the only way to validate their entrance moneywise was to become the 12th member and creation of the Championship game. No B1G President was going to vote yes to taking less money and Nebraska couldn't provide enough alone to justify it's entrance.
As to Rutgers the financial projections the B1G did prior to our entrance showed Rutgers would increase revenue via cable subscriptions(they could now charge more) and advertising. The only hold out was Northwestern in the vote. Most everyone is going to vote for more money and the Academics were on par with B1G members. As to the 20 yrs. ago the Midwest just began dying so the need for expansion wasn't that great and yes RU had already been considered in the past.
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Easy to say that now. If the reward outweighed the risk, Rutgers would have been added decades ago. How do you explain the reluctance if this was so obvious? Future payments with and without Rutgers were projections and no sure thing. I'm sure they ran the same projections for Nebraska and things haven't turned out as well as they might have expected.
The relevance of mentioning UConn was that most observers were shocked that Rutgers received this invite (even though they had been considered as a partner for Penn State in the past). It appeared to be a great deal for RU that many schools would have jumped on all things being equal. If the RU administration f'ed this up, it would have been worse than declining the invite to the Big East back in the day. Seton Hall stepped into the void back in the day. A decade from now this will be long forgotten after we have received years of very robust full share payments from the B1G.
Rutgers would have been the 12th member if they had been added instead of Nebraska. Yet the conference selected Nebraska despite projections showing Rutgers provided more cash flow than them? Obviously something else was considered. Nebraska fit the image of a typical B1G school, despite relatively weak academics, and it was viewed as a coup by the B1G to land them. Simply considering money, they would have taken Rutgers over Nebraska, right?
I think the usual suspects.
1.) the anti-athletic segment of the faculty ---- which is why I think it's important the university figures out a way to invest in and support strong departments that as a rule don't bring in big grant dollars as part of the field.
2.) The union ---- maybe? I think it depends on what other kind of financial restructuring is done that benefits faculty in non-revenue producing (outside of tuition) departments.
3.) The local politicians in Essex and Camden who might feel that Camden and Newark are not getting their appropriate share. I think one of the advantages of the Barchi model was that you could easily point to the P&L of Camden and Newark to show both revenues and costs vis a vis enrollments and faculty size.
Not sure who on the boards would oppose, but I would assume there would be a core nucleus of opposition on the the BoT. I don't know if they have any jurisdiction over this though since it would essentially be an internal accounting procedure.
How we did it: NorthJersey.com reporters uncover $265M in Rutgers athletics debt
How we did it: NorthJersey.com reporters uncover $265M in Rutgers athletics debt
Investigative reporters Abbott Koloff and Jean Rimbach discuss the hurdles faced and the thousands of documents they amassed to reveal Rutgers' debt.
www.mycentraljersey.com
The last line of that story refers to their original story, which is a subscriber-only story, stating the original story details: "Rutgers’ anticipated windfall when the Big Ten renegotiates its TV contracts after 2023. "How we did it: NorthJersey.com reporters uncover $265M in Rutgers athletics debt
How we did it: NorthJersey.com reporters uncover $265M in Rutgers athletics debt
Investigative reporters Abbott Koloff and Jean Rimbach discuss the hurdles faced and the thousands of documents they amassed to reveal Rutgers' debt.www.mycentraljersey.com
Does the original story do any further analysis or discussion on how when the windfall occurs, Rutgers will be on schedule to pay the so-called debt (and isn't some of this so-called "debt" the loan from the B1G that Rutgers is paying back via reduced distributions until 2028 or 2029?) at some point in the future. As stated above, this could be a situation of having to invest some money to make money in the future. Consider it like startup company.
Try this should be free:
Ohio State football, basketball, sports news, scores, analysis | buckeyextra.com
The latest Ohio State Buckeyes football, basketball & sports news
www.buckeyextra.com
Definitely was the best but I still don't agree with the terms.
It was all about money and no other school was delivering the increased carriage $, ad $, and exposure in the NYC TV DMA, because we're the only school in it. We immediately delivered over $30M/yr to B1GN in increased carriage deals before playing a game and more in the increased FOX/ESPN deals. I'd say that more than covered paying us a full share or at least comparable to MD and Nebraska.
Agree on B1G loans as well, but I want them forgiven, rather than considered an advance on future payouts, because they get us higher payouts now and don't reduce future payouts.
Funny. It worked, then it didn't a few days ago. And now it works again.Try this should be free:
Ohio State football, basketball, sports news, scores, analysis | buckeyextra.com
The latest Ohio State Buckeyes football, basketball & sports newswww.buckeyextra.com
What is disingenuous about the original article is: "ticket sales have declined by 53% since 2015." Well, no kidding there were no football ticket sales in 2020.
And they keep harping on "loans" from the B1G. Well, those "loans" will be paid off in 2029, per a post above.
- 2018: $50,000,000 | $23,841,721
- 2019: $51,500,000 | $26,242,246
- 2020: $53,045,000 | $28,643,801
- 2021: $54,636,350 | $43,705,600
- 2022: $56,275,441 | $46,029,566
- 2023: $57,963,704 | $48,941,204
- 2024: $59,702,615 | $50,970,215
- 2025: $61,493,693 | $53,055,193
- 2026: $63,338,504 | $56,178,379
- 2027: $65,238,659 | $65,238,659
- 2028: $67,195,819 | $67,195,819
- 2029: $69,211,694 | $69,211,694
Don't see any projections beyond 2020 in that article, but that does not fit their narrative.
Same lame Union doing the same lame thing, they do this EVERY TIME Rutgers starts to get some buzz. It is the SAME PEOPLE EVERY SINGLE TIME and the story is always ends up 100% BS since they never give the full picture.
It is so tiresome and boring. How dumb do people have to be to keep falling for it? This is not real reporting folks.
It is so tiresome and boring. How dumb do people have to be to keep falling for it? This is not real reporting folks.
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