Money from the B1G: questions, questions

[rutgersguy1]

Heres the main thing.

No one here knows what they are talking about (including me). No one really seems to know how much we owed the AAC and how long we had to pay it off. No one knows what we made from the Big Ten this year (that wont come out until the tax filings come out sometime next year). No one knows what we will make from the Big Ten in the future. All we know is that in 2021 we will make the full share, which will be a very large number relative to what we are making now.

heres the closest thing to a quote

From the Rutgers mailbag article about how much the planned athletic expansion will cost.

"Both funding options, I was told, are on the table with Rutgers expected to rake in $19.3 million in Big Ten revenue in 2020 and perhaps more than twice that amount by the time it becomes a full-share partner in 2021."

I dont know where this number comes from - $19.3 million - but for right now, I would accept that as the closest thing we have to a firm number. Its a safe assumption that RU will not make MORE than that number in any of the intervening years.

Also - to the poster above - I dont think MD was in worse shape financially. I think its more fair to say - their political climate wouldnt allow them to run deficits in the tens of millions for years on end like ours would. Like most BCS schools they expect to come somewhat close to breaking even on sports, and if they dont its a major issue to be rectified.

We owed the AAC 11.5M and paid them about 5M up front. We owe 6.5M and were scheduled to pay it off over 4 years with the final payment being in 2017.

http://www.nj.com/rutgersfootball/i...nce_announce_115m_deal_to_settle_lawsuit.html

As far as the 19.3 M that is a number I've seen projected before in a report by some committee. I've said this many times before and assuming there have been no changes, the projections for the first few years will range in the 10-11.5M range, then a jump to 15M, 19M, 25M and finally 35M which at the time was probably the projection for a full payout but looks like it will be a bigger number from reports out there.

 

[Upstream]

Also - to the poster above - I dont think MD was in worse shape financially.

Certainly in terms of subsidy, Rutgers was in much worse shape than Maryland. According to USA Today, the largest P5 athletic subsidies last year are:

Rutgers $36 MM (includes $10 MM student fees)
Maryland $18 MM (includes $11 MM student fees)
Virginia $13 MM (includes $13 MM student fees)
Oregon State $12 MM (includes $3 MM student fees)
Colorado $12 MM (includes $2 MM student fees)



So Rutgers has a subsidy that is twice Maryland's, and Maryland has a subsidy that is about 50% more than the next highest P5 school.

(Note that USA Today definition of subsidy includes student fees, so even when Rutgers reaches its goal of revenue neutral athletics, we will still have a $10 MM+ subsidy according to USA Today.)

 

[Knight_Light]

Heres the main thing.

No one here knows what they are talking about (including me). No one really seems to know how much we owed the AAC and how long we had to pay it off.
.

We owed the AAC 11.5M and paid them about 5M up front. We owe 6.5M and were scheduled to pay it off over 4 years with the final payment being in 2017.

http://www.nj.com/rutgersfootball/i...nce_announce_115m_deal_to_settle_lawsuit.html
.

Thought everyone knew that (i.e. Rutgers and AAC agreed to a $11.5 Million exit fee) and realized that was a very wise investment for RU, considering the future hundreds of millions of $$ they will be receiving every decade as members of the Big Ten.

 

[rutgersguy1]

Certainly in terms of subsidy, Rutgers was in much worse shape than Maryland. According to USA Today, the largest P5 athletic subsidies last year are:

Rutgers $36 MM (includes $10 MM student fees)
Maryland $18 MM (includes $11 MM student fees)
Virginia $13 MM (includes $13 MM student fees)
Oregon State $12 MM (includes $3 MM student fees)
Colorado $12 MM (includes $2 MM student fees)



So Rutgers has a subsidy that is twice Maryland's, and Maryland has a subsidy that is about 50% more than the next highest P5 school.

(Note that USA Today definition of subsidy includes student fees, so even when Rutgers reaches its goal of revenue neutral athletics, we will still have a $10 MM+ subsidy according to USA Today.)

In that same report, the student fees are projected to be about 12M in 2021-22

 

[ruready4somefootball]

Didn't the AAC NOT pay Rutgers Bowl money and that was subtracted from what we owe those d-bags?

 

[rutgersguy1]

Didn't the AAC NOT pay Rutgers Bowl money and that was subtracted from what we owe those d-bags?

In the article I linked, it says we were going to be paid the 1.5M from the Pinstripe when the settlement was reached.

From article:
The university will also receive a $1.5 million payment from the AAC this spring for its December appearance in the Pinstripe Bowl at Yankee Stadium, the Rutgers spokesman said. The conference had previously threatened to withhold that payment if Rutgers refused to pay its full exit fee.

 

[derleider]

We owed the AAC 11.5M and paid them about 5M up front. We owe 6.5M and were scheduled to pay it off over 4 years with the final payment being in 2017.

http://www.nj.com/rutgersfootball/i...nce_announce_115m_deal_to_settle_lawsuit.html

As far as the 19.3 M that is a number I've seen projected before in a report by some committee. I've said this many times before and assuming there have been no changes, the projections for the first few years will range in the 10-11.5M range, then a jump to 15M, 19M, 25M and finally 35M which at the time was probably the projection for a full payout but looks like it will be a bigger number from reports out there.

Yeah. I figured if I posted that no one knew then someone would post the reality here.

But see - here we go. Is $19 million the last payout before we get the full or the second to last? No one seems to now. I think all we know is - we wont get anything close to the real full payout (which is projecting in the $45 million range now) until 2021 (or is it 2022?). Actually - do we even know how that money gets distributed. I mean - does the Big Ten cut us one big check at the beggining of the fiscal year (so last July) or the end (so next week), or a bunch of smallre checks throughout the year?

 

[rutgersguy1]

Yeah. I figured if I posted that no one knew then someone would post the reality here.

But see - here we go. Is $19 million the last payout before we get the full or the second to last? No one seems to now. I think all we know is - we wont get anything close to the real full payout (which is projecting in the $45 million range now) until 2021 (or is it 2022?). Actually - do we even know how that money gets distributed. I mean - does the Big Ten cut us one big check at the beggining of the fiscal year (so last July) or the end (so next week), or a bunch of smallre checks throughout the year?

It should be the 2nd to last, the 25M payment should be the last. To me the 35M number is the projection for the full payout but now that figure looks to be larger from reports out there (40-50M depending on source).

The fiscal reporting should come out in the 2022 calendar year but the actual fiscal year spans 2 calendar years, 2021 and 2022. As to how it's paid, in increments over the course of the fiscal year or 1 lump sum at the end of the fiscal year? I don't know. I don't think I've ever read that. The reporting comes out at the end of the fiscal year but how the actual distribution is actually handled I don't know. But does it really matter whether it's in a lump sum or increments. Either way the department will form an appropriate budget to take into account whatever revenue comes in and how it comes in.

 

[CornerTavern]

Several pieces of information.

#7 - From a money standpoint, joining the Big was a grand slam home run.

FIFY: From a money standpoint, joining the Big was a triple crown, 80 home run, 30 stolen bases, cy young, 2.00 ERA, 300 strikeouts, world series MVP season.

 

[Scarlet_Scourge]

Certainly in terms of subsidy, Rutgers was in much worse shape than Maryland. According to USA Today, the largest P5 athletic subsidies last year are:

Rutgers $36 MM (includes $10 MM student fees)
Maryland $18 MM (includes $11 MM student fees)

So Rutgers has a subsidy that is twice Maryland's, and Maryland has a subsidy that is about 50% more than the next highest P5 school.

(Note that USA Today definition of subsidy includes student fees, so even when Rutgers reaches its goal of revenue neutral athletics, we will still have a $10 MM+ subsidy according to USA Today.)

That is a little misleading since the Maryland one is not the same as ours, in that they must pay that back, while Rutgers' doesn't have to be paid back. So Maryland is worst off.

 

[pd125]

The actual amount will not be know until the league signs a new TV contract. WE are the last big deal left for the networks and it should be a HUGE deal. High tide lifts all boats!

 

[bingethinker]

Maryland did NOT get a "better deal." They received an upfront loan from The B1G that is to be paid back with revenue from subsequent years. This deal had nothing to do with "where they came from" from an athletic standpoint and more from where we came from from a financial standpoint. Believe it or not, but Maryland was in much worst financial shape than Rutgers was and therefore needed the loan (money) now.

Maryland is not now nor was it ever in worse financial shape than Rutgers. It's time for people to just accept that while both schools have dire financial issues, Maryland Athletics has operated and continues to operate at a higher capacity than Rutgers both on the field and on the balance sheets.

Also, a simple Google search confirmed what I thought I remembered about the travel stipend Maryland received. I can't find a source that indicates that $20-30 million subsidy was a loan at all. However, I can find sources that suggest it was a sweetener thrown in during negotiations to assuage the Maryland BOR's concerns about the increased cost of travel. Both the Baltimore Sun and the Washington Post cite that as being that body's primary sticking point in opposition to the switch from the ACC to the B1G.

Finally, there is no loan involved in Maryland's deal. Yes, it's a front-loaded deal that will cost Maryland money on the back end, but it's not a loan at all. Maryland was the more valuable property. It requested more concessions than Rutgers did as a result of having a stable Power 5 conference to call home. It got the deal it got because they had more leverage.

 

[knightfan7]

Maryland is not now nor was it ever in worse financial shape than Rutgers. It's time for people to just accept that while both schools have dire financial issues, Maryland Athletics has operated and continues to operate at a higher capacity than Rutgers both on the field and on the balance sheets.

Also, a simple Google search confirmed what I thought I remembered about the travel stipend Maryland received. I can't find a source that indicates that $20-30 million subsidy was a loan at all. However, I can find sources that suggest it was a sweetener thrown in during negotiations to assuage the Maryland BOR's concerns about the increased cost of travel. Both the Baltimore Sun and the Washington Post cite that as being that body's primary sticking point in opposition to the switch from the ACC to the B1G.

Finally, there is no loan involved in Maryland's deal. Yes, it's a front-loaded deal that will cost Maryland money on the back end, but it's not a loan at all. Maryland was the more valuable property. It requested more concessions than Rutgers did as a result of having a stable Power 5 conference to call home. It got the deal it got because they had more leverage.

Maryland's settlement with the ACC was more than $30 million but could have been a lot more. I thought this was a major reason why their deal was front loaded.

 

[GoodOl'Rutgers]

Finally, there is no loan involved in Maryland's deal. Yes, it's a front-loaded deal that will cost Maryland money on the back end, but it's not a loan at all. Maryland was the more valuable property. It requested more concessions than Rutgers did as a result of having a stable Power 5 conference to call home. It got the deal it got because they had more leverage.

Maryland was the more valuable property?

Just because Maryland cost more to obtain doesn't mean they were "more valuable". Think of a company wanting to buy a lot of property on the same street for some development. The hold-outs, despite initially having the same "value" as every other property on the block, could cost more to obtain. Maryland was in the ACC and had that revenue and the cost to leave that conference to consider. They were harder to obtain. And, like the property hold-out, got paid more. And just like the property examples where you need all the properties on the block, to achieve its goals, the Big Ten needed to make the deal. That doesn't mean one lot of the block's property is more valuable than another, after-the-fact.

But here is one way t look at it... the college licensing company ranks universities by sales. Maryland is 43 and Rutgers is 53. Maryland is "more valuable".

Football attendance... in 2014 Rutgers averaged 50K, Maryland 46K.. Rutgers is "more valuable".

Basketball.. not going to look that up.. Maryland.. in Mens and Womens.

TV ratings... I'd assume Rutgers gets more eyeballs in football and Maryland in basketball. Football is much more valuable for many reasons. And so are the eyeballs in this area.. for advertising rates. And this really relates to advertising and Maryland has Underarmor.. so its probably a wash.

Forbes or somebody ranked the values of college degrees and Rutgers was up there nationally.. I will assume ahead of Maryland. Rutgers is "more valuable".

Research dollars? In a 2012 summery I see Maryland is slightly ahead. That will all change with the medical school coming back to Rutgers. The current academic world university rankings has Maryland at 43 and Rutgers at 53. Much of this is due to Maryland getting far more Federal Research dollars... probably due to its location.. which should help all Big Ten cooperative research grant proposals.

So.. for right now... Maryland is more valuable. But they have had national championships, been in a good conference, have a high profile sponsor... and still it is a close thing.. comparing the schools value. With any kind of increasing success for Rutgers to capitalize, we should overtake them.

 

[derleider]

It should be the 2nd to last, the 25M payment should be the last. To me the 35M number is the projection for the full payout but now that figure looks to be larger from reports out there (40-50M depending on source).

The fiscal reporting should come out in the 2022 calendar year but the actual fiscal year spans 2 calendar years, 2021 and 2022. As to how it's paid, in increments over the course of the fiscal year or 1 lump sum at the end of the fiscal year? I don't know. I don't think I've ever read that. The reporting comes out at the end of the fiscal year but how the actual distribution is actually handled I don't know. But does it really matter whether it's in a lump sum or increments. Either way the department will form an appropriate budget to take into account whatever revenue comes in and how it comes in.

The fiscal reporting for the 2021-22 fiscal year would usually come out in spring of 2023 I think, at least publicly.

Maryland is not now nor was it ever in worse financial shape than Rutgers. It's time for people to just accept that while both schools have dire financial issues, Maryland Athletics has operated and continues to operate at a higher capacity than Rutgers both on the field and on the balance sheets.

Also, a simple Google search confirmed what I thought I remembered about the travel stipend Maryland received. I can't find a source that indicates that $20-30 million subsidy was a loan at all. However, I can find sources that suggest it was a sweetener thrown in during negotiations to assuage the Maryland BOR's concerns about the increased cost of travel. Both the Baltimore Sun and the Washington Post cite that as being that body's primary sticking point in opposition to the switch from the ACC to the B1G.

Finally, there is no loan involved in Maryland's deal. Yes, it's a front-loaded deal that will cost Maryland money on the back end, but it's not a loan at all. Maryland was the more valuable property. It requested more concessions than Rutgers did as a result of having a stable Power 5 conference to call home. It got the deal it got because they had more leverage.

That is in essence a no interest loan. They got money on the front end, and have to pay it back by not getting it on the back end.

MD wasnt the more valuable property, they simply had more leverage because they had options.

GOR - you did way too much analysis. The Big Ten makes money (or at least money in amounts that matter) from schools in one way - TV deals. Neither MD nor Rutgers moves the national needle in FB, and BB is too inconsequential in the value of a national deal for one team - even a very good team like MD to matter. So that leaves the BTN - which RU cleans up on because NYC market + the rest of NJ is much bigger than MD + the rest of the DC market.. RU is the more valuable team.

And the proof of that is simple to see - despite RU having a MAC level athletic department (outside of our mid-BCS level FB team) and needing hundreds of millions in upgrades just to get up to the middle of the pack, upgrades which will take a decade or two to build, RU was still invited over schools like Pitt, Syracuse, BC, UConn, UVa, UNC, Missouri, Kansas, or GT - all schools who offer better athletics, generally similar academics (some better, some worse), and for the most part decent to good markets. That says it all.

 

[Cruising Route 66]

Yeah. I figured if I posted that no one knew then someone would post the reality here.

But see - here we go. Is $19 million the last payout before we get the full or the second to last? No one seems to now. I think all we know is - we wont get anything close to the real full payout (which is projecting in the $45 million range now) until 2021 (or is it 2022?). Actually - do we even know how that money gets distributed. I mean - does the Big Ten cut us one big check at the beggining of the fiscal year (so last July) or the end (so next week), or a bunch of smallre checks throughout the year?

Payouts are made a couple times a year and are approved by the council of presidents and chancellors when they meet.

 

[GoodOl'Rutgers]

The fiscal reporting for the 2021-22 fiscal year would usually come out in spring of 2023 I think, at least publicly.

That is in essence a no interest loan. They got money on the front end, and have to pay it back by not getting it on the back end.

MD wasnt the more valuable property, they simply had more leverage because they had options.

GOR - you did way too much analysis. The Big Ten makes money (or at least money in amounts that matter) from schools in one way - TV deals. Neither MD nor Rutgers moves the national needle in FB, and BB is too inconsequential in the value of a national deal for one team - even a very good team like MD to matter. So that leaves the BTN - which RU cleans up on because NYC market + the rest of NJ is much bigger than MD + the rest of the DC market.. RU is the more valuable team.

And the proof of that is simple to see - despite RU having a MAC level athletic department (outside of our mid-BCS level FB team) and needing hundreds of millions in upgrades just to get up to the middle of the pack, upgrades which will take a decade or two to build, RU was still invited over schools like Pitt, Syracuse, BC, UConn, UVa, UNC, Missouri, Kansas, or GT - all schools who offer better athletics, generally similar academics (some better, some worse), and for the most part decent to good markets. That says it all.

Leverage has value, does it not?

I think your analysis of my analysis, misses the point.. which you recognized when you first spoke of leverage. That is the context of comparing Rutgers and Maryland.. in this thread at least.. it is asking why Maryland got the better deal... in essence, a lower entry fee. Ultimately I think it is the same deal. We're both members whose future is in our own hands and soon enough the entry fee issue will be a footnote... hopefully a rounding error.

Overall, I think Maryland has less upside potential and I think you are correct about Rutgers "value" in terms of the current market and market potential. I think you also miss the point saying Rutgers does not "move the needle". It does because Rutgers does well in the most valuable market. That moves the needle on a national level... even if we are shown regionally.. that is fewer eyeballs for the national games.

I have to say that, in doing my research I was a little surprised that Maryland was ahead of us in research dollars. It will be interesting to see what happens with the med school stuff. And it is a damn shame that New Jersey politicians in DC do so little to help Rutgers bring in Federal research dollars. They absolutely suck at it.

 

[RUnumber1]

That is a little misleading since the Maryland one is not the same as ours, in that they must pay that back, while Rutgers' doesn't have to be paid back. So Maryland is worst off.

 

[RUnumber1]

Bingo!!! Maryland was and still is in worst shape than Rutgers, because they owe more than we do. They made huge improvements to their stadium hoping to pay for it with additional revenue from premium seats, but that did not happen. That is why their president jumped at the B1G offer.

Also, our yearly payout from The B1G cannot be stated exactly because it changes based upon bowl revenue and TV revenue. While a base of between 10 to 12 million is reasonable, our actual payout might (and should) be much more.

 

[RCTrooper]

Will this really be a "net" boon for Rutgers athletics when we get a full share? Hasn't Barchi professed that the goal is for athletics to be revenue neutral? So the extra $15-25 million "full share" that we get will primarily go to offsetting the $35 million subsidy that Rutgers gives its athletic program?

 

[Scarlet_Scourge]

Will this really be a "net" boon for Rutgers athletics when we get a full share? Hasn't Barchi professed that the goal is for athletics to be revenue neutral? So the extra $15-25 million "full share" that we get will primarily go to offsetting the $35 million subsidy that Rutgers gives its athletic program?

I would suggest checking out the subsidy for all of the other Big Ten schools.

Remember, that is just TV money. Rutgers will be making a lot more than just money from their TV deal.

 

[RCTrooper]

I would suggest checking out the subsidy for all of the other Big Ten schools.

Remember, that is just TV money. Rutgers will be making a lot more than just money from their TV deal.

Well, other school's subsidies are irrelevant to RU. Barchi has indicated that any financial windfall from the BiG athletic conference membership will go towards eliminating RU's subsidies to RU athletics.

What other net gain does RU get from BiG athletics? Is it increased bowl revenue sharing and a gain in ticket sales and donations? Is that a big difference in absolute dollars?

 

[Scarlet_Scourge]

Well, other school's subsidies are irrelevant to RU. Barchi has indicated that any financial windfall from the BiG athletic conference membership will go towards eliminating RU's subsidies to RU athletics.

What other net gain does RU get from BiG athletics? Is it increased bowl revenue sharing and a gain in ticket sales and donations? Is that a big difference in absolute dollars?

It is not irrelevant, since they clearly make it work and many don't even have student fees. In other words we have nothing to worry about,

That net gain can add up to millions, I wish I had numbers but it is over $10 million I believe.

 

[GoodOl'Rutgers]

RCTrooper.. that Big money requires Rutgers make a solid effort and do its part athletically. It is not free money for doing nothing. A lot of it will have to be reinvested... THEN.. the remainder can be used to offset. Done correctly, Rutgers will catch up in facilities, coaching and so on and its revenues should increase. But we can't just cash the check and spend nothing on improving athletics.

 

[Scarlet_Scourge]

RCTrooper.. that Big money requires Rutgers make a solid effort and do its part athletically. It is not free money for doing nothing. A lot of it will have to be reinvested... THEN.. the remainder can be used to offset. Done correctly, Rutgers will catch up in facilities, coaching and so on and its revenues should increase. But we can't just cash the check and spend nothing on improving athletics.

No one wants that. Rutgers gets that they can make sell more tickets and get more donations if the teams are winning. (Football, Men's Basketball, Wrestling).

Men's Basketball is mission critical since that is a ton of money that we are leaving on the table due to them being the worst team in the Big Ten.