Tennessee Athletic Dept. in $200M Debt

[cyspy]

They need to either call Jim Delany immediately or email Pollard.

[Rhoadhoused]

To compare it to us, it would be like us having $80-100 million in debt. Two full years of AD revenue. I would guess we have about $20 to 30 million in debt right now, just ballpark. Maybe someone has better numbers on that.

Tennessee- $99 million per year AD
ISU- $40-50 million per year AD

Tennessee- $200 million debt
ISU- $20-30 million?

[Prone2Clone]

As if an SEC school ever needed a reason to cheat. Look out.

[Wesley]

Looks like no SEZ for Tennessee

Maybe they can sell and then rent their stadium.

[letsCYber]

maybe they can get a government bailout

A Peyton Manning bail out perhaps...

[2ndCyCE]

A Peyton Manning bail out perhaps...

That's a lot of free pizza!

[alarson]

To compare it to us, it would be like us having $80-100 million in debt. Two full years of AD revenue. I would guess we have about $20 to 30 million in debt right now, just ballpark. Maybe someone has better numbers on that.

Tennessee- $99 million per year AD
ISU- $40-50 million per year AD

Tennessee- $200 million debt
ISU- $20-30 million?

I dont know if its nearly that linear though. A school making 100 million a year has a lot more free cash to spend on debt payments than a school making $50 mil. Both are going to have fairly similar spending in a lot of areas (coaching salaries, for example). Its sort of similar to how if a person makes 50k or 100k they still spend similarly on food, so the one making 100k can devote a larger % of their income to other things.

[Rhoadhoused]

I dont know if its nearly that linear though. A school making 100 million a year has a lot more free cash to spend on debt payments than a school making $50 mil. Both are going to have fairly similar spending in a lot of areas (coaching salaries, for example). Its sort of similar to how if a person makes 50k or 100k they still spend similarly on food, so the one making 100k can devote a larger % of their income to other things.

Good point. They will be able to pay coaches no matter what since it is a lower percentage of their income.

ISU needs to save up more since it has a lower budget total.

[JRE1975]

Not that it makes a lot of difference but I thought I saw that our budget is between $60-$65 million per year, and our debt service is like $6 million a year with the stadium work the last few years, the football facility, the complex out by the Towers. In fact I think there is still some debt related to the indoor practice facility.

We have a healthy reserve to back up the debt payments, but that is why JP is saying we need to reduce our debt service before the SEZ is started.

It seems the debt payment with the low interest rates today is pretty high for Tennessee with $200 million of debt. JP said somewhere that the debt service on $50 million for the SEZ would be a little over $3 million per year. $20 million per year seems high to me.

[kilgore_trout]

enron, aig, tyco, big banks...

Good point. They will be able to pay coaches no matter what since it is a lower percentage of their income.

ISU needs to save up more since it has a lower budget total.

[bosco]

Leveraging is used to take advantage of cash flows and assets. Private citizens do this to buy homes and cars. The key is to properly project cash flow and anticipate possible future economic distresses. I don't know if Tennessee is in trouble but if my debt cost accounted for 20% of my budget I'd be very nervous.

[DurangoCy]

I know I'll be dreaming about Tennessee declaring bankruptcy tonight. It'll be better than the one I had a couple weeks ago where Katherine Webb, Erin Andrews, and Sam Steele spent the night talking dirty football to me. It was awesome.

[kingcy]

We are very lucky to have Pollard at ISU. He can make a dollar go farther than any AD in the country.

[TOFB4ISU]

Wow, most games this year they had 20,000 empty seats. Even at 50 a pop, that is a million per game lost revenue.

[TykeClone]

I dont know if its nearly that linear though. A school making 100 million a year has a lot more free cash to spend on debt payments than a school making $50 mil. Both are going to have fairly similar spending in a lot of areas (coaching salaries, for example). Its sort of similar to how if a person makes 50k or 100k they still spend similarly on food, so the one making 100k can devote a larger % of their income to other things.

To be fair, since they play in the SEC they require a much, much higher payroll for acquiring players than ISU has...