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More on SEC Athletics Debt Levels

Tennessee is not in good financial shape, but what about everyone else in the SEC?


After the report came out yesterday about Tennessee's frightening financial picture, I wanted to take a look at how the other schools in the conferences are doing with their money. It's only fair.

I began going through schools' financial statements in alphabetical order yesterday evening. I made it through LSU before giving up on the effort. The problem was that every school seems to do its accounting differently, and not all information is up on the web to find. Florida, for instance, puts all of its athletics finances into its University Athletic Association, and it can all be found in a single statement. Auburn, on the other hand, puts an abbreviated statement out for its Tigers Unlimited Foundation inside its larger university statement, and you have to specially request a copy of TUF's full statements separately.

The most valuable statement for these purposes came from Arkansas. It did a survey of athletic debt levels in March of 2011 for its June 2011 report (the most recent I could find). Here is what it found back then, almost two years ago:

Image source: 2010-2011 University of Arkansas Department of Athletics Annual Report, page 30. See larger.

Here we can see Tennessee's debt level getting up there, but at the time, Alabama and LSU had even more than UT did. Those two are not in crisis mode, however, because they're both winning lots of games and selling out their stadiums. High debt loads can be manageable with high income streams. It's when that income starts to dry up, as is the case with Tennessee and its falling attendance, then problems begin to arise.

Alabama's accounting is an interesting case. It has its Crimson Tide Foundation, and its 2012 financials aren't so bad. It has just over $113 million in net assets and only $1.2 million in long-term debt. Its yearly interest expense was $130,560, just over 2% of its expenses. However when you look at the full university's statement, you find almost $197 million listed as "intercollegiate athletics long-term debt" and another $1.8 million for the Crimson Tide Foundation airplane.

LSU's 2012 statement lists only two bonds oustanding, one from 1999 and another from 2004 for a total of $120,285,000. That is a bit over half of what it told Arkansas it had in 2011, so unless it did a heroic amount of debt repayment that no one knows about, a big chunk of its athletics debt is on the general university books like with Alabama. Its interest expense on just those two bonds will peak at around $4.9 million annually from 2022-26 (see page 22).

Kentucky actually dissolved its University of Kentucky Athletic Association effective June 30, 2012. A few items in its 2012 statement show why that decision was probably made. UKAA seems to have been kept on a short leash, with only $7.5 million in debt that I could find. Of that $7.5 million, $6.9 million of it was a loan from the university itself. The association did, however, pay a "lease" of $2.2 million annually for Commonwealth Stadium to cover the debt service on bonds for the 1999 improvements that the university took on. It similarly paid about a half a million per year for interest expense on the school's 2006 bonds to upgrade Memorial Coliseum. At some point, keeping this stuff separate is just a hassle.

In any event, it just goes to show that we pundits and talking heads often get something wrong when we talk about big paydays from TV money and such. Inevitably, we'll say that one of the things it will do is pay for new facilities upgrades. Having taken a look at eight schools' finances now plus the chart from Arkansas, I can tell you that's largely not the case. Those inflows will pay for old facilities upgrades and give them the ability to issue new bonds to pay for new upgrades.

College athletics wouldn't be possible without a lot of things, but one of those appears to be millions of dollars of debt.