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Then how do you explain LSU giving between $4-5 million per year to the school's general fund? Not every school keeps the money in the AD..
I look at 4 factors to determine this, the 4th being the biggest.
1. The cost-per-student subsidy above the price of tuition for each player isn't reimbursed from the AD to the academic side. At most state universities this is 2.5x tuition. At the big schools with international reps, like Michigan, it's 4x tuition.
2. All branding and royalties for sweatshirts, hats, and the like, are considered AD revenues. Now, say about 10% of those would be sold regardless, simply because NYU and Boston U and schools like that also sell gear without bigtime football or basketball. LSU gets 37.5m a year in royalties for branding.
3. They did a study down at U. Texas that showed 40%+ of the contributors to the Longhorn Foundation were entirely unaware that they were contributing to athletics and not academics. This is counted as athletics revenue. Now, imagine that a portion of that 40% would have preferred to give to academics.
All these are fine, in a way. It's not a big deal to lose a million here or there. BUT...
4. Here's the big whammy: the buildout for facilities is paid out by the university side, because only the university side can issue bonds. I looked at U. Texas (the academic side owes $250m+ on facilities), U. Michigan ($240m), Nebraska ($105m), etc. We know about the Rutgers clusterfrig ($110m+) but there are a lot of schools just like it, Purdue for instance ($70m).
4a. This is how the accounting works. Say boosters or private donors pay for a small portion of the facilities/stadium. Well, the money comes to the school, then you have the school bonding out the building of the stadium. BUT, the contributions are reported as athletic revenue and added to the AD budget over a period of years. For instance, PSU recently reported that it had a huge increase in donations to athletics for last year. It was immediately pointed out that this included the Pegula hockey money. Now, who is going to finance the construction of the hockey arena? The university. But the Pegula money will be counted as athletic department revenue for years to come.
Look at these articles on Michigan:
http://blog.mlive.com/annarbornews/2007/09/um_professors_urge_reconsidera.html
Here you have concerns that the academic side won't be able to handle the debt on Crisler Arena and the refurbishing of Michigan Stadium.
http://www.annarbor.com/news/u-m-bo...illion-second-phase-of-crisler-arena-renovat/
In this article, the total cost is $52m for Crisler and $226m for Mich. Stadium. Two years later, it shows the total academic debt here (http://annarborchronicle.com/wp-con...FY2013-Budget-Presentation-6-21-final-v.2.pdf) as $240 million. So, we can assume that some amount of principal paid plus donations brought down the tab from $278 to $240. Let's say it's $35 raised from private sources (all listed, again, as AD revenue).
Then look at this: http://www.regents.umich.edu/meetings/06-11/2011-06-X-13.pdf
This is the ADs budget. The AD services the debt on facilities with $2.2 million a year in payments.
What a deal!! I bet the Boneyard could scrap together $2.2 million a year if someone were willing to lend us $240 million. Let's face it, the AD services a very small portion of those bonds while the rest is debt serviced by the university.
The problem as raised by the professor in the first article is that stadiums are so expensive that a school reaches its credit limit very quickly (i.e. it doesn't want to go over its threshold and lose its bond rating, it needs to keep the top tier). One can make an argument that as long as the cash is flowing schools should build out stadiums, but if there is ever a downtrend (which there surely will be in the future) then there will be a credit crunch. We've seen this at Oklahoma St. 2 years ago when T. Boone Pickens gave $180m for the football stadium. Pickens insisted, as part of the donation, that the money be kept in his hedge fund. The school then bonded out the building of the stadium. Pickens' hedge fund went bankrupt, and all the money was lost. To his credit, he promised to donate the exact amount again (but the money wasn't to come for a few years). In the meantime, researchers at Okie St. won big gov't grants that required new labs and facilities that the school was unable to build because they had maxed out their credit building the stadium. The grants were lost.
The ADs are in a big arms race, and the schools are racking up huge amounts of debt trying to keep up.