The Pac-12 Conference’s COVID loan program—once discussed as a nearly $1 billion facility for all 12 members to offset pandemic shortfalls—will end up as a much smaller endeavor, with just one school taking part, according to multiple people familiar with the plan.
The University of Colorado is the only Pac-12 athletic department that will be borrowing money through the conference, said the people, who were granted anonymity because the details are private. On the conference side, the money will be borrowed as an extension of the Pac-12’s existing line of credit, the people said. The other 11 programs were able to fulfill their borrowing needs (if necessary) through other means.
Colorado is borrowing roughly $18 million, its entire 2021 shortfall, to be paid back in the next seven or eight years through its annual conference distributions. The school declined to comment on interest rate, beyond it being in line with current market rates.
“I feel really good about how we finished fiscally,” Colorado AD Rick George told reporters last week about the department’s $18 million deficit. “When you have no ticket revenue–and had $23 million the year before–and you have about a 50-60% conference distribution, those two numbers alone put us at about a $40-45 million revenue reduction. To be able to operate the way we did, I feel really good about it.”
A representative for the Pac-12 didn’t immediately respond to a request for comment.
Last summer, as the college football season looked increasingly less likely and athletic departments like Oregon and Washington were bracing for revenue shortfalls in the $75 million range, the Pac-12 began discussing a conference-wide program to help its schools financially. Talks at one point focused on a credit facility of about $1 billion, $83 million per member, paid back over 10 years at a rate of 3.75%.
In the past six months, however, circumstances changed. The Pac-12 canceled the fall football season in August, but eventually overturned that decision and played a shorter season, which helped preserve millions from TV contracts. The NCAA men’s basketball tournament was also held in its entirety, preserving another important revenue stream. Many schools also saw increases in donations to help cover some of the shortfall.
Perhaps most importantly, athletic departments found other ways to finance their deficits. Some were able to borrow from their school or system at more favorable terms, while others had losses covered without needing to pay their schools back at all. Some athletic departments went directly to banks themselves and many utilized government relief packages like the CARES Act and the American Rescue Plan.
Colorado’s athletics budget was $91 million in Fiscal 2019, the year before COVID-19 disrupted the all-important football season. Like many departments around the country, the Buffaloes went through a series of layoffs, furloughs and pay cuts. (George said coach salaries are now back to normal and that the department is starting to bring people back).
A representative for the athletic department said it preferred to borrow through the conference, as opposed to going to the university or directly to a bank, because the school expects the Pac-12 payouts to jump up once the conference renegotiates its TV deals. That made it easier for the school to plan ahead from a budgeting standpoint.
At least one other conference, however, has organized a league-wide loan program. In May the SEC announced that it was distributing $23 million to each of its 14 members to help offset COVID shortfalls. That money was borrowed using future media rights guarantees.
The Pac-12 reported $534 million in revenue for 2019-20, roughly in line with the previous year’s pre-pandemic number. The league’s new commissioner, former MGM executive George Kliavkoff, began his tenure on July 1.
(This story has been updated with details of the loan in the second paragraph.)